REGISTRATION RIGHTS AGREEMENT
Registration
Rights Agreement dated as of November 3, 2006 (this “Agreement”)
by and
between 3DIcon Corporation, an Oklahoma corporation, with principal executive
offices located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Company”),
and
Golden Gate Investors, Inc. (the “Holder”).
WHEREAS,
upon the terms and subject to the conditions of the Securities Purchase
Agreement dated as of even date herewith, by and between the Holder and the
Company (the “Securities
Purchase Agreement”),
the
Company has agreed to issue and sell to the Holder a Convertible Debenture
(the
“Debenture”)
of the
Company in the aggregate principal amount of $1,250,000 which, upon the terms
of
and subject to the conditions contained therein, is convertible into shares
of
the Company’s Common Stock (the “Common
Stock”)
;
and
WHEREAS,
to induce the Holder to execute and deliver the Securities Purchase Agreement,
the Company has agreed to provide with respect to the Common Stock issued upon
conversion of the Debenture certain registration rights under the Securities
Act;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions
(A) As
used
in this Agreement, the following terms shall have the meanings:
(1) “Affiliate”
of any
specified Person means any other Person who directly, or indirectly through
one
or more intermediaries, is in control of, is controlled by, or is under common
control with, such specified Person. For purposes of this definition, control
of
a Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether by contract,
securities ownership or otherwise; and the terms “controlling”
and
“controlled”
have the
respective meanings correlative to the foregoing.
(2) “Closing
Date”
means
the date of this Agreement.
(3) “Commission”
means
the Securities and Exchange Commission.
(4) “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder, or any similar successor statute.
(5) “Investor”
means
each of the Holder and any transferee or assignee of Registrable Securities
which agrees to become bound by all of the terms and provisions of this
Agreement in accordance with Section 8 hereof.
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(6) “Person”
means
any individual, partnership, corporation, limited liability company, joint
stock
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
(7) “Prospectus”
means
the prospectus (including, without limitation, any preliminary prospectus and
any final prospectus filed pursuant to Rule 424(b) under the Securities Act,
including any prospectus that discloses information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
on
Rule 430A under the Securities Act) included in the Registration Statement,
as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such prospectus
and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.
(8) “Public
Offering”
means an
offer registered with the Commission and the appropriate state securities
commissions by the Company of its Common Stock and made pursuant to the
Securities Act.
(9) “Registrable
Securities”
means
the Common Stock issued or issuable (i) upon conversion or redemption of
the Debenture, (ii) pursuant to the terms and provisions of the Debenture
or the Securities Purchase Agreement, (iii) in connection with any
distribution, recapitalization, stock-split, stock adjustment or reorganization
of the Company; provided,
however,
a share
of Common Stock shall cease to be a Registrable Security for purposes of this
Agreement when it no longer is a Restricted Security.
(10) “Registration
Statement”
means a
registration statement of the Company filed on an appropriate form under the
Securities Act providing for the registration of, and the sale on a continuous
or delayed basis by the holders of, all of the Registrable Securities pursuant
to Rule 415 under the Securities Act, including the Prospectus contained therein
and forming a part thereof, any amendments to such registration statement and
supplements to such Prospectus, and all exhibits to and other material
incorporated by reference in such registration statement and
Prospectus.
(11) “Restricted
Security”
means
any share of Common Stock issued upon conversion or redemption of the Debenture
except any such share that (i) has been registered pursuant to an effective
registration statement under the Securities Act and sold in a manner
contemplated by the prospectus included in such registration statement, (ii)
has
been transferred in compliance with the resale provisions of Rule 144 under
the
Securities Act (or any successor provision thereto) or is transferable pursuant
to paragraph (k) of Rule 144 under the Securities Act (or any successor
provision thereto) or (iii) otherwise has been transferred and a new share
of
Common Stock not subject to transfer restrictions under the Securities Act
has
been delivered by or on behalf of the Company.
(12) “Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder, or any similar successor statute.
(B) All
capitalized terms used and not defined herein have the respective meaning
assigned to them in the Securities Purchase Agreement or the
Debenture.
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2. Registration
(A) Filing
and Effectiveness of Registration Statement.
The
Company shall prepare and file with the Commission as soon as practicable a
Registration Statement relating to the offer and sale of the Registrable
Securities and shall use its best efforts to cause the Commission to declare
such Registration Statement effective under the Securities Act as promptly
as
practicable but in no event later than the Deadline (as defined in the
Debenture). The Company shall promptly (and, in any event, no more than 24
hours
after it receives comments from the Commission), notify the Holder when and
if
it receives any comments from the Commission on the Registration Statement
and
promptly forward a copy of such comments, if they are in writing, to the Holder.
At such time after the filing of the Registration Statement pursuant to this
Section 2(A) as the Commission indicates, either orally or in writing, that
it has no further comments with respect to such Registration Statement or that
it is willing to entertain appropriate requests for acceleration of
effectiveness of such Registration Statement, the Company shall promptly, and
in
no event later than two (2) business days after receipt of such indication
from
the Commission, request that the effectiveness of such Registration Statement
be
accelerated within forty-eight (48) hours of the Commission’s receipt of such
request. The Company shall notify the Holder by written notice that such
Registration Statement has been declared effective by the Commission within
24
hours of such declaration by the Commission.
(B) Eligibility
for Use of Form S-3 or an SB-2.
The
Company agrees that at such time as it meets all the requirements for the use
of
a Securities Act Registration Statement on Form S-3 or SB-2, it shall file all
reports and information required to be filed by it with the Commission in a
timely manner and take all such other action so as to maintain such eligibility
for the use of such form.
(C) Additional
Registration Statement.
In the
event the Current Market Price declines to a price per share the result of
which
is that the Company cannot satisfy its conversion obligations to Holder
hereunder, the Company shall, to the extent required by the Securities Act
(because the additional shares were not covered by the Registration Statement
filed pursuant to Section 2(a)), as reasonably determined by the Holder, file
an
additional Registration Statement with the Commission for such additional number
of Registrable Securities as would be issuable upon conversion of the Debenture
(the “Additional
Registrable Securities”)
in
addition to those previously registered. The Company shall use its best efforts
to cause the Commission to declare such Registration Statement effective under
the Securities Act as promptly as practicable but not later than the Deadline.
The Company shall not include any other securities in the Registration Statement
relating to the offer and sale of such Additional Registrable
Securities.
(D) Piggyback
Registration Rights.(i)If
the
Company proposes to register any of its warrants, Common Stock or any other
shares of common stock of the Company under the Securities Act (other than
a
registration (A) on Form S-8 or S-4 or any successor or similar forms,
(B) relating to Common Stock or any other shares of common stock of the
Company issuable upon exercise of employee share options or in connection with
any employee benefit or similar plan of the Company or (C) in connection
with a direct or indirect acquisition by the Company of another Person or any
transaction with respect to which Rule 145 (or any successor provision) under
the Securities Act applies), whether or not for sale for its own account, it
will each such time, give prompt written notice at least 20 days prior to the
anticipated filing date of the registration statement relating to such
registration to each Investor, which notice shall set forth such Investor’s
rights under this Section 2(D) and shall offer such Investor the
opportunity to include in such registration statement such number of Registrable
Securities as such Investor may request. Upon the written request of any
Investor made within 10 days after the receipt of notice from the Company (which
request shall specify the number of Registrable Securities intended to be
disposed of by such Investor), the Company will use its best efforts to effect
the registration under the Securities Act of all Registrable Securities that
the
Company has been so requested to register by each Investor, to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered; provided,
however,
that
(A) if such registration involves a Public Offering, each Investor must
sell its Registrable Securities to any underwriters selected by the Company
with
the consent of such Investor on the same terms and conditions as apply to the
Company and (B) if, at any time after giving written notice of its
intention to register any Registrable Securities pursuant to this Section 2
and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register such Registrable Securities, the Company shall give written notice
to
each Investor and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration. The Company’s
obligations under this Section 2(D) shall terminate on the date that the
registration statement to be filed in accordance with Section 2(A) is declared
effective by the Commission.
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(ii) If
a
registration pursuant to this Section 2(D) involves a Public Offering and the
managing underwriter thereof advises the Company that, in its view, the number
of shares of Common Stock that the Company and the Investors intend to include
in such registration exceeds the largest number of shares of Common Stock that
can be sold without having an adverse effect on such Public Offering (the
“Maximum
Offering Size”),
the
Company will include in such registration only such number of shares of Common
Stock as does not exceed the Maximum Offering Size, and the number of shares
in
the Maximum Offering Size shall be allocated among the Company, the Investors
and any other sellers of Common Stock in such Public Offering (“Third-Party
Sellers”),
first,
pro rata
among the Investors until all the shares of Common Stock originally proposed
to
be offered for sale by the Investors have been allocated, and second,
pro rata
among the Company and any Third-Party Sellers, in each case on the basis of
the
relative number of shares of Common Stock originally proposed to be offered
for
sale under such registration by each of the Investors, the Company and the
Third-Party Sellers, as the case may be. If as a result of the proration
provisions of this Section 2(D)(ii), any Investor is not entitled to include
all
such Registrable Securities in such registration, such Investor may elect to
withdraw its request to include any Registrable Securities in such registration.
With respect to registrations pursuant to this Section 2(D), the number of
securities required to satisfy any underwriters’ over-allotment option shall be
allocated among the Company, the Investors and any Third Party Seller pro rata
on the basis of the relative number of securities offered for sale under such
registration by each of the Investors, the Company and any such Third Party
Sellers before the exercise of such over-allotment option.
3. Obligations
of the Company
In
connection with the registration of the Registrable Securities, the Company
shall:
(A) Promptly
(i) prepare and file with the Commission such amendments (including
post-effective amendments) to the Registration Statement and supplements to
the
Prospectus as may be necessary to keep the Registration Statement continuously
effective and in compliance with the provisions of the Securities Act applicable
thereto so as to permit the Prospectus forming part thereof to be current and
useable by Investors for resales of the Registrable Securities for a period
of
two (2) years from the date on which the Registration Statement is first
declared effective by the Commission (the “Effective
Time”)
or such
shorter period that will terminate when all the Registrable Securities covered
by the Registration Statement have been sold pursuant thereto in accordance
with
the plan of distribution provided in the Prospectus, transferred pursuant to
Rule 144 under the Securities Act or otherwise transferred in a manner that
results in the delivery of new securities not subject to transfer restrictions
under the Securities Act (the “Registration
Period”)
and
(ii) take all lawful action such that each of (A) the Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, not misleading
and (B) the Prospectus forming part of the Registration Statement, and any
amendment or supplement thereto, does not at any time during the Registration
Period include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
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(B) During
the Registration Period, comply with the provisions of the Securities Act with
respect to the Registrable Securities of the Company covered by the Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
Investors as set forth in the Prospectus forming part of the Registration
Statement;
(C) (i) Prior
to the filing with the Commission of any Registration Statement (including
any
amendments thereto) and the distribution or delivery of any Prospectus
(including any supplements thereto), provide (A) draft copies thereof to
one counsel chosen by the Investors and give consideration to include in such
documents all such comments as the Investors’ counsel reasonably may propose and
(B) to the counsel for the Investors a copy of the accountant’s consent
letter to be included in the filing and (ii) furnish to each Investor whose
Registrable Securities are included in the Registration Statement and the
Investor’s legal counsel (A) promptly after the same is prepared and
publicly distributed, filed with the Commission, or received by the Company,
one
copy of the Registration Statement, each Prospectus, and each amendment or
supplement thereto and (B) such number of copies of the Prospectus and all
amendments and supplements thereto and such other documents, as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor;
(D) (i) Register
or qualify the Registrable Securities covered by the Registration Statement
under the securities or “blue sky” laws of the State of California,
(ii) prepare and file in such jurisdiction such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at
all
times during the Registration Period, (iii) take all such other lawful
actions as may be necessary to maintain such registrations and qualifications
in
effect at all times during the Registration Period and (iv) take all such
other lawful actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdiction; provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(D), (B) subject itself
to general taxation in any such jurisdiction or (C) file a general consent
to
service of process in any such jurisdiction;
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(E) As
promptly as practicable after becoming aware of such event, notify each Investor
of the occurrence of any event, as a result of which the Prospectus included
in
the Registration Statement, as then in effect, includes an untrue statement
of a
material fact or omits to state a material fact required to be stated therein
or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and promptly prepare an amendment to
the
Registration Statement and supplement to the Prospectus to correct such untrue
statement or omission, and deliver a number of copies of such supplement and
amendment to each Investor as such Investor may reasonably request;
(F) As
promptly as practicable after becoming aware of such event, notify each Investor
who holds Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance by the Commission of any
stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time and take all lawful action to effect
the
withdrawal, rescission or removal of such stop order or other
suspension;
(G) Cause
all
the Registrable Securities covered by the Registration Statement to qualify
for
trading in the over the counter market via the “pink sheets” or otherwise be
listed on the principal national securities exchange, and included in an
inter-dealer quotation system of a registered national securities association,
on or in which securities of the same class or series issued by the Company
are
then listed or included;
(H) Maintain
a transfer agent and registrar, which may be a single entity, for the
Registrable Securities not later than the effective date of the Registration
Statement;
(I) Cooperate
with the Investors who hold Registrable Securities being offered to facilitate
the timely preparation and delivery of certificates for the Registrable
Securities to be offered pursuant to the registration statement and enable
such
certificates for the Registrable Securities to be in such denominations or
amounts, as the case may be, as the Investors reasonably may request and
registered in such names as the Investor may request; and, within three (3)
business days after a registration statement which includes Registrable
Securities is declared effective by the Commission, deliver and cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such registration statement) an appropriate
instruction and, to the extent necessary, an opinion of such
counsel;
(J) Take
all
such other lawful actions reasonably necessary to expedite and facilitate the
disposition by the Investors of their Registrable Securities in accordance
with
the intended methods therefor provided in the Prospectus which are customary
under the circumstances;
(K) Make
generally available to its security holders as soon as practicable, but in
any
event not later than three (3) months after (i) the effective date (as defined
in Rule 158(c) under the Securities Act) of the Registration Statement and
(ii)
the effective date of each post-effective amendment to the Registration
Statement, as the case may be, an earnings statement of the Company and its
subsidiaries complying with Section 11 (a) of the Securities Act and the rules
and regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);
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(L) In
the
event of an underwritten offering, promptly include or incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
such information as the managers reasonably agree should be included therein
and
to which the Company does not reasonably object and make all required filings
of
such Prospectus supplement or post-effective amendment as soon as practicable
after it is notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment;
(M) (i) Make
reasonably available for inspection by counsel to the Investors, any underwriter
participating in any disposition pursuant to the Registration Statement, and
any
attorney, accountant or other agent retained by such underwriter all relevant
financial and other records, pertinent corporate documents and properties of
the
Company and its subsidiaries, and (ii) cause the Company’s officers,
directors and employees to supply all information reasonably requested by such
underwriter, attorney, accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence examinations;
provided,
however,
that
all records, information and documents that are designated in writing by the
Company, in good faith, as confidential, proprietary or containing any material
nonpublic information shall be kept confidential by such Investors and any
such
underwriter, attorney, accountant or agent (pursuant to an appropriate
confidentiality agreement in the case of any such holder or agent), unless
such
disclosure is made pursuant to judicial process in a court proceeding (after
first giving the Company an opportunity promptly to seek a protective order
or
otherwise limit the scope of the information sought to be disclosed) or is
required by law, or such records, information or documents become available
to
the public generally or through a third party not in violation of an
accompanying obligation of confidentiality; and provided,
further,
that,
if the foregoing inspection and information gathering would otherwise disrupt
the Company’s conduct of its business, such inspection and information gathering
shall, to the maximum extent possible, be coordinated on behalf of the Investors
and the other parties entitled thereto by one firm of counsel designated by
and
on behalf of the majority in interest of Investors and other
parties;
(N) In
connection with any underwritten offering, make such representations and
warranties to the Investors participating in such underwritten offering and
to
the managers, in form, substance and scope as are customarily made by the
Company to underwriters in secondary underwritten offerings;
(O) In
connection with any underwritten offering, obtain opinions of counsel to the
Company (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managers) addressed to the underwriters, covering
such matters as are customarily covered in opinions requested in secondary
underwritten offerings (it being agreed that the matters to be covered by such
opinions shall include, without limitation, as of the date of the opinion and
as
of the Effective Time of the Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence, to such
counsel’s knowledge, from the Registration Statement and the Prospectus,
including any documents incorporated by reference therein, of an untrue
statement of a material fact or the omission of a material fact required to
be
stated therein or necessary to make the statements therein (in the case of
the
Prospectus, in light of the circumstances under which they were made) not
misleading, subject to customary limitations);
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(P) In
connection with any underwritten offering, obtain “cold comfort” letters and
updates thereof from the independent public accountants of the Company (and,
if
necessary, from the independent public accountants of any subsidiary of the
Company or of any business acquired by the Company, in each case for which
financial statements and financial data are, or are required to be, included
in
the Registration Statement), addressed to each underwriter participating in
such
underwritten offering (if such underwriter has provided such letter,
representations or documentation, if any, required for such cold comfort letter
to be so addressed), in customary form and covering matters of the type
customarily covered in “cold comfort” letters in connection with secondary
underwritten offerings;
(Q) In
connection with any underwritten offering, deliver such documents and
certificates as may be reasonably required by the managers, if any,
and
(R) In
the
event that any broker-dealer registered under the Exchange Act shall be an
“Affiliate”
(as
defined in Rule 2729(b)(1) of the rules and regulations of the National
Association of Securities Dealers, Inc. (the “NASD
Rules”)
(or any
successor provision thereto)) of the Company or has a “conflict
of interest”
(as
defined in Rule 2720(b)(7) of the NASD Rules (or any successor provision
thereto)) and such broker-dealer shall underwrite, participate as a member
of an
underwriting syndicate or selling group or assist in the distribution of any
Registrable Securities covered by the Registration Statement, whether as a
holder of such Registrable Securities or as an underwriter, a placement or
sales
agent or a broker or dealer in respect thereof, or otherwise, the Company shall
assist such broker-dealer in complying with the requirements of the NASD Rules,
including, without limitation, by (A) engaging a “qualified
independent underwriter”
(as
defined in Rule 2720(b)(15) of the NASD Rules (or any successor provision
thereto)) to participate in the preparation of the Registration Statement
relating to such Registrable Securities, to exercise usual standards of due
diligence in respect thereof and to recommend the public offering price of
such
Registrable Securities, (B) indemnifying such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 6 hereof and (C) providing such information to such broker-dealer
as may be required in order for such broker-dealer to comply with the
requirements of the NASD Rules.
4. Obligations
of the Investors
In
connection with the registration of the Registrable Securities, the Investors
shall have the following obligations:
(A) It
shall
be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held
by it
and the intended method of disposition of the Registrable Securities held by
it
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request;
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(B) Each
Investor by its acceptance of the Registrable Securities agrees to cooperate
with the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from
the
Registration Statement; and
(C) Each
Investor agrees that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in Section 3(E) or 3(F), it shall
immediately discontinue its disposition of Registrable Securities pursuant
to
the Registration Statement covering such Registrable Securities until such
Investor’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(E) and, if so directed by the Company, such Investor
shall deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in such
Investor’s possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
5. Expenses
of Registration
All
expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Section
3,
but including, without limitation, all registration, listing, and qualifications
fees, printing and engraving fees, accounting fees, and the fees and
disbursements of counsel for the Company shall be borne by the
Company.
6. Indemnification
and Contribution
(A) Indemnification
by the Company. The
Company shall indemnify and hold harmless each Investor (each such person being
sometimes hereinafter referred to as an “Indemnified
Person”)
from
and against any losses, claims, damages or liabilities, joint or several, to
which such Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon an untrue statement of a
material fact contained in any Registration Statement or an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, not misleading, or arise out of or
are
based upon an untrue statement of a material fact contained in any Prospectus
or
an 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 under which they were made, not misleading; and the Company hereby
agrees to reimburse such Indemnified Person for all reasonable legal and other
expenses incurred by them in connection with investigating or defending any
such
action or claim as and when such expenses are incurred; provided,
however,
that
the Company shall not be liable to any such Indemnified Person in any such
case
to the extent that any such loss, claim, damage or liability arises out of
or is
based upon (i) an untrue statement or alleged untrue statement made in, or
an
omission or alleged omission from, such Registration Statement or Prospectus
in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein or (ii) in the
case
of the occurrence of an event of the type specified in Section 3(E), the use
by
the Indemnified Person of an outdated or defective Prospectus after the Company
has provided to such Indemnified Person an updated Prospectus correcting the
untrue statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage or liability.
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(B) Indemnification
by Investors.Each
Investor shall severally indemnify and hold harmless the Company from and
against any losses, claims, damages or liabilities, joint or several, to which
the Company may become subject under the Securities Act or otherwise, insofar
as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement of a material fact provided
by such Investor that is contained in any Registration Statement, or arise
out
of an omission or alleged omission by such Investor to state therein a material
fact concerning or known to such Investor that is required to be stated therein
or is necessary to make the statements therein, not misleading, or arise out
of
or are based upon an untrue statement of a material fact provided by such
Investor contained in any Prospectus, or arise out of an omission or alleged
omission or alleged omission by such Investor to state therein a material fact
concerning or known to such Investor that is required to be stated therein
or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Investor hereby agrees
to
reimburse the Company for all reasonable legal and other expenses incurred
by it
in connection with investigating or defending any such action or claim as and
when such expenses are incurred; provided, however, that no Investor shall
be
liable to the Company in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement made in, or an omission or alleged omission from,
such
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished by the Company or another Investor expressly
for
use therein.
(C) Notice
of Claims, etc.
Promptly
after receipt by a party seeking indemnification pursuant to this Section 6
(an “Indemnified
Party”)
of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a “Claim”),
the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 6 is being sought (the “Indemnifying
Party”)
of the
commencement thereof; but the omission to so notify the Indemnifying Party
shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of
any
Claim by the Indemnifying Party, the Indemnified Party shall have the right
to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees, costs
and expenses, (y) the Indemnified Party and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available
to
the Indemnifying Party or (z) the Indemnifying Party shall have failed to employ
legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If
the
Indemnified Party employs separate legal counsel in circumstances other than
as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of
such
legal counsel shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in connection with any Claim
in the same jurisdiction, be liable for the fees and expenses of more than
one
firm of counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnified Party shall not, without the prior written consent
of
the Indemnifying Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that
does
not include an unconditional release of the Indemnifying Party from all
liabilities with respect to such Claim or judgment.
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(D) Contribution.
If the
indemnification provided for in this Section 6 is unavailable to or insufficient
to hold harmless an Indemnified Person under subsection (A) above in respect
of
any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as
is
appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault
of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such Indemnifying Party or by such Indemnified Party,
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 6(D) were determined by pro rata allocation (even if the Investors
or
any underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this Section 6(D). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities (or actions
in
respect thereof) referred to above shall be deemed to include any legal or
other
fees or expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. No person guilty
of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Investors
and any underwriters in this Section 6(D) to contribute shall be several in
proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(E) Notwithstanding
any other provision of this Section 6, in no event shall any (i) Investor be
required to undertake liability to any person under this Section 6 for any
amounts in excess of the dollar amount of the proceeds to be received by such
Investor from the sale of such Investor’s Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) pursuant
to
any Registration Statement under which such Registrable Securities are to be
registered under the Securities Act and (ii) underwriter be required to
undertake liability to any Person hereunder for any amounts in excess of the
aggregate discount, commission or other compensation payable to such underwriter
with respect to the Registrable Securities underwritten by it and distributed
pursuant to the Registration Statement.
(F) The
obligations of the Company under this Section 6 shall be in addition to any
liability which the Company may otherwise have to any Indemnified Person and
the
obligations of any Indemnified Person under this Section 6 shall be in addition
to any liability which such Indemnified Person may otherwise have to the
Company. The remedies provided in this Section 6 are not exclusive and shall
not
limit any rights or remedies which may otherwise be available to an indemnified
party at law or in equity.
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7. Rule
144
With
a
view to making available to the Investors the benefits of Rule 144 under the
Securities Act or any other similar rule or regulation of the Commission that
may at any time permit the Investors to sell securities of the Company to the
public without registration (“Rule
144”),
the
Company agrees to use its best efforts to:
(1) comply
with the provisions of paragraph (c) (1) of Rule 144 and
(2) file
with
the Commission in a timely manner all reports and other documents required
to be
filed by the Company pursuant to Section 13 or 15(d) under the Exchange Act;
and, if at any time it is not required to file such reports but in the past
had
been required to or did file such reports, it will, upon the request of any
Investor, make available other information as required by, and so long as
necessary to permit sales of, its Registrable Securities pursuant to
Rule 144.
8. Assignment
The
rights to have the Company register Registrable Securities pursuant to this
Agreement shall be automatically assigned by the Investors to any permitted
transferee of all or any portion of such Registrable Securities (or all or
any
portion of the Debenture of the Company which is convertible into such
securities) only if (a) the Investor agrees in writing with the transferee
or
assignee to assign such rights, and a copy of such agreement is furnished to
the
Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) immediately following such transfer or assignment,
the securities so transferred or assigned to the transferee or assignee
constitute Restricted Securities and (d) at or before the time the Company
received the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all
of
the provisions contained herein.
9. Amendment
and Waiver
Any
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively
or
prospectively), only with the written consent of the Company and Investors
who
hold a majority-in-interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 9 shall be binding upon each
Investor and the Company.
10. Changes
in Common Stock
If,
and
as often as, there are any changes in the Common Stock by way of stock split,
stock dividend, reverse split, combination or reclassification, or through
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof, as may
be
required, so that the rights and privileges granted hereby shall continue with
respect to the Common Stock as so changed.
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11. Miscellaneous
(A) A
person
or entity shall be deemed to be a holder of Registrable Securities whenever
such
person or entity owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
(B) If,
after
the date hereof and prior to the Commission declaring the Registration Statement
to be filed pursuant to Section 2(a) effective under the Securities Act, the
Company grants to any Person any registration rights with respect to any Company
securities which are more favorable to such other Person than those provided
in
this Agreement, then the Company forthwith shall grant (by means of an amendment
to this Agreement or otherwise) identical registration rights to all Investors
hereunder.
(C) Except
as
may be otherwise provided herein, any notice or other communication or delivery
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by telecopier machine or by a nationally recognized
overnight courier service, and shall be deemed given when so delivered
personally, or by telecopier machine or overnight courier service as
follows:
| (1) | If to the Company, to: |
|
3DIcon
Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
|
|
| With a copy to: | |
|
▇▇▇▇
▇. ▇’▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇,
▇’▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:
▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
|
|
| (2) | If to the Investor, to: |
|
Golden
Gate Investors, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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(3) If
to any
other Investor, at such address as such Investor shall have provided in writing
to the Company.
The
Company, the Holder or any Investor may change the foregoing address by notice
given pursuant to this Section 11(C).
(D) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
(E) This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of California. Each of the parties consents to the jurisdiction of
the
federal courts whose districts encompass any part of the City of San Diego
or
the state courts of the State of California sitting in the City of San Diego
in
connection with any dispute arising under this Agreement and hereby waives,
to
the maximum extent permitted by law, any objection including any objection
based
on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions.
(F) Should
any party hereto employ an attorney for the purpose of enforcing or construing
this Agreement, or any judgment based on this Agreement, in any legal proceeding
whatsoever, including insolvency, bankruptcy, arbitration, declaratory relief
or
other litigation, the prevailing party shall be entitled to receive from the
other party or parties thereto reimbursement for all reasonable attorneys'
fees
and all reasonable costs, including but not limited to service of process,
filing fees, court and court reporter costs, investigative costs, expert witness
fees, and the cost of any bonds, whether taxable or not, and that such
reimbursement shall be included in any judgment or final order issued in that
proceeding. The "prevailing party" means the party determined by the court
to
most nearly prevail and not necessarily the one in whose favor a judgment is
rendered.
(G) The
remedies provided in this Agreement are cumulative and not exclusive of any
remedies provided by law. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means
to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
that
may be hereafter declared invalid, illegal, void or unenforceable.
(H) The
Company shall not enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. The Company
is not currently a party to any agreement granting any registration rights
with
respect to any of its securities to any person which conflicts with the
Company’s obligations hereunder or gives any other party the right to include
any securities in any Registration Statement filed pursuant hereto, except
for
such rights and conflicts as have been irrevocably waived. Without limiting
the
generality of the foregoing, without the written consent of the holders of
a
majority in interest of the Registrable Securities, the Company shall not grant
to any person the right to request it to register any of its securities under
the Securities Act unless the rights so granted are subject in all respect
to
the prior rights of the holders of Registrable Securities set forth herein,
and
are not otherwise in conflict or inconsistent with the provisions of this
Agreement. The restrictions on the Company’s rights to grant registration rights
under this paragraph shall terminate on the date the Registration Statement
to
be filed pursuant to Section 2(A) is declared effective by the
Commission.
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(I) This
Agreement, the Securities Purchase Agreement, and the Debenture, of even date
herewith among the Company and the Holder constitute the entire agreement among
the parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. These Agreements supersede all prior agreements and
undertakings among the parties hereto with respect to the subject matter
hereof.
(J) Subject
to the requirements of Section 8 hereof, this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto.
(K) All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
(L) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning thereof.
(M) This
Agreement may be executed in counterparts, each of which shall be deemed an
original but both of which shall constitute one and the same agreement. A
facsimile transmission of this signed Agreement shall be legal and binding
on
the parties hereto.
IN
WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be
executed and delivered on the date first above written.
| 3DIcon Corporation | ||
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| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
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Name: ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Title:
Chief Executive Officer
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Golden
Gate Investors, Inc.
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| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇ | |
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Name:
▇▇▇▇▇▇ ▇▇▇▇
Title:
Portfolio Manager, Vice President
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