Exhibit No. 17
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
Form 10-KSB/ 2000
File No. 0-26917
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 5,
2000, (the "Agreement") is made by and between the holders of
Registrable Securities (as defined herein) and ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇,
Inc., a Delaware corporation (the "Company").
For good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall
have the meanings ascribed to them below:
"Business Day" means any day other than a day on which
banks are authorized or required to be closed in the State of New
York.
"Commission" means the United States Securities and
Exchange Commission, or any other federal agency at the time
administering the Securities Act.
"Common Stock" means the common stock, par value
$0.0001 per share, of the Company, as it may exist from time to
time.
"Convertible Preferred Stock" means the Company's
Series B Convertible Preferred Stock, par value $0.0001 per
share.
"Initial Registration" means the Initial Registration
as defined in Section 2.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar Federal statute, and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Holder" means any person who now holds or shall
hereafter acquire and hold Registrable Securities.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency
or political subdivision thereof.
"Piggy-Back Registration" means a Piggy-Back
Registration as defined in Section 2.2.
"Preferred Stock Event of Default" means a Preferred
Stock Event of Default as defined in the Series B Certificate of
Designations.
"Private Placement" means the limited offering of
Units, each Unit consisting of one share of Convertible Preferred
Stock and five Common Stock purchase warrants described in the
Company's Confidential Limited Offering Memorandum dated
September 21, 2000.
"Prospectus" means the prospectus included in any
Registration Statement (including without limitation, a
prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act),
as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the
securities
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covered by such Registration Statement, and all other
amendments and supplements to the prospectus, including post-
effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such prospectus.
"Records" means the records of the Company as set forth
in Section 3.1.
"Registrable Securities" means the shares of Common
Stock issued or issuable upon conversion of the Convertible
Preferred Stock and the Common Stock issued or issuable upon
exercise of the Warrants, until (i) a Registration Statement
covering such shares of Common Stock has been declared effective
by the Commission and such shares of Common Stock have been
disposed of pursuant to such effective Registration Statement, or
(ii) such shares of Common Stock are sold under circumstances in
which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are
met, or (iii) such shares of Common Stock have been otherwise
transferred and the Company has delivered a new certificate or
other evidence of ownership for such Common Stock not bearing a
restrictive legend and not subject to any stop transfer or
similar restrictive order and all of such Common Stock may be
resold by the person receiving such certificate without complying
with the registration requirements of the Securities Act.
"Registration Statement" means any registration
statement of the Company which covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
"Required Holders" means the Holders of at least two
thirds of the Registrable Securities.
"Securities Act" means the Securities Act of 1933 or
any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
"Selling Holder" means a Holder who is selling
Registrable Securities pursuant to a Registration Statement under
the Securities Act.
"Selling Holders Counsel" means the counsel selected to
represent the Selling Holders as set forth in Section 3.1
"Series B Certificate of Designations" means the
Certificate of Designations under which the terms, powers,
designations, preferences, rights, qualifications, restrictions
and limitations of the Convertible Preferred Stock were
established.
"Target Effective Period" means the period a
Registration Statement is required to be effective as set forth
in Section 2.1.
"Underwriter" means a securities dealer who purchases
any Registrable Securities as principal in an underwritten
offering and not as part of such dealer's market-making
activities.
"Warrants" means the Common Stock purchase warrants of
the Company sold as part of the Units in the Private Placement,
600,000 Common Stock purchase warrants issued in connection with
sale of the Company's 18% per annum promissory notes due December
31, 2000, in the principal amount of $1,200,000, the Common Stock
purchase warrants issued to First level as part of its selling
agent compensation arising from the Private Placement, warrants
to purchase 32,500 shares of Common Stock issued to First Level
as compensation for bridge financing raised by First level in
June 2000, and 462,500 Common Stock purchase warrants issued with
promissory notes issued by the Company from May through June
2000.
ARTICLE 2.
REGISTRATION RIGHTS
SECTION 2.1. Initial Registration.
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(a) Registration Obligation. During the 90 day period
following the date of the final closing of the sale of Units by
the Company in the Private Placement, the Company shall file a
Registration statement for the offer and sale of the Registrable
Securities under the Securities Act (such registration being
hereinafter referred to as a "Initial Registration"). The
Company shall use its best efforts to have the Initial
Registration declared effective by the Commission as soon as
possible, but in any event no later than six months following the
date of the final closing of the sale of Units by the Company in
the Private Placement.
(b) Effective Registration. A registration will not
be deemed to have been effected as the Initial Registration
unless the Registration Statement relating thereto has been
declared effective by the Commission and the Company has complied
in all material respects with its obligations under this
Agreement with respect thereto; provided that if, after the
Registration Statement has become effective, the offering and/or
sale of Registrable Securities pursuant to such Registration
Statement is or becomes the subject of any stop order, injunction
or other order or requirement of the Commission or any other
governmental or administrative agency, or if any court or other
governmental or quasi-governmental agency prevents or otherwise
limits the offer and/or sale of the Registrable Securities
pursuant to the Registration Statement, other than in each case
primarily as a result of acts or omissions of the Holders or any
agent thereof, such registration will be deemed not to have been
effected. If (i) the Initial Registration or (ii) the
Registration Statement relating to the Initial Registration does
not remain effective for a period of at least one year beyond the
effective date thereof or, with respect to an underwritten
offering of Registrable Securities, until 45 days after the
commencement of the distribution by the Holders of the
Registrable Securities included in such Registration Statement
(such periods being referred to herein as the "Target Effective
Periods"), then the Company shall continue to be obligated to
effect such Registration pursuant to this Section 2.1. The
Holders shall be permitted to withdraw all or any part of the
Registrable Securities from a Registration Statement at any time
prior to the effective date of such Initial Registration
Statement; provided that in the event of such withdrawal, the
Company shall have no obligation to effect an Initial
Registration covering the Registrable Securities that are
withdrawn.
(c) Selection of Underwriter. If the Required Holders
participating in the Initial Registration so elect, the offering
of such Registrable Securities pursuant to such Initial
Registration shall be in the form of an underwritten offering.
The Holders making such election shall select, subject to the
approval of the Company, which approval will not be unreasonably
withheld, one or more nationally recognized firms of investment
bankers to act as the lead managing Underwriter or Underwriters
in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the
offering.
SECTION 2.2. Piggy-Back Registration. If any of the
Registrable Securities issuable on exercise of the Warrants
remain unsold after expiration of the Target Exercise Periods and
thereafter the Company proposes to file a Registration Statement
under the Securities Act with respect to an offering by the
Company for its own account or for the account of any of its
respective security holders (other than (x) a Registration
Statement on Form S-8 (or any substitute form that may be adopted
by the Commission), or (y) a Registration Statement on Form S-4
(or any substitute form that may be adopted by the Commission);
provided that such Registration Statement on Form S-4 does not
include any securities other than the securities to be issued by
the Company in connection with a transaction that is referenced
in clauses (1) through (3) of the General Instructions A.1. of
Form S-4 (as such General Instructions are currently in effect)),
then the Company shall give written notice of such proposed
filing to the Holders as soon as practicable (but in no event
less than 30 days before the anticipated filing date), and such
notice shall offer such Holders the opportunity to register such
number of Registrable Securities as each such Holder may request
(which request shall specify the Registrable Securities intended
to be disposed of by such Holder and the intended method(s) of
distribution thereof and shall also state the firm intent of the
Holder to offer Registrable Securities for sale) (a "Piggy-Back
Registration"). The Company shall use all reasonable efforts to
cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities
requested to be included in a Piggy-Back Registration to be
included on the same terms and conditions as any similar
securities of the Company or any other security holder included
therein and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method of
distribution thereof. Any Holder shall have the right to
withdraw its request for inclusion of its Registrable Securities
in any Registration Statement pursuant to this Section 2.2 by
giving written notice to the Company of its request to withdraw.
The Company may withdraw a Piggy-Back Registration at any time
prior to the time it becomes effective.
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No failure to effect a registration under this Section
2.2 and to complete the sale of Registrable Securities in
connection therewith shall relieve the Company of any other
obligation under this Agreement (including, without limitation,
the Company's obligations under Sections 3.2 and 4.1).
SECTION 2.3. Reduction of Offering.
(a) Initial Registration. The Company may include in a
Initial Registration pursuant to Section 2.1 securities of the
same class as the Registrable Securities for the account of the
Company and any other Persons who hold securities of the same
class as the Registrable Securities on the same terms and
conditions as the Registrable Securities to be included therein;
provided, however, that if the offering is not underwritten, no
other Person, including the Company, shall be permitted to offer
securities under any such Initial Registration unless the
Required Holders participating in the offering consent to the
inclusion of such shares therein.
(b) Piggy-Back Registration. (i) Notwithstanding
anything contained herein, if the managing Underwriter or
Underwriters of any underwritten offering described in Section
2.2 have informed, in writing, the Holders requesting inclusion
in such offering that it is their opinion that the total number
of shares which the Company, Holders and any other Persons
holding securities of the same class as the Registrable
Securities desiring to participate in such registration intend to
include in such offering is such as to materially and adversely
affect the success of such offering, then, the Company will
include in such registration (y) first, all the shares the
Company offered for its own account, if any, (z) then, if
additional shares may be included in such registration without
materially and adversely affecting the success of such offering,
the number of shares offered by the Holders and such other
holders of securities of the same class as the Registrable
Securities whose piggy-back registration rights may not be
reduced without violating their contractual rights (provided such
contractual rights were in existence prior to the date of this
Agreement), on a pro rata basis in proportion to the relative
number of Registrable Securities of the holders (including the
Holders) participating in such registration.
(ii) If the managing Underwriter or Underwriters
of any underwritten offering described in Section 2.2 notify the
Holders requesting inclusion in such offering that the kind of
securities that the Holders, the Company and any other Persons
desiring to participate in such registration intend to include in
such offering is such as to materially and adversely affect the
success of such offering, (x) the Registrable Securities to be
included in such offering shall be reduced as described in clause
(i) above or (y) if such reduction would, in the judgment of the
managing Underwriter or Underwriters, be insufficient to
substantially eliminate the adverse effect that inclusion of the
Registrable Securities requested to be included would have on
such offering, such Registrable Securities will be excluded from
such offering.
(c) If, as a result of the proration provisions of
this Section 2.3, any Holder shall not be entitled to include all
Registrable Securities in a Piggy-Back Registration that such
Holder has requested to be included, such Holder may elect to
withdraw his request to include Registrable Securities in such
registration.
SECTION 2.4. Subsequent Registration Rights. From
and after the date of this Agreement, the Company shall not,
without the prior written consent of the Required Holders, enter
into any other agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or
prospective holder (a) to include such securities in any
registration filed under Section 2.2 or 2.3(b) hereof, unless
under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only
to the extent that the inclusion of its securities will not
reduce the amount of the Registrable Securities of the Holders
which is included or (b) to make a Initial Registration which
could result in such registration statement being declared
effective prior to the earlier of the dates set forth in
subsection 3.1(a).
. ARTICLE 3.
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever the
Company is required to effect or cause the registration of the
offer and sale of Registrable Securities pursuant to Section 2.1
or 2.2 hereof, the Company will use its best efforts to effect
the registration of the offer and the sale of such Registrable
Securities in accordance with the intended method(s) of
disposition thereof as quickly as practicable, and in connection
with any such request:
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(a) The Company promptly will prepare and file with
the Commission a Registration Statement with respect to the offer
and sale of such securities and use its best efforts to cause
such Registration Statement to become and remain effective until
the completion of the distribution contemplated thereby;
provided, however, the Company shall not be required to keep such
Registration Statement effective for more than one year (or such
shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold,
but not prior to the expiration of the applicable period referred
to in Section 4(3) of the Securities Act and Rule 174 thereunder,
if applicable).
(b) The Company promptly will prepare and file with
the Commission such amendments and post-effective amendments to
the Registration Statement as may be necessary to keep such
Registration Statement effective for as long as such registration
is required to remain effective pursuant to the terms hereof;
cause the Prospectus to be supplemented by any required
Prospectus supplement, and, as so supplemented, to be filed
pursuant to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act applicable to it with
respect to the disposition of all Registrable Securities covered
by such Registration Statement during the applicable period in
accordance with the intended methods of disposition by the
Selling Holders set forth in such Registration Statement or
supplement to the Prospectus.
(c) The Company, at least ten (10) Business Days prior
to filing a Registration Statement or at least five (5) Business
Days prior to filing a Prospectus or any amendment or supplement
to such Registration Statement or Prospectus, will furnish to (i)
each Selling Holder and not more than one counsel representing
all Selling Holders ("Selling Holders Counsel"), to be selected
by a majority-in-interest of such Selling Holders, and (ii) each
Underwriter, if any, of the Registrable Securities covered by
such Registration Statement copies of such Registration Statement
as proposed to be filed, together with exhibits thereto, which
documents will be subject to review and approval by each of the
foregoing within five (5) Business Days after delivery (except
that such review and approval of any Prospectus or any amendment
or supplement to such Registration Statement or Prospectus must
be within three (3) Business Days after delivery), and
thereafter, furnish to such Selling Holders, Selling Holders
Counsel and Underwriters, if any, such number of conformed copies
of such Registration Statement, each amendment and supplement
thereto (in each case including all exhibits thereto and
documents incorporated by reference therein), the Prospectus
included in such Registration Statement (including each
preliminary Prospectus) and such other documents or information
as such Selling Holders, Selling Holders Counsel or Underwriters
may reasonably request in order to facilitate the disposition of
the Registrable Securities (it being understood that the Company
consents to the use of the Prospectus and any amendment or
supplement thereto by each Selling Holder and the Underwriters,
if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any
amendment or supplement thereto).
(d) The Company promptly will notify each Selling
Holder of (and in any event within 24 hours of the receipt 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 at the earliest possible moment if entered.
(e) On or prior to the date on which the Registration
Statement is declared effective, use its best efforts to register
or qualify such Registrable Securities under such other
securities or "blue sky" laws of such jurisdictions as any
Selling Holder, Selling Holders Counsel or Underwriter requests
and do any and all other acts and things which may be necessary
or advisable to enable such Selling Holder to consummate the
disposition in such jurisdictions of such Registrable Securities
owned by such Selling Holder; use its best efforts to keep each
such registration or qualification (or exemption therefrom)
effective during the period which the Registration Statement is
required to be kept effective; and use its best efforts to do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided that
the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (e), (B) subject
itself to taxation in any such jurisdiction, (C) consent to
general service of process in any such jurisdiction, (D) amend
its certificate of incorporation or bylaws or (E) require any
Person to escrow any securities they own in the Company.
(f) The Company will notify each Selling Holder,
Selling Holders Counsel and any Underwriter promptly (and in any
event within 24 hours) and (if requested by any such Person)
confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed
and, with respect to a Registration Statement or any post-
effective amendment, when the same has become effective, (ii) of
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any request by the Commission or any other federal or state
governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional
information to be included in any Registration Statement or
Prospectus or otherwise, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings for
that purpose, (iv) of the issuance by any state securities
commission or other regulatory authority of any order suspending
the qualification or exemption from qualification of any of the
Registrable Securities under state securities or "blue sky" laws
or the initiation of any proceedings for that purpose, and (v) of
the happening of any event which makes any statement made in a
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated by reference therein
untrue or which requires the making of any changes in such
Registration Statement, Prospectus or documents so that they will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements in the Registration Statement
and Prospectus not misleading in light of the circumstances in
which they were made; and, as promptly as practicable thereafter,
prepare and file with the Commission and furnish a supplement or
amendment to such Prospectus so that, as thereafter deliverable
to the buyers of such Registrable Securities, such Prospectus
will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(g) The Company will make generally available an
earnings statement satisfying the provisions of Section 11(a) of
the Securities Act no later than 90 days after the end of the 12-
month period beginning with the first day of the Company's first
fiscal quarter commencing after the effective date of a
Registration Statement, which earnings statement shall cover said
12-month period, and which requirement will be deemed to be
satisfied if the Company timely files complete and accurate
information on Forms 10-QSB, 10-KSB and 8-K under the Exchange
Act and otherwise complies with Rule 158 under the Securities
Act.
(h) If requested by the managing Underwriter or
Underwriters, Selling Holders Counsel, or any Selling Holder, the
Company will, unless otherwise advised by counsel, promptly
incorporate in a Prospectus supplement or post-effective
amendment such information as the managing Underwriter or
Underwriters requests, or Selling Holders Counsel requests, to be
included therein, including, without limitation, with respect to
the Registrable Securities being sold by such Selling Holder to
such Underwriter or Underwriters, the purchase price being paid
therefor by such Underwriter or Underwriters and with respect to
any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering, and promptly make all
required filings of such Prospectus supplement or post-effective
amendment.
(i) The Company will enter into customary agreements
reasonably satisfactory to the Company (including, if applicable,
an underwriting agreement in customary form and which is
reasonably satisfactory to the Company) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities (the
Selling Holders, at their option, may require that any or all of
the representations, warranties and covenants of the Company to
or for the benefit of such Underwriters also be made to and for
the benefit of such Selling Holders).
(j) The Company will make available to each Selling
Holder (and will deliver to their counsel) and each Underwriter,
if any, subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof,
copies of all correspondence between the Commission and the
Company, its counsel or auditors and will also make available for
inspection at reasonable times at the Company's offices by any
Selling Holder of such Registrable Securities, any Underwriter
participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other professional
retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively,
the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the
Company's officers and employees to supply all information
reasonably requested by any Inspectors in connection with such
registration statement.
(k) In connection with an underwritten offering, the
Company will participate, to the extent reasonably requested by
the managing Underwriter or Underwriters for the offering or the
Selling Holders, in reasonable and customary efforts to sell the
securities under the offering, including, without limitation,
participating in "road shows."
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(l) The Company, during the period when the Prospectus
is required to be delivered under the Securities Act, promptly
will file all documents required to be filed with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act.
(m) The Company, if requested by Selling Holders,
shall cause its outside legal counsel to deliver an opinion
relating to the Registrable Securities, in customary form to such
Selling Holders and any Underwriter therefor, cause its officers
to execute and deliver all customary documents and certificates
requested by any Underwriters of the Registrable Securities, and
cause its independent public accountants to provide to such
Selling Holders and any Underwriters therefor one or more comfort
letters in customary form.
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the
distribution of the Registrable Securities as the Company may
from time to time reasonably request and such other information
as may be legally required in connection with such registration
including, without limitation, all such information as may be
requested by the Commission or the National Association of
Securities Dealers, Inc.
Each Selling Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 3.1(f) hereof, such Selling Holder will
forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such Selling Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section
3.1(f) hereof, and, if so directed by the Company, such Selling
Holder will deliver to the Company all copies, other than
permanent file copies then in such Selling Holder's possession,
of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event
the Company shall give such notice, the Company shall extend the
period during which such Registration Statement shall be
maintained effective (including the period referred to in Section
3.1(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section
3.1(f) hereof to the date when the Company shall make available
to the Selling Holders covered by such Registration Statement a
Prospectus supplemented or amended to conform with the
requirements of Section 3.1(f) hereof.
SECTION 3.2. Registration Expenses. The Company
shall pay all expenses incident to the Company's performance of
or compliance with this Agreement including, without limitation:
(i) all registration and filing fees, (ii) the fees and expenses
of compliance with securities or blue sky laws (including fees
and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) all printing
and delivery expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties),
(v) the fees and expenses incurred in connection with the listing
or quotation, as appropriate, of the Registrable Securities, (vi)
the fees and disbursements of counsel for the Company and the
fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any special
audit or cold comfort letters), and (vii) the fees and expenses
of any special experts retained by the Company in connection with
such registration. The Company shall have no obligation to pay
any underwriting fees, discounts or commissions attributable to
the sale of Registrable Securities, the fees and expenses of
Selling Holders Counsel, and any of the expenses incurred by
Selling Holders which are not payable by the Company, such costs
to be borne by the Selling Holder or Selling Holders.
ARTICLE 4.
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The
Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each Selling Holder, its partners,
officers, directors, employees, advisors and agents, and each
Person, if any, who controls such Selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the partners, officers, directors,
employees and agents of such controlling Person (collectively,
the "Controlling Persons"), from and against any loss, claim,
damage, liability, attorneys' fees, cost or expense and costs and
expenses of investigating and defending any such claim
(collectively, the "Damages") and any action in respect thereof
to which such Selling Holder, its partners, officers, directors,
employees, advisors and agents, and any such Controlling Person
may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Damages (or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in any
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Registration Statement or Prospectus or any preliminary
Prospectus, or arise out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same are based upon information
furnished in writing to the Company by a Selling Holder expressly
for use therein, and shall reimburse each Selling Holder, its
partners, officers, directors, employees, advisors and agents,
and each such Controlling Person for any legal and other expenses
reasonably incurred by that Selling Holder, its partners,
officers, directors, employees, advisors and agents, or any such
Controlling Person in investigating or defending or preparing to
defend against any such Damages or proceedings; provided,
however, that the Company shall not be liable to any Selling
Holder or other indemnitee to the extent that any such Damages
arise out of or are based upon an untrue statement or omission
made in any preliminary Prospectus if (i) such Selling Holder
failed to send or deliver a copy of the final Prospectus with or
prior to the delivery of written confirmation of the sale by such
Selling Holder to the Person asserting the claim from which such
Damages arise in any case where such delivery of the Prospectus
(as amended or supplemented) is required by the Securities Act,
and (ii) the final Prospectus would have corrected such untrue
statement or such omission, where such failure to deliver the
Prospectus was not a result of non-compliance by the Company
under Section 3.1(f) of this Agreement. The Company also agrees
to indemnify any Underwriters of the Registrable Securities,
their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section
4.1.
SECTION 4.2. Indemnification by Selling Holders.
Each Selling Holder agrees, severally but not jointly, to
indemnify and hold harmless the Company, its officers, directors,
employees, advisors and agents and each Person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with
the partners, officers, directors, employees, advisors and agents
of such controlling Person, to the same extent as the foregoing
indemnity from the Company to such Selling Holder, but only with
reference to information related to such Selling Holder, or its
plan of distribution, furnished in writing by such Selling Holder
expressly for use in any Registration Statement or Prospectus, or
any amendment or supplement thereto, or any preliminary
Prospectus; provided, however, that such Selling Holder shall not
be liable in any such case to the extent that prior to the filing
of any such Registration Statement or Prospectus or amendment or
supplement thereto, such Selling Holder has furnished in writing
to the Company information expressly for use in such Registration
Statement or Prospectus or any amendment or supplement thereto
which corrected or made not misleading information previously
furnished to the Company. In no event shall the liability of any
Selling Holder be greater in amount than the dollar amount of the
proceeds received by such Selling Holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation. In case any action or proceeding shall be brought
against the Company or its officers, directors, employees,
advisors or agents or any such controlling Person or its
officers, directors, employees or agents, in respect of which
indemnity may be sought against such Selling Holder, such Selling
Holder shall have the rights and duties given to the Company, and
the Company or its officers, directors, employees or agents, or
such controlling Person, or its officers, directors, employees,
advisors or agents, shall have the rights and duties given to
such Selling Holder, by the preceding paragraph.
SECTION 4.3. Conduct of Indemnification Proceedings.
Promptly after receipt by any person in respect of which
indemnity may be sought pursuant to Section 4.1 or 4.2 (an
"Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such
indemnity may be sought (an "Indemnifying Party"), notify the
Indemnifying Party in writing of the claim or the commencement of
such action; provided that the failure to notify the Indemnifying
Party shall not relieve it from any liability which it may have
to an Indemnified Party otherwise than under Section 4.1 or 4.2
except to the extent of any actual prejudice resulting therefrom.
If any such claim or action shall be brought against an
Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate
therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the
defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defense of
such claim or action, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation;
provided that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and
its controlling Persons who may be subject to liability arising
out of any claim in respect of which indemnity may be sought by
the Indemnified Party against the Indemnifying Party, but the
fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) in the opinion of
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counsel to such
Indemnified Party, representation of both parties by the same
counsel would be inappropriate due to actual or potential
conflicts of interest between them, it being understood, however,
that the Indemnifying Party shall not, in connection with any one
such claim or action or separate but substantially similar or
related claims or actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all
Indemnified Parties. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all
liability arising out of such claim or proceeding. Whether or
not the defense of any claim or action is assumed by the
Indemnifying Party, such Indemnifying Party will not be subject
to any liability for any settlement made without its consent,
which consent will not be unreasonably withheld.
SECTION 4.4. Contribution. If the indemnification
provided for in this Article 4 is unavailable to the Indemnified
Parties in respect of any Damages referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages in such proportion
as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Selling Holders on the other
from the offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits but
also the relative fault of the Company on the one hand and the
Selling Holders on the other in connection with the statements or
omissions which resulted in such Damages, as well as any other
relevant equitable considerations. The relative fault of the
Company on the one hand and of each Selling Holder on the other
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not
be just and equitable if contribution pursuant to this Section
4.4 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as
a result of the Damages referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no Selling Holder shall be
required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such
Selling Holder were offered to the public exceeds the amount of
any damages which such Selling Holder has otherwise paid by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. Each
Selling Holder's obligations to contribute pursuant to this
Section 4.4 is several in the proportion that the proceeds of the
offering received by such Selling Holder bears to the total
proceeds of the offering received by all the Selling Holders and
not joint.
ARTICLE 5.
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten
Registrations. No Person may participate in any underwritten
registration hereunder unless such Person (a) agrees to sell such
Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to
approve such arrangements, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the
terms of such underwriting arrangements and these registration
rights.
SECTION 5.2. Rule 144. The Company agrees and will
use its best efforts to file any reports required to be filed by
it under the Securities Act and the Exchange Act (or, if the
Company is not required to file such reports, it will, upon the
request of any Holder, make publicly available other information
as long as necessary to permit sales under Rule 144 under the
Securities Act) and that it will take such further action as any
Holder may
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reasonably request, all to the extent required from
time to time to enable Holders to sell Registrable Securities
without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 5.3. Amendment and Modification. Any
provision of this Agreement may be waived, provided that such
waiver is set forth in a writing executed by the party against
whom the enforcement of such waiver is sought. This Agreement
may not be amended, modified or supplemented other than by a
written instrument signed by the Required Holders; provided,
however, that without the consent of all the Holders, no
amendment or modification which materially and adversely affects
the ability of such Holders to have the offer and sale of
securities registered hereunder may be effected. No course of
dealing between or among any Persons having any interest in this
Agreement will be deemed effective to modify, amend or discharge
any part of this Agreement or any rights or obligations of any
Person under or by reason of this Agreement.
SECTION 5.4. Successors and Assigns; Third Party
Beneficiaries; Entire Agreement. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit
of the parties hereto, each subsequent Holder and their
respective successors and assigns and executors, administrators
and heirs. Holders are intended third party beneficiaries of
this Agreement and this Agreement may be enforced by such
Holders. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
SECTION 5.5. Headings. Subject headings are included
for convenience only and shall not affect the interpretation of
any provisions of this Agreement.
SECTION 5.6. Notices. Any notice, demand, request,
waiver, or other communication under this Agreement shall be in
writing and shall be deemed to have been duly given on the date
of service if personally served or sent by telecopy, on the
business day after notice is delivered to a courier or mailed by
express mail if sent by courier delivery service or express mail
for next day delivery and on the third day after mailing if
mailed to the party to whom notice is to be given, by first class
mail, registered, return receipt requested, postage prepaid and
addressed as follows:
If to the Company to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Holder, to the Holder
at the most current address reflected
on the books and records of the Company.
SECTION 5.7. Severability. In the event that any one or
more of the immaterial provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or
unenforceable, the same shall not affect any other provision of
this Agreement, but this Agreement shall be construed in a manner
which, as nearly as possible, reflects the original intent of the
parties.
SECTION 5.8. No Prejudice. The terms of this Agreement
shall not be construed in favor of or against any party on
account of its participation in the preparation hereof.
SECTION 5.9. Words in Singular and Plural Form. Words
used in the singular form in this Agreement shall be deemed to
import the plural, and vice versa, as the sense may require.
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SECTION 5.10. Remedy for Breach. The Company hereby
acknowledges that in the event of any breach or threatened breach
by the Company of any of the provisions of this Agreement, the
Holder would have no adequate remedy at law and could suffer
substantial and irreparable damage. Accordingly, the Company
hereby agrees that, in such event, the Holder shall be entitled,
without the necessity of proving damages or posting bond, and
notwithstanding any election by any Holder to claim damages, to
obtain a temporary and/or permanent injunction, without proving a
breach therefor, to restrain any such breach or threatened breach
or to obtain specific performance of any such provisions, all
without prejudice to any and all other remedies which any Holder
may have at law or in equity.
IN WITNESS WHEREOF, the Company has executed this Agreement
as of the date first above written.
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
Name:
Title:
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