DEBENTURE REGISTRATION RIGHTS AGREEMENT
DEBENTURE
REGISTRATION
RIGHTS AGREEMENT
DEBENTURE
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of February 10, 2006,
by and between Eagle Broadband, Inc., a company organized under the laws of
state of Texas (the “Company”), and Dutchess Private Equities Fund, LP (the
“Holder”).
WHEREAS,
upon the terms and subject to the conditions of the Subscription Agreement
between the Holder and the Company (the “Subscription Agreement”), the Company
has agreed to issue and sell to the Holder convertible debentures of the Company
(the “Debentures”), which will be convertible into shares of the Company’s
common stock, $.001 par value per share (the “Common Stock”), of the Company.
WHEREAS,
to induce the Holder to execute and deliver the Subscription Agreement, Warrant
Agreement, Security Agreement, and the Debenture Agreement (collectively, the
“Transaction Documents”), the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws, with respect to the shares of
Common Stock issuable pursuant to the Subscription Agreement, Warrant Agreement
and Debenture Agreement.
NOW,
THEREFORE, in consideration of the foregoing promises and the mutual covenants
contained hereinafter and other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, the Company and the Holder hereby
agree as follows:
1.
DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following
meanings:
a.
“Closing Date” shall mean the date in the preamble of this
Agreement.
b.
“Debenture” or “Debentures” mean the convertible debenture issued by the Company
to the Holder.
c.
“Holder” shall mean Dutchess Private Equities Fund, LP
d.
“Effective Date” shall mean the date the United States Securities and Exchange
Commission (“SEC”) has declared the Registration Statement effective and the
Company has filed all necessary amendments, including the letter to request
accelerated effectiveness and the following Prospectus covering the resale
of
Shares.
e.
“Face
Amount” means eight hundred and twenty-two thousand five hundred dollars
($822,500) to be invested by the Holder.
f.
“Filing Date” shall mean the date the Registration Statement has been filed with
the SEC (as determined by ▇▇▇▇▇) and no stop order of acceptance has been issued
by the SEC.
g.
“Person” means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
h.
“Potential Material Event” means any of the following: (i) the possession by the
Company of material information not ripe for disclosure in a Registration
Statement, which shall be evidenced by determinations in good faith by the
Board
of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of
the
Company, or (ii) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in a Registration Statement at such time,
which
determination shall be accompanied by a good faith determination by the Board
of
Directors of the Company that the Registration Statement would be materially
misleading absent the inclusion of such information.
i.
“Principal Market” means either The American Stock Exchange, Inc., The New York
Stock Exchange, Inc., the Nasdaq National Market, The Nasdaq SmallCap Market
or
the National Association of Securities Dealer’s, Inc. OTC electronic bulletin
board, whichever is the principal market on which the Common Stock is listed.
j.
“Register,” “Registered,” and “Registration” refer to a registration effected by
preparing and filing with
the
SEC one
or
more Registration Statements in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous basis (“Rule 415”), and effectiveness
of such Registration Statement(s).
k.
“Registrable Securities” means the shares of Common Stock issued or issuable (i)
pursuant to the Subscription Agreement, and (ii) any shares of capital stock
issued or issuable with respect to such shares of Common Stock and Warrants,
if
any, as a result of any stock split, stock dividend, recapitalization, exchange
or similar event or otherwise, which have not been (x) included in a
Registration Statement that has been declared effective by the SEC, (y) sold
under circumstances meeting all of the applicable conditions of Rule 144 (or
any
similar provision then in force) under the 1933 Act or (z) saleable without
limitation as to time, manner and volume pursuant to Rule 144(k) (or any similar
provision then in force) under the 1933 Act.
l.
“Registration Statement” means a registration statement of the Company filed
under the 1933 Act.
m.
“$”
and/or “Dollar” shall mean legal currency of the United States of
America
All
capitalized terms used in this Agreement and not otherwise defined herein shall
have the same meaning ascribed to them in the Subscription Agreement or
Debenture Agreement.
For
the
purposes of determining dates for penalties or filing deadlines, as outlined
in
this Agreement, both parties agree that the date given by the SEC shall
constitute the official date.
2. REGISTRATION.
a. Mandatory
Registration. Within ten (10) days of the Closing Date, the Company shall
prepare and file with the SEC a Registration Statement or Registration
Statements (as is necessary) on Form SB-2 (or, if such form is unavailable
for
such a registration, on such other form as is available for such a
registration), covering the resale of all of the Registrable Securities, which
Registration Statement(s) shall state that, in accordance with Rule 415
promulgated under the 1933 Act, such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon stock splits, stock dividends or similar transactions. The Company shall
initially register for resale an amount of shares of Common Stock which would
be
issuable on the date preceding the filing of the Registration Statement based
on
the Fixed Conversion Price (as defined in the Debenture Agreement) of the
Debentures dated February 10, 2006 and the amount reasonably calculated that
represents the number of shares issuable pursuant to the terms of the Offering,
including those Shares underlying the Warrant Agreement. The total amount of
Shares shall be both 1) the amount specified in the Warrant Agreement and 2)
the
Face Amount of the Debenture, dated February 10, 2006, divided by the Fixed
Conversion Price. For example, if the Fixed Conversion Price is nine cents
($.09) per share, the amount of Shares to be registered will be nine million
one
hundred and thirty-eight thousand eight hundred and eighty-nine shares
(9,138,889) shares. ($822,500/.09). In the event the Company cannot register
sufficient shares of Common Stock, due to the remaining number of authorized
shares of Common Stock being insufficient, the Company will use its best efforts
to register the maximum number of shares it can based on the remaining balance
of authorized shares and will use its best efforts to increase the number of
its
authorized shares as soon as reasonably practicable.
b. The
Company shall use its best efforts to have the Registration Statement filed
with
the SEC within ten (10) calendar days after the Closing Date (“Filing
Deadline”). If the Registration Statement covering the Registrable Securities
required to be filed by the Company pursuant to Section 2(a) hereof is not
filed
by the Filing Deadline, then the Company shall pay the Holder the sum of two
percent (2%) per month, compounded daily, pro rata for partial periods, of
the
Face Amount of the Debentures outstanding as liquidated damages, and not as
a
penalty. In addition, if the Company fails to file the Registration Statement
by
the Filing Deadline, the Fixed Conversion Price of the Debentures will decrease
by ten percent (10%) of the original Fixed Conversion Price, and an additional
ten percent (10%) for each ten (10) day period thereafter the Company fails
to
file the registration statement. For example, in the event that upon the
eleventh (11th) day following Closing, the Registration Statement has not been
filed with the SEC, the Fixed Conversion Price shall decrease by nine-tenths
of
a cent (.009) per share. (.09 x 10%=.009.
Notwithstanding
the foregoing, the amounts payable by the Company pursuant to this Section
shall
not be payable to the extent any delay in the filing of the Registration
Statement occurs because of an act of, or a failure to act or to act timely
by
the Holder or is otherwise attributable to the Holder. The liquidated damages
set forth in this Section shall continue until the obligation is fulfilled
and
shall be paid within three (3) business days after each ten (10) day period,
or
portion thereof, until the Registration Statement is filed. Failure of the
Company to make payment within said three (3) business days shall be considered
a breach of this Agreement, and the Holder may elect to pursue remedies as
outlined in this Section.
The
Company acknowledges that its failure to have the Registration Statement filed
within said ten (10) calendar day period will cause the Holder to suffer
irreparable harm, and, that damages will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Agreement a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties’
good faith effort to quantify such damages and, as such, agree that the form
and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to register the Common Stock and deliver the Common Stock
pursuant to the terms of this Agreement, the Subscription Agreement and the
Debenture.
c. The
Company shall use its best efforts and take all available steps to have the
Registration Statement declared effective by the SEC within ninety (90) calendar
days after the Closing Date (the “Effective Date Deadline”). If the Registration
Statement covering the Registrable Securities required to be filed by the
Company pursuant to Section 2(a) hereof has
not
become
effective by the Effective Date Deadline, then the Company shall pay the Holder
the sum of two percent (2%) of the Face Amount as liquidated damages, and not
as
a penalty, for each ten (10) calendar day period, pro rata, compounded daily,
following the Effective Date Deadline until the Registration Statement is
declared effective.
If
the
Registration Statement covering the Registrable Securities required to be filed
by the Company pursuant to Section 2(a) hereof has
become
effective, but after the effective date or the Holder’s right to sell is
suspended, then the Company shall pay the Holder the sum of two percent (2%)
of
the Face Amount plus interest and penalties due to the Holder for the
Registrable Securities pursuant to the Subscription Agreement for each ten
(10)
calendar day period, pro rata, compounded daily, following the suspension,
until
such suspension ceases.
Notwithstanding
the foregoing, the amounts payable by the Company pursuant to this Section
shall
not be payable to the extent any delay in the effectiveness of the Registration
Statement or any suspension of the effectiveness occurs because of an act of,
or
a failure to act or to act timely by the Holder or is otherwise attributable
to
the Holder.
The
damages set forth in this Section shall continue until the obligation is
fulfilled and shall be paid within three (3) business days after each ten (10)
day period, or portion thereof, until the Registration Statement is declared
effective or such suspension is released. Failure of the Company to make payment
within said three (3) business days shall be considered a default.
The
Company acknowledges that its failure to have the Registration Statement
become effective
by the Effective Date Deadline or to permit the suspension of the effectiveness
of the Registration Statement, will cause the Holder to suffer irreparable
harm
and, that damages will be difficult to ascertain. Accordingly, the parties
agree
that it is appropriate to include in this Agreement a provision for liquidated
damages. The parties acknowledge and agree that the liquidated damages provision
set forth in this section represents the parties’ good faith effort to quantify
such damages and, as such, agree that the form and amount of such liquidated
damages are reasonable and will not constitute a penalty. The payment of
liquidated damages shall not relieve the Company from its obligations to
register the Common Stock and deliver the Common Stock pursuant to the terms
of
this Agreement, the Subscription Agreement and the Debenture.
d.
The
Company agrees to only register such securities as are necessary to meet is
obligations to the Holder and agrees not to register additional securities
without the Holder’s prior written consent. Furthermore,
the Company agrees that it will not file any other Registration Statement,
including those on Form S-8, for other securities, until three hundred and
sixty
(360) calendar days after the Effective Date unless it has written approval
from
the Holder. Failure to obtain written approval from the Holder will cause the
Holder to suffer damages that will be difficult to ascertain. Accordingly,
the
parties agree that it is appropriate to include a provision for liquidated
damages and the Company agrees to pay the Holder the sum of two percent (2%)
of
the Face Amount as liquidated damages and not as a penalty for each ten (10)
calendar day period, pro rata, compounded daily, until the unauthorized
Registration Statement is withdrawn.
After
May
2, 2006, the Holder shall permit one (1) issuance and registration of the
Company’s Common Stock for The Tail Wind Fund, solely for settlement of the
current lawsuit. The terms and conditions of Section 3(v) of the Subscription
Agreement shall apply to any issuances made to The Tail Wind Fund.
3. RELATED
OBLIGATIONS.
At
such
time as the Company is obligated to prepare and file a Registration Statement
with the SEC pursuant to Section 2(a), the Company will use its best efforts
to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, with respect thereto, the Company
shall have the following obligations:
| a. |
The
Company shall use its best efforts to cause such Registration Statement
relating to the Registrable Securities to become effective within
ninety
(90) calendar days after the Closing Date and shall keep such Registration
Statement effective pursuant to Rule 415 until the Filing Date on
which
(A) the Holder shall have sold all the Registrable Securities or
the
shares included therein otherwise cease to be Registrable Securities,
and
(B) the Holder has no right to convert the securities it owns into
Common
Stock under the Subscription Agreement, Debenture Agreement or Warrant
Agreement, respectively (the “Registration Period”), which Registration
Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall, as of the date thereof, not
contain
any 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 in which they were made, not
misleading. The Company shall respond to any and all SEC comments
or
correspondence, whether written or oral, direct or indirect, formal
or
informal (“Comments”), within seven (7) business days of receipt by the
Company of such Comments. If the Company fails to respond within
seven (7)
business days of receipt of SEC Comments, the Company shall pay to
the
Holder an amount equal to two percent (2%) per month, on a pro rata
basis,
compounded daily, of the Face Amount as liquidated damages and not
as a
penalty; provided
that the seven (7) business day period provided herein shall be extended
as may be required by delays caused by Holder’s counsel pursuant to
paragraph 3(g) below, and, provided
further, that
such seven (7) business day period shall be extended two (2) business
days
for responses to SEC staff accounting comments.
|
The
Company shall cause the Registration Statement relating to the Registrable
Securities to become effective no later than two (2) business days after notice
from the SEC that the Registration Statement has been cleared of all comments.
Failure to do so will result in the Face Amount of the Debentures to be
increased, as liquidated damages, by five percent (5%) per calendar day for
each
day that the Company does not request acceleration for effectiveness from the
SEC.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be
necessary to keep such Registration Statement effective during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act
with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the Holder thereof as set forth in such Registration
Statement. In the event the number of shares of Common Stock available under
a
Registration Statement filed pursuant to this Agreement is at any time
insufficient to cover all of the Registrable Securities, the Company shall
amend
such Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30) calendar days after the necessity therefor arises (based
on
the then Purchase Price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely), assuming the Company has sufficient
authorized shares at that time, and if it does not, within thirty (30) calendar
days after such shares are authorized. The Company shall use it best efforts
to
cause such amendment and/or new Registration Statement to become effective
as
soon as practicable following the filing thereof.
Prior
to
conversion of all the Shares (as defined in the Debenture Agreement between
the
Company and the Holder of this date) if at any
time
the
conversion of all the Shares outstanding would result in an insufficient number
of authorized shares of Common Stock being available to cover all the
conversions, or in the event that Holder deems that the Shares authorized will
become insufficient, the Company will move to call and hold a shareholder’s
meeting within thirty (30) calendar days for the sole purpose of authorizing
additional shares of Common Stock to facilitate the conversions. In such an
event the Company shall recommend to all shareholders and management of the
Company to vote their shares in favor of increasing the authorized number of
shares of Common Stock. The Company represents and warrants that under no
circumstances will it deny or prevent Holder’s right to convert the Shares as
permitted under the terms of the Subscription Agreement or the Debenture
Registration Rights Agreement. The Holder retains the right to request
additional shares upon the determination the company may not be able to
facilitate conversions in the future.
c The
Company shall furnish to the Holder whose Registrable Securities are included
in
any Registration Statement and its legal counsel without charge and upon request
(i) promptly after the same is prepared and filed with the SEC at least one
copy
of such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits, the prospectus included in such Registration Statement (including
each preliminary prospectus) and, with regards to such Registration
Statement(s), any correspondence by or on behalf of the Company to the SEC
or
the staff of the SEC and any correspondence from the SEC or the staff of the
SEC
to the Company or its representatives, (ii) upon the effectiveness of any
Registration Statement, a copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number
of
copies as the Holder may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as the Holder may
reasonably request from time to time in order to facilitate the disposition
of
the Registrable Securities. The Company filing the documents described in this
paragraph through the Electronic Data Gathering Analysis and Retrieval System
(“▇▇▇▇▇”) shall constitute delivery.
d. The
Company shall use reasonable efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under the applicable securities
or “blue sky” laws of such states of the United States as reasonably specified
by the Holder, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations
and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary
to
maintain such registrations and qualifications in effect at all times during
the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify the Holder who holds Registrable Securities
of
the receipt by the Company of any notification with respect to the suspension
of
the registration or qualification of any of the Registrable Securities for
sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
e.
The
Company shall immediately notify the Holder in writing of the happening of
any
event as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
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, as a result, is required to be supplemented or as a result
of which the Registration Statement is required to be amended (“Registration
Default”) and use all diligent efforts to promptly prepare any necessary
supplement to such prospectus or amendment to such Registration Statement and
take any other necessary steps to cure the Registration Default, (which, if
such
Registration Statement is on Form S-3, may consist of a document to be filed
by
the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934 Act (as defined below) and to be incorporated by reference in the
prospectus) to correct such untrue statement or omission, and deliver one (1)
copy of such supplement or amendment to Holder (or such other number of copies
as Holder may reasonably request; delivery via ▇▇▇▇▇ shall constitute delivery).
Failure to cure the Registration Default within five (5) business days shall
result in the Company paying liquidated damages of two percent (2%) of the
then
outstanding principal amount of the Debentures then held by the Holder for
each
thirty (30) calendar day period or portion thereof, beginning on the date of
suspension. The Company shall also promptly notify Holder in writing (i) when
a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to
Holder by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, (iii)
of
the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate, (iv) in the event the Registration
Statement is no longer effective or, (v) the Registration Statement is stale
for
a period of more than five (5) Trading Days as a result of the Company’s failure
to timely file its financials.
The
Company acknowledges that its failure to cure the Registration Default within
three (3) business days will cause the Holder irreparable harm, and that damages
will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages.
The
parties acknowledge and agree that the liquidated damages provision set forth
in
this section represents the parties’
good
faith effort to quantify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty.
It
is the
intention of the parties that interest payable under any of the terms of this
Agreement shall not exceed the maximum amount permitted under any applicable
law. If a law, which applies to this Agreement which sets the maximum interest
amount, is finally interpreted so that the interest in connection with this
Agreement exceeds the permitted limits, then: (1) any such interest shall be
reduced by the amount necessary to reduce the interest to the permitted limit;
and (2) any sums already collected (if any) from the Company which exceed the
permitted limits will be refunded to the Company. The Holder may choose to
make
this refund by reducing the amount that the Company owes under this Agreement
or
by making a direct payment to the Company. If a refund reduces the amount that
the Company owes the Holder, the reduction will be treated as a partial payment.
In the event that any provision of this Agreement is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity
and
enforceability of the remaining provisions of this Agreement will not in any
way
be affected or impaired thereby.
f.
The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and
to
notify the Holder of the issuance of such order and the resolution thereof.
The
Company will immediately notify the Holder of a proceeding, or threat of
proceeding, the result of which could effect the effectiveness of the
registration statement.
g. The
Company shall permit the Holder and its counsel, of the Holder’s choosing, to
review and comment upon all Registration Statements, amendments and supplements,
at least two (2) business days prior to filing. The Company shall not file
any
Registration Statement with which Holder or its counsel reasonably objects.
h. At
the
request of the Holder, the Company shall cause to be furnished to Holder, on
the
date of the effectiveness of a Registration Statement, an opinion, dated as
of
such date, of counsel representing the Company for purposes of such Registration
Statement, in the form of Exhibit D attached to the Subscription
Agreement.
i. The
Company shall make available for inspection by (i) the Holder and (ii) one
firm
of attorneys and one firm of accountants or other agents retained by the Holder
(collectively, the “Inspectors”) all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively,
the
“Records”), as shall be reasonably deemed necessary by each Inspector, and cause
the Company’s officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each Inspector
shall hold in strict confidence and shall not make any disclosure (except to
the
Holder) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors
are
so notified, unless (a) the disclosure of such Records is necessary to avoid
or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body
of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this
or any other agreement of which the Inspector has knowledge. The Holder agrees
that it shall, upon learning that disclosure of such Records is sought in or
by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential.
j. The
Company shall hold in confidence and not make any disclosure of information
concerning the Holder unless (i) disclosure of such information is necessary
to
comply with federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in
any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation
of
this Agreement or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning a Holder is sought
in or
by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to the Holder and allow the Holder, at the
Holder’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
k. The
Company shall use its best efforts to secure designation and quotation of all
the Registrable Securities covered by any Registration Statement on the
Principal Market. If, despite the Company’s best efforts, the Company is
unsuccessful in satisfying this obligation, it shall use its best efforts to
cause all the Registrable Securities covered by any Registration Statement
to be
listed on each other national securities exchange and automated quotation
system, if any, on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable Securities
is then permitted under the rules of such exchange or system. If, despite the
Company’s best efforts, the Company is unsuccessful in satisfying its obligation
in this Section, it will use its best efforts to secure the inclusion for
quotation with Pink Sheets, LLC. The Company shall pay all fees and expenses
in
connection with satisfying its obligation under this Section 3(k).
l. The
Company shall cooperate with the Holder to facilitate the timely preparation
and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case
may
be, as the Holder may reasonably request and registered in such names of the
Persons who shall acquire such Registrable Securities from the Holder, as the
Holder may request.
m. The
Company shall provide a transfer agent for all the Registrable Securities not
later than the Closing Date of the first Registration Statement filed pursuant
hereto.
n. If
requested by the Holder, the Company shall (i) as soon as reasonably practical,
incorporate in a prospectus supplement or post-effective amendment such
information as Holder reasonably determines should be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the offering of the Registrable
Securities to be sold in such offering; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any Registration Statement
if reasonably requested by Holder.
o. The
Company shall use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved
by
such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
p. The
Company shall make available to the Holder as soon as reasonably practical,
but
not later than ninety (90) calendar days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 under the ▇▇▇▇ ▇▇▇) covering a twelve-month period beginning not later
than
the first day of the Company’s fiscal quarter next following the effective date
of any Registration Statement. Filing via ▇▇▇▇▇ shall constitute
delivery.
q. The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
r. Within
one (1) business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent
for
such Registrable Securities, with copies to the Holder, confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A. Failure to do so will result in the Face Amount
on
the Debentures to be increased by two percent (2%) per day, as liquidated
damages.
s. After
the
SEC declares the Registration Statement cleared of all comments and the
Company’s acceptance of the effectiveness of the Registration Statement, the
Company shall file a prospectus covering the resale of the Shares (“Prospectus”)
within two (2) trading days. In the event the Company does not file the
Prospectus within two (2) trading days of the Effective Date, then the Company
shall pay the Holder the sum of five percent (5%) of the Face Amount due to
the
Holder for each two (2) trading day period, pro rata, compounded daily,
following the two (2) trading day period until the Prospectus is
filed.
t. The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Holder of Registrable Securities pursuant to
a
Registration Statement.
4. OBLIGATIONS
OF THE HOLDER.
a. At
least
five (5) calendar days prior to the first anticipated filing date of a
Registration Statement the Company shall notify the Holder in writing of the
information the Company requires from the Holder. The Holder covenants and
agrees that, in connection with any resale of Registrable Securities by it
pursuant to a Registration Statement, it shall comply with the “Plan of
Distribution” section of the current prospectus relating to such Registration
Statement.
b. The
Holder, by Holder’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder and
in
responding to SEC comments in connection therewith.
▇. ▇▇▇▇▇▇
agrees that, upon receipt of any notice from the Company of the happening of
any
event of the kind described in Section 3(f) or the first sentence of 3(e),
Holder will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of 3(e).
5. EXPENSES
OF REGISTRATION.
All
expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections
2
and 3, including, without limitation, all registration, listing and
qualifications fees, printing and accounting fees, and reasonable fees and
disbursements of counsel for the Company shall be paid by the
Company.
6. INDEMNIFICATION.
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
a. To
the
fullest extent permitted by law, the Company will, and hereby agrees to,
indemnify, hold harmless and defend the Holder who holds such Registrable
Securities, the directors, officers, partners, employees, agents,
representatives of, and each Person, if any, who controls Holder within the
meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended
(the
“1934 Act”) (each, an “Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, attorneys’
fees, amounts paid in settlement or expenses, joint or several (collectively,
“Claims”), incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing
by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified Damages”), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon:
(i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which the statements therein were
made, not misleading, (ii) any untrue statement or alleged untrue statement
of a
material fact contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in light of the circumstances under which
the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). Subject to the
restrictions set forth in Section 6(c) with respect to the number of legal
counsel, the Company shall reimburse the Holder and each such controlling
person, promptly as such expenses are incurred and are due and payable, for
any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out
of or
based upon a Violation committed by any Indemnified Person or which occurs
in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus were timely made available by the Company
pursuant to Section 3(c); (ii) shall not be available to the extent such Claim
is based on (a) a failure of the Holder to deliver or to cause to be delivered
the prospectus made available by the Company or (b) the Indemnified Person’s use
of an incorrect prospectus despite being promptly advised in advance by the
Company in writing not to use such incorrect prospectus; and (iii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the resale of the Registrable Securities by the Holder
pursuant to the Registration Statement.
b. In
connection with any Registration Statement in which the Holder is participating,
the Holder agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company within
the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of
or
are based upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by Holder expressly for use in
connection with such Registration Statement; and, subject to Section 6(c),
Holder will reimburse any legal or other expenses reasonably incurred by them
in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior
written consent of Holder, which consent shall not be unreasonably withheld;
provided, further, however, that the Holder shall be liable under this Section
6(b) for only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the resale of the Registrable Securities
by
the Holder pursuant to the Registration Statement. Notwithstanding anything
to
the contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to
the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus were corrected on a timely basis
in
the prospectus, as then amended or supplemented.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to
be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. The indemnifying party shall pay for only one
separate legal counsel for the Indemnified Persons or the Indemnified Parties,
as applicable, and such counsel shall be selected by the Holder, if the Holder
is entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The Indemnified Party
or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto.
No
indemnifying party shall be liable for any settlement of any action, claim
or
proceeding effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into
any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
d. The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no contribution
shall be made under circumstances where the maker would not have been liable
for
indemnification under the fault standards set forth in Section 6; (ii) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from
any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (iii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by
such seller from the sale of such Registrable Securities.
8. REPORTS
UNDER THE EXHANGE ACT.
With
a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act of 1933 or any similar rule or regulation of the SEC
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:
(a)
make
and keep public information available, as those terms are understood and defined
in Rule 144;
(b)
file
with the SEC in a timely manner all reports and other documents required of
the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents as are required by the applicable provisions of Rule 144; and
(c)
furnish to the Holder, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or
quarterly report of the Company and such other reports and documents so filed
by
the Company, and (iii) such other information as may be reasonably requested
to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. NO
ASSIGNMENT OF REGISTRATION RIGHTS.
The
registration rights and obligations under this Agreement shall not be
assignable.
10. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
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 the Holder
of
the Registrable Securities. Any amendment or waiver effected in accordance
with
this Section 10 shall be binding upon Holder and the Company.
11. MISCELLANEOUS.
a. Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
▇▇▇▇▇
▇▇▇▇▇
Eagle
Broadband, Inc. Corp
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to the
Holder:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Dutchess
Capital Management
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone:
▇▇▇-▇▇▇-▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Each
party shall provide five (5) business days prior notice to the other party
of
any change in address, phone number or facsimile number.
b.
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.
c.
All
disputes arising under this agreement shall be governed by and interpreted
in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to
principles of conflict of laws. The parties to this agreement will submit all
disputes arising under this agreement to arbitration in Boston, Massachusetts
before a single arbitrator of the American Arbitration Association (“AAA”). The
arbitrator shall be selected by application of the rules of the AAA, or by
mutual agreement of the parties, except that such arbitrator shall be an
attorney admitted to practice law in the Commonwealth of Massachusetts. No
party
to this agreement will challenge the jurisdiction or venue provisions as
provided in this section.
d.
This
Agreement and the Transaction Documents
(as
defined herein) constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to in the Transaction
Documents.
e. This
Agreement and the Transaction Documents supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
g.
This
Agreement may be executed in two or more counterparts, all of which taken
together shall constitute one instrument. Execution and delivery of this
Agreement by exchange of facsimile copies bearing the facsimile signature of
a
party shall constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.
h. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
i. The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
12.
WAIVER.
The
Holder’s delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not
waive, affect, or diminish any right of the Holder under this Agreement to
demand strict compliance and performance herewith. Any waiver by the Holder
of
any Event of Default shall not waive or affect any other Event of Default,
whether such Event of Default is prior or subsequent thereto and whether of
the
same or a different type. None of the undertakings, agreements and covenants
of
the Company contained in this Agreement, and no Event of Default, shall be
deemed to have been waived by the Holder, nor may this Agreement be amended,
changed or modified, unless such waiver, amendment, change or modification
is
evidenced by an instrument in writing specifying such waiver, amendment, change
or modification and signed by the Holder.
13.
PAYMENT OF PENALTIES
Any
accrued penalties incurred herein by the Company for failure to act in a timely
manner, as described in this Agreement, shall be charged to the Face Amount
of
the Debenture (as defined in the Debenture), unless specifically noted
otherwise. The Holder reserves the rights to take Payment of Penalties in cash
or in Common Stock priced at the Fixed Conversion Price (as defined in the
Debenture Agreement).
*
*
*
IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to
be duly executed as of the day and year first above written. Duly authorized
to
sign on behalf of:
EAGLE
BROADBAND, INC.
By:
/s/▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇▇
Title:
President
and Chief Executive Officer
By:
/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Title:
Vice
President of Administration
DUTCHESS
PRIVATE EQUITIES FUND, L.P.
BY
ITS
GENERAL PARTNER DUTCHESS
CAPITAL
MANAGEMENT, LLC
By:
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
A
Managing Member
EXHIBIT
A
FORM
OF
NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Date:
__________
[TRANSFER
AGENT]
Re: Eagle
Broadband, Inc..
Ladies
and Gentlemen:
We
are
counsel to Eagle
Broadband, Inc.,
a Texas
corporation (the “Company”), and have represented the Company in connection with
that certain Subscription Agreement (the “Subscription Agreement”) entered into
by and among the Company and _________________________ (the “Holder”) pursuant
to which the Company has agreed to issue to the Holder shares of the Company’s
common stock, $.001 par value per share (the “Common Stock”) on the terms and
conditions set forth in the Subscription Agreement. Pursuant to the Subscription
Agreement, the Company also has entered into a Registration Rights Agreement
with the Holder (the “Registration Rights Agreement”) pursuant to which the
Company agreed, among other things, to register the Registrable Securities
(as
defined in the Registration Rights Agreement), including the shares of Common
Stock issued or issuable under the Subscription Agreement under the Securities
Act of 1933, as amended (the “1933 Act”). In connection with the Company’s
obligations under the Registration Rights Agreement, on ____________ ___, 2006,
the Company filed a Registration Statement on Form S- ___ (File No.
333-________) (the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable Securities which names the
Holder as a selling shareholder thereunder.
In
connection with the foregoing, we advise you that [a
member
of the SEC’s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective]
[the
Registration Statement has become effective]
under
the 1933 Act at [enter
the time of effectiveness]
on
[enter
the date of effectiveness]
and to
the best of our knowledge, after telephonic inquiry of a member of the SEC’s
staff, no stop order suspending its effectiveness has been issued and no
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.
Very
truly yours,
[Company
Counsel]
By: ____________________
|
cc:
|
[Holder]
|