Exhibit 10.9
MTM TECHNOLOGIES, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of May 21,
2004 is by and among MTM TECHNOLOGIES, INC., a New York corporation (the
"Company"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a natural person, ▇▇▇▇▇▇ ▇▇▇▇▇▇, a natural person
(Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ collectively, the "Executives") and each of the
stockholders of the Company listed on Schedule I hereto (the "Pequot
Stockholders").
Preliminary Statement
The Company and the Pequot Stockholders are entering into a Purchase
Agreement, dated January 29, 2004 and as amended from time to time (the
"Purchase Agreement"), providing for, among other things, the purchase by the
Pequot Stockholders of (i) shares of Series A Preferred Stock, $0.001 par value
per share (the "Series A Preferred Stock") of the Company (the "Shares") and
(ii) warrants to purchase shares of Common Stock (as defined below) of the
Company (the "Warrants"), in each case, subject to the terms and provisions of
the Purchase Agreement;
Simultaneously with, and as a condition to, the closing of the transactions
contemplated in the Purchase Agreement, the Company and the Pequot Stockholders
desire to enter into this Agreement to provide certain registration and other
rights with respect to the Company's common stock, $.001 par value per share
("Common Stock") held by or issuable to the Pequot Stockholders;
The Company has agreed to provide the Executives with certain registration
rights, subject to the terms and provisions of this Agreement, with respect to
the Common Stock held by the Executives; and
No other registration rights, other than those set forth herein with
respect to the Pequot Stockholders and the Executives, have been granted by the
Company to its stockholders and are in existence as of the date hereof.
Terms and Conditions
In consideration of the mutual covenants and agreements contained in this
Agreement and the Purchase Agreement, and intending to be legally bound, the
parties hereto agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms have
the meanings indicated below or in the referenced sections of this Agreement:
"Agreement." As defined in the initial paragraph hereof.
"Common Stock." As defined in the Preliminary Statement hereof.
"Executives." As defined in the initial paragraph hereof.
"Exchange Act." The Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
"NASD." The National Association of Securities Dealers, Inc.
"Nasdaq." The Nasdaq Stock Market.
"Person." An individual, a partnership, a corporation, a limited liability
company or partnership, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization or a government
entity or any department, agency, or political subdivision thereof.
"Pequot Majority in Interest." The Pequot Stockholders holding at least a
majority of the shares of Common Stock issued or issuable, directly or
indirectly, upon conversion or exercise of the Shares and Warrants purchased by
such Pequot Stockholders in accordance with the Purchase Agreement.
"Pequot Stockholders." As defined in the initial paragraph hereof, and
their successors, assigns and transferees.
"Piggyback Registration." As defined in Section 4(a) hereof.
"Purchase Agreement." As defined in the Preliminary Statement hereof.
"Registrable Securities." Any Common Stock issued or issuable upon
conversion or exercise of the Shares and Warrants or deriving therefrom, all
shares of Common Stock owned by the Executives at the time of the Initial
Closing (as such term is defined in the Purchase Agreement), and all other
shares of Common Stock of the Company or any successor owned from time to time
by the Pequot Stockholders; provided, that a Registrable Security ceases to be a
Registrable Security when (i) it is registered under the Securities Act and
disposed of in accordance with the registration statement covering it or (ii) it
is sold or transferred in accordance with the requirements of Rule 144 (or
similar provisions then in effect) promulgated by the SEC under the Securities
Act ("Rule 144").
"Registration Expenses." As defined in Section 7(a) hereof.
"Registration Statement." Registration Statement shall mean the
registration statement contemplated by Section 3 and any additional registration
statements contemplated by Section 4, including (in each case) the prospectus,
amendments and supplements to such registration statement or prospectus, all
exhibits attached thereto, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
"SEC." The United States Securities and Exchange Commission.
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"Securities Act." The Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Series A Preferred Stock." As defined in the Preliminary Statement hereof.
"Shares." As defined in the Preliminary Statement hereof.
"Warrants." As defined in the Preliminary Statement hereof.
Section 2. Securities Subject to this Agreement.
(a) Holders of Registrable Securities. A Person is deemed to be a holder of
Registrable Securities whenever that Person owns, directly or beneficially, or
has the right to acquire, Registrable Securities, disregarding any legal
restrictions upon the exercise of that right.
(b) Majority of Registrable Securities. As used in this Agreement, the term
"majority of the Registrable Securities" means more than 50% of the Registrable
Securities being registered unless the context indicates that it is more than
50% of the Registrable Securities then issued and outstanding.
Section 3. Initial Registration. (a) Subject to receipt of necessary
information from the Pequot Stockholders, the Company will, as soon as practical
but in no event later than 60 days following (a) the date hereof, (b) the date
of any issuance of Series A Preferred Stock and (c) the date of notice to the
Company of any acquisition of Common Stock then having a fair market value of at
least $150,000 by the Pequot Stockholders, prepare and file with the SEC a
Registration Statement on Form S-1 or, if applicable, Form S-3, or any
equivalent form for registration by small business issuers in accordance with
the Securities Act, to permit a public offering and resale of the Registrable
Securities under the Securities Act on a continuous basis under Rule 415. The
Company acknowledges that the plan of distribution contemplated by such
Registration Statement shall include offers and sales through underwriters or
agents, offers and sales directly to investors, block trades and such other
methods of offer and sale as the Pequot Stockholders shall request. The Company
will use its reasonable best efforts to cause the Registration Statement to be
declared effective by the SEC within 150 days following the date hereof. The
Company will cause such Registration Statement to remain effective until such
time as all of the shares of Common Stock designated thereunder are sold or the
holders thereof are entitled to rely on Rule 144(k) for sales of Registrable
Securities without registration under the Securities Act and without compliance
with the public information, sales volume, manner of sale or notice requirements
of Rule 144(c), (e), (f) or (h). The Company will pay all Registration Expenses
of each registration of Registrable Securities pursuant to this Section 3. The
number of shares of Common Stock designated in the Registration Statement shall
be equal to the sum of the number of shares of Common Stock (x) issuable upon
(A) the conversion of the Series A Preferred Stock and (B) the exercise of the
Warrants held by or issuable to the Pequot Stockholders and (c) issued to the
Executives as the time of the Initial Closing. The Company acknowledges that at
the time the Company files the Registration Statement pursuant to this Section 3
the number of Registrable Securities issuable to the Pequot Stockholders will
not be fixed due to the pricing, antidilution and other provisions related to
the Shares and Warrants ("Adjustment Provisions"). Accordingly, the Company
agrees that it will register the number of
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shares of Common Stock issuable on conversion of the Series A Preferred Stock
and on the exercise of the Warrants held by or issuable to the Pequot
Stockholders as of the date hereof. The Company agrees that, thereafter, it will
file, within a reasonable period of time after all of the Registrable Securities
held by or issuable to the Pequot Stockholders are not covered by such
Registration Statement (due to the effect of the Adjustment Provisions) such
amendments and/or supplements to the Registration Statement, and such additional
Registration Statements as are necessary in order to ensure that at least 100%
of the number of shares of Common Stock issuable on conversion of the Series A
Preferred Stock and on the exercise of the Warrants held by or issuable to the
Pequot Stockholders are included in a Registration Statement.
(b) Executives' Registrable Securities. If any of the Executives desires,
from time to time, to include his Registrable Securities for resale in a
Registration Statement filed pursuant to Section 3(a), such Executives may
include, collectively, an amount of Registrable Securities equal to the greater
of (x) 50% of the Registrable Securities being registered by the Pequot
Stockholders in such resale or (y) a portion of such Executive's Registrable
Securities equal to the aggregate number of Registrable Securities owned by the
Executives multiplied by a fraction, the numerator of which is the aggregate
number of Registrable Securities owned by the Executives and the denominator of
which is the aggregate number of Registrable Securities. Registrable Securities
held by each Executive shall be included pro rata based on the number of
Registrable Securities that each Executive desires to include.
(c) Selection of Underwriters. If any registration pursuant to this Section
3 is an underwritten offering, the Pequot Stockholders will select as the
investment banker(s) and manager(s) that will administer the offering a
nationally recognized investment banker(s) and manager(s) with demonstrable
industry-specific expertise and experience and reasonably acceptable to the
Company.
Section 4. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of
its securities in an underwritten offering under the Securities Act, whether for
its own account or for the account of another stockholder (except for the
registration of securities to be offered pursuant to an employee benefit plan on
Form S-8, pursuant to a registration made on Form S-4 or any successor forms
then in effect) at any time other than pursuant to a registration in connection
with Section 3 above and the registration form to be used may be used for the
registration of the Registrable Securities (a "Piggyback Registration"), it will
so notify in writing all Pequot Stockholders no later than twenty (20) days
prior to the anticipated filing date. Subject to the provisions of Section 4(c),
the Company will include in the Piggyback Registration all Registrable
Securities owned by the Pequot Stockholders with respect to which the Company
has received written requests for inclusion within ten (10) days after the
issuance of the Company's notice. Such Pequot Stockholders notice shall state
the intended method of disposition of the Registrable Securities by such Pequot
Stockholder. Such Registrable Securities may be made subject to an underwriters'
over-allotment option, if so requested by the managing underwriter. A Pequot
Stockholder may withdraw all or any part of the Registrable Securities from a
Piggyback Registration at any time before ten (10) business days prior to the
effective date of the Piggyback Registration. In any Piggyback Registration, the
Company, the Pequot Stockholders and any Person who hereafter becomes entitled
to register its securities in a registration initiated
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by the Company must sell their securities on the same terms and conditions. A
registration of Registrable Securities pursuant to this Section 4 shall be in
addition to the registration pursuant to Section 3.
(b) Piggyback Expenses. The Company shall pay all Registration Expenses in
connection with a Piggyback Registration by the Pequot Stockholders.
(c) Underwriting; Priority on Piggyback Registrations. The right of any
Pequot Stockholder to be included in an underwritten registration pursuant to
this Section 4 shall be conditioned upon such Pequot Stockholder's participation
in such underwriting and the inclusion of such Pequot Stockholder's Registrable
Securities in the underwriting to the extent provided herein. If the managing
underwriter gives the Company its written opinion that the total number or
dollar amount of securities requested to be included in the registration exceeds
the number or dollar amount of securities that can be sold, the Company will
include the securities in the registration in the following order of priority:
(i) first, all securities the Company proposes to sell; (ii) second, up to the
full number or dollar amount of Registrable Securities requested to be included
in the registration by the Pequot Stockholders (allocated pro rata among the
Pequot Stockholders, on the basis of the dollar amount or number of Registrable
Securities requested to be included); and (iii) third, any other securities
(provided they are of the same class as the securities sold by the Company)
requested to be included, allocated among the holders of such securities in such
proportions as the Company and those holders may agree; provided, that at least
fifteen percent (15%) of the Registrable Securities requested to be included in
such registration by the Pequot Stockholders have been included in the offering;
provided, further, that the Pequot Stockholders' Registrable Securities shall
not be subject to any cutback in the amount of Registrable Securities requested
to be included in the registration unless all other holders of securities,
including, without limitation, the Executives, requesting to be included in such
registration have been excluded from such registration; provided, further, that
the Pequot Stockholders' Registrable Securities shall not be subject to any
cutback which would result in the Pequot Stockholders' owning less than an
aggregate amount of 750,000 shares of Common Stock. In the event that the
managing underwriter advises the Company that an underwriters' over-allotment
option is necessary or advisable, the allocation provided for in this Section
4(c) shall apply to the determination of which securities are to be included in
the registration of such shares.
(d) Selection of Underwriters. In any Piggyback Registration, the Company
will select as the investment banker(s) and manager(s) that will administer the
offering a nationally recognized investment banker(s) and manager(s) with
demonstrable industry-specific expertise and experience. The Company and the
holders of Registrable Securities whose shares are being registered shall enter
into a customary underwriting agreement with such investment banker(s) and
manager(s); provided, that the liability of any holder of Registrable Securities
shall be limited to such holder's net proceeds received from the sale of its
Registrable Securities in such offering and such limitation shall not be amended
by any underwriting agreement or arrangement.
(e) Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 4
prior to the effectiveness of such registration whether or not any Pequot
Stockholder has elected to include securities in such
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registration. The Registration Expenses of such withdrawn registration shall be
borne by the Company in accordance with Section 7 hereof.
Section 5. "Lock-Up" Agreements.
If requested by the managing underwriter, each holder of Registrable
Securities agrees not to sell, transfer, make any short sale of, grant any
option for the purchase of, or enter into any hedging or similar transaction
with the same economic effect as a sale with respect to (each, a "Disposition")
any Registrable Securities (or other securities) of the Company held by such
holder (other than those included in the registration) for a 30 day period (or
such longer period requested by the managing underwriter which shall in no event
exceed 90 days) after the effective date of any Registration Statement by the
Company pursuant to Section 4 after the date hereof unless the managing
underwriter(s) agrees otherwise; provided, however, that all executive officers
and directors of the Company, all holders of at least five percent (5%) of the
Company's equity securities purchased from the Company (other than securities
purchased from the Company at any time after the date of this Agreement in a
registered public offering) and all other persons with registration rights
(whether or not pursuant to this Agreement) are bound by and have entered into a
similar agreement and the restrictions on transfer have not been waived in whole
or in part with respect to any such executive officers, directors, holders or
persons.
Section 6. Registration Procedures.
(a) Obligations of the Company. Whenever required to register any
Registrable Securities, the Company shall as expeditiously as practicable:
(1) prepare and, as soon as practicable, but in any event within 60
days of the date hereof in the case of a registration pursuant to Section
3, file with the SEC a Registration Statement on the appropriate form and
use reasonable best efforts to cause the Registration Statement to become
effective. At least ten (10) days before filing a Registration Statement or
prospectus or at least three (3) business days before filing any amendments
or supplements thereto, the Company will furnish to the counsel of the
holders of a majority of the Registrable Securities being registered copies
of all documents proposed to be filed for that counsel's review and
approval, which approval shall not be unreasonably withheld or delayed;
(2) immediately notify each seller of Registrable Securities of any
stop order threatened or issued by the SEC and take all actions reasonably
required to prevent the entry of a stop order or if entered to have it
rescinded or otherwise removed;
(3) prepare and file with the SEC such amendments and supplements to
the Registration Statement and the corresponding prospectus necessary to
keep the Registration Statement effective, in the case of the registration
required by Section 3 hereof for the period provided in Section 3 and in
any other case for 90 days or such shorter period as may be required to
sell all Registrable Securities covered by the Registration Statement; and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by the Registration Statement during
each
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period in accordance with the sellers' intended methods of disposition as
set forth in the Registration Statement;
(4) furnish to each seller of Registrable Securities a sufficient
number of copies of the Registration Statement, each amendment and
supplement thereto (in each case including all exhibits), the corresponding
prospectus (including each preliminary prospectus), and such other
documents as a seller may reasonably request to facilitate the disposition
of the seller's Registrable Securities;
(5) use its best efforts to register or qualify the Registrable
Securities under securities or blue sky laws of jurisdictions in the United
States of America as any seller requests within twenty (20) days following
the original filing of a Registration Statement and do any and all other
reasonable acts and things that may be necessary or advisable to enable the
seller to consummate the disposition of the seller's Registrable Securities
in such jurisdiction; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business under the laws
of any jurisdiction in which it is not then qualified or to file any
general consent to service of process;
(6) notify each seller of Registrable Securities, at any time when a
prospectus is required to be delivered under the Securities Act, of any
event as a result of which the prospectus or any document incorporated
therein by reference contains an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which such statements
were made, and use reasonable best efforts to prepare a supplement or
amendment to the prospectus or any such document incorporated therein so
that thereafter the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which
such statements were made;
(7) cause all registered Registrable Securities to be listed on each
securities exchange or quotation system, if any, on which similar
securities issued by the Company are then listed;
(8) provide an institutional transfer agent and registrar and a CUSIP
number for all Registrable Securities on or before the effective date of
the Registration Statement;
(9) enter into such customary agreements, including an underwriting
agreement in customary form (which underwriting agreement shall include a
"lock-up" agreement regarding offers or sales by the Company, in customary
form and with such duration as may be reasonably requested by the
underwriters), and take all other actions in connection with those
agreements as the holders of a majority of the Registrable Securities being
registered or the underwriters, if any, reasonably request to expedite or
facilitate the disposition of the Registrable Securities;
(10) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
the Registration Statement, and any attorney, accountant, or other agent of
any such seller or underwriter, all financial
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and other records, pertinent corporate documents, and properties of the
Company, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any seller, underwriter,
attorney, accountant, or other agent in connection with the Registration
Statement; provided that an appropriate confidentiality agreement is
executed by any such seller, underwriter, attorney, accountant or other
agent;
(11) in connection with any underwritten offering, obtain a "comfort"
letter from the Company's independent public accountants in customary form
and covering those matters customarily covered by "comfort" letters as the
holders of a majority of the Registrable Securities being registered or the
managing underwriter reasonably request (and, if the Company is able after
using its reasonable efforts, the letter shall be addressed to holders of
the Registrable Securities, the Company and the underwriters);
(12) in connection with any underwritten offering, furnish, at the
request of the holders of a majority of the Registrable Securities being
registered or underwriter(s) of the offering, an opinion of counsel
representing the Company for the purposes of the registration, in the form
and substance customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to counsel representing the holders of
Registrable Securities being registered and the underwriter(s) of the
offering, addressed to the underwriters and to the holders of the
Registrable Securities being registered;
(13) use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable, an earnings statement complying with the
provisions of Section 11(a) of the Securities Act and covering the period
of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first month after the effective date of the Registration
Statement;
(14) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be
made with the NASD or Nasdaq; and
(15) take all other steps reasonably necessary to effect the
registration of the Registrable Securities contemplated hereby.
(b) Seller Information. In the event of any registration by the Company,
from time to time, the Company may require each seller of Registrable Securities
subject to the registration to furnish to the Company information regarding such
seller, the Registrable Securities held by it, and the distribution of the
securities subject to the registration, and such seller shall furnish all such
information reasonably requested by the Company.
(c) Notice to Discontinue. Each holder of Registrable Securities agrees by
acquisition of such securities that, upon receipt of any notice from the Company
of any event of the kind described in Section 6(a)(6), the holder will
discontinue disposition of Registrable Securities until the holder receives
copies of the supplemented or amended prospectus
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contemplated by Section 6(a)(6). In addition, if the Company requests, the
holder will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in the holder's possession, of the prospectus
covering the Registrable Securities current at the time of receipt of the
notice. If the Company gives any such notice, the time period mentioned in
Section 6(a)(3) shall be extended by the number of days elapsing between the
date of notice and the date that each seller receives the copies of the
supplemented or amended prospectus contemplated in Section 6(a)(6).
(d) Notice by Holders. Whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this
Agreement, those holders shall notify the Company, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event concerning that holder of the Registrable Securities, as
a result of which the prospectus included in the Registration Statement contains
an untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 7. Registration Expenses.
(a) Generally. All Registration Expenses incurred in connection with the
Company's performance of or compliance with this Agreement shall be paid as
provided in this Agreement. The term "Registration Expenses" includes without
limitation all registration filing fees, reasonable professional fees and other
reasonable expenses of the Company's compliance with federal, state and other
securities laws (including fees and disbursements of counsel for the
underwriters in connection with state or other securities law qualifications and
registrations), printing expenses, messenger, telephone and delivery expenses;
reasonable fees and disbursements of counsel for the Company and for one counsel
for the selling Pequot Stockholders; reasonable fees and disbursement of the
independent certified public accountants selected by the Company (including the
expenses of any audit or "comfort" letters required by or incident to
performance of the obligations contemplated by this Agreement); fees and
expenses of the underwriters (excluding discounts and commissions); fees and
expenses of any special experts retained by the Company at the request of the
managing underwriters in connection with the registration; and applicable stock
exchange, NASD and Nasdaq registration and filing fees. The term "Registration
Expenses" does not include the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed, all of which shall be paid by the Company, nor does it
include underwriting fees or commissions or transfer taxes, all of which shall
be paid by each of the sellers of Registrable Securities with respect to the
Registrable Securities sold by such seller. For the avoidance of doubt, the
parties hereto acknowledge and agree that any and all fees and expenses of
underwriters retained in connection with a plan of distribution of the
Registrable Securities described in Section 3 are expressly excluded from the
definition of "Registration Expenses" above.
(b) Other Expenses. To the extent the Company is not required to pay
Registration Expenses, each holder of securities included in any registration
will pay those Registration
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Expenses allocable to the holder's securities so included, and any Registration
Expenses not allocable will be borne by all sellers in proportion to the number
of securities each registers.
Section 8. Indemnification.
(a) Indemnification by Company. In the event of any registration of
Registrable Securities under the Securities Act pursuant to this Agreement, to
the full extent permitted by law, the Company agrees to indemnify and hold
harmless each holder of Registrable Securities, its officers, directors,
trustees, partners, employees, advisors and agents, and each Person who controls
(within the meaning of the Securities Act and the Exchange Act) the holder
against any and all losses, claims, damages, liabilities and expenses arising
out of (i) any untrue or allegedly untrue statement of material fact contained
in any Registration Statement or any amendment thereof under which such
Registrable Securities were registered under the Securities Act, any prospectus
or preliminary prospectus contained therein or any amendment thereof or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which such statements were made, except to the extent
the untrue statement or omission resulted from information that the holder
furnished in writing to the Company expressly for use therein, and (ii) any
failure to comply with any law, rule or regulation applicable to such
registration. Such indemnity shall remain in full force and effect, regardless
of any investigation made by such indemnified party, and shall survive the
transfer of such Registrable Securities by such holder. In connection with a
firm or best efforts underwritten offering, to the extent customarily required
by the managing underwriter, the Company will indemnify the underwriters, their
officers and directors and each Person who controls (within the meaning of the
Securities Act and the Exchange Act) the underwriters, to the extent customary
in such agreements.
(b) Indemnification by Holders of Securities. In connection with any
Registration Statement, each participating holder of Registrable Securities will
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any registration statement or
prospectus and each participating holder agrees, severally and not jointly, to
indemnify and hold harmless, to the extent permitted by law, the Company, its
directors, officers, trustees, partners, employees, advisors and agents, and
each Person who controls (within the meaning of the Securities Act and the
Exchange Act) the Company against any and all losses, claims, damages,
liabilities and expenses arising out of any untrue or allegedly untrue statement
of a material fact or any omission or alleged omission to state a material fact
required to be stated in the registration statement or prospectus or any
amendment thereof or supplement thereto necessary to make the statements therein
not misleading in light of the circumstances under which such statements were
made, but only to the extent that the untrue statement or omission is contained
in or omitted from any information or affidavit the holder furnished in writing
to the Company expressly for use therein and only in an amount not exceeding the
net proceeds received by the holder with respect to securities sold pursuant to
such registration statement. Such indemnity shall remain in full force and
effect, regardless of any investigation made by the Company, and shall survive
the transfer of such Registrable Securities by such holder. In connection with a
firm or best efforts underwritten offering, to the extent customarily required
by the managing underwriter, each participating holder of Registrable Securities
will indemnify the underwriters, their officers and directors and each Person
who controls the underwriters (within the meaning of the Securities Act and the
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Exchange Act), to the same extent as it has indemnified the Company; provided,
that the indemnity obligations of any holder contained in such agreement shall
be limited to the amount of such holder's net proceeds received from the sale of
its Registrable Securities in such offering.
(c) Indemnification Proceedings. Any Person entitled to indemnification
under this Agreement will (i) give prompt notice to the indemnifying party of
any claim with respect to which it seeks indemnification and (ii) unless in the
indemnified party's reasonable judgment a conflict of interest may exist between
the indemnified and indemnifying parties with respect to the claim, permit the
indemnifying party to assume the defense of the claim with counsel reasonably
satisfactory to the indemnified party. If the indemnifying party does not assume
the defense, the indemnifying party will not be liable for any settlement made
without its consent (but that consent may not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or will enter into any
settlement that does not include as an unconditional term thereof the claimant's
or plaintiff's release of the indemnified party from all liability concerning
the claim or litigation or which includes any non-monetary settlement. An
indemnifying party who is not entitled to or elects not to assume the defense of
a claim will not be under an obligation to pay the fees and expenses of more
than one counsel for all parties indemnified by the indemnifying party with
respect to the claim, unless in the reasonable judgment of any indemnified party
a conflict of interest may exist between the indemnified party and any other
indemnified party with respect to the claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of no more than one
additional counsel for the indemnified parties.
(d) Contribution. If the indemnification provided for in Section 8(a) or
(b) is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each indemnifying
party thereunder shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnified party and the indemnifying party in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the indemnified party and the indemnifying party 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 the indemnified party and the
indemnifying party and the parties' relative intent and knowledge.
The parties hereto agree that it would not be just and equitable if
contribution pursuant this Section 8(d) were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding anything herein to the contrary, no participating holder of
Registrable Securities acting as an indemnifying party shall be required to
contribute any amount in excess of the amount by which the net proceeds of the
offering (before deducting expenses, if any) received by such participating
holder exceeds the amount of any damages that such participating holder has
otherwise been required to pay 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.
11
The obligations of the Company and the holders of Registrable Securities
under this Section 8 shall survive the completion of any offering of Registrable
Securities in a registration statement, including the termination of this
Agreement.
Section 9. Rule 144. With a view to making available to the holders of
Registrable Securities the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a holder owns any Registrable Securities, furnish to
such holder forthwith upon request; a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act; a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
Section 10. Participation in Underwritten Registration. No Person may
participate in any underwritten registration without (a) agreeing to sell
securities on the basis provided in underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements (the holders of
Registrable Securities in a registration pursuant to Section 3 and the Company
in a piggyback registration pursuant to Section 4(d)), and (b) completing and
executing all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required by the underwriting arrangements.
Section 11. Termination. This Agreement shall terminate with respect to a
holder of Registrable Securities as of such time such holder is entitled to rely
on Rule 144(k) for sales of Registrable Securities without registration under
the Securities Act and without compliance with the public information, sales
volume, manner of sale or notice requirements of Rule 144 (c), (e), (f) or (h).
Section 12. Suspension of Registration Statement. The Company shall be
permitted to suspend the effectiveness of any Registration Statement hereunder
if (i) the Company provides at least 10 days' prior written notice to the Pequot
Stockholders of the Company's intention to make a public offering of its Common
Stock within 30 days of such notice, other than a Registration Statement filed
pursuant to Section 3 hereof or (ii) a merger, acquisition, business combination
or other similar transaction has been proposed and is being actively considered
by the Company and notice of the same is provided to the Pequot Stockholders.
Notwithstanding anything to the contrary in this Section 12, the Company shall
not be permitted to suspend the
12
effectiveness of any Registration Statement hereunder for more than 30
consecutive days at any one time or more than 60 days in any 12-month period.
Section 13. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall apply to the full extent set forth herein with respect to (i) the
Registrable Securities, (ii) any and all shares of voting common stock of the
Company into which the Registrable Securities are converted, exchanged or
substituted in any recapitalization or other capital reorganization by the
Company and (iii) any and all equity securities of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in conversion of, in exchange for
or in substitution of, the Registrable Securities and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof. The Company
shall use its best efforts to cause any successor or assign (whether by sale,
merger or otherwise) to enter into a new registration rights agreement with the
holders of Registrable Securities on terms substantially the same as this
Agreement as a condition of any such transaction.
(b) Amendment. This Agreement may be amended or modified only by a written
agreement executed by (i) the Company and (ii) a Pequot Majority in Interest.
Section 3(b) of this Agreement shall not be amended without the consent of the
Executives. Any Amendment or modification shall bind all of the parties hereto.
(c) Attorneys' Fees. In any legal action or proceeding brought to enforce
any provision of this Agreement, the prevailing party shall be entitled to
recover all reasonable expenses, charges, court costs and attorneys' fees in
addition to any other available remedy at law or in equity.
(d) Benefit of Parties; Assignment. Subject to the terms and conditions of
the Purchase Agreement, the Stockholders Voting Agreement of the Company dated
the date hereof and this subsection (d), including, without limitation, the
transfer restrictions contained therein, all of the terms and provisions of this
Agreement shall be binding on and inure to the benefit of the parties and their
respective successors and assigns, including, without limitation, all subsequent
holders of securities entitled to the benefits of this Agreement who agree in
writing to become bound by the terms of this Agreement. The rights to cause the
Company to register Registrable Securities under this Agreement may be
transferred or assigned by such holder only to: (i) partners, members and
affiliates of such holder or (ii) a transferee or assignee who acquires at least
five percent (5%) of the Registrable Securities held by such holder and then
outstanding (or, if a smaller amount, the number of Registrable Securities held
by such holder on an as-converted and fully diluted basis), provided that the
Company is given written notice promptly following the time of such transfer or
assignment, stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned, and, provided further, that the transferee or
assignee of such rights assumes in writing prior to such transfer or assignment,
the obligations of such holder under this Agreement.
13
(e) Captions. The captions of the sections and subsections of this
Agreement are solely for convenient reference and shall not be deemed to affect
the meaning or interpretation of any provision of this Agreement.
(f) Cooperation. The parties agree that after execution of this Agreement
they will from time to time, upon the request of any other party and without
further consideration, execute, acknowledge and deliver in proper form any
further instruments and take such other action as any other party may reasonably
require to carry out effectively the intent of this Agreement.
(g) Counterparts; Facsimile Execution. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement. Facsimile execution
and delivery of this Agreement shall be legal, valid and binding execution and
delivery for all purposes.
(h) Entire Agreement. Each party hereby acknowledges that no other party or
any other person or entity has made any promises, warranties, understandings or
representations whatsoever, express or implied, not contained in the Transaction
Documents (as defined in the Purchase Agreement) and acknowledges that it has
not executed this Agreement in reliance upon any such promises, representations,
understandings or warranties not contained herein or therein and that the
Transaction Documents supersede all prior agreements and understandings between
the parties with respect thereto. There are no promises, covenants or
undertakings other than those expressly set forth or provided for in the
Transaction Documents.
(i) Governing Law. The internal law of the State of New York will govern
the interpretation, construction, and enforcement of this Agreement and all
transactions and agreements contemplated hereby, notwithstanding any state's
choice of law rules to the contrary.
(j) No Inconsistent Agreements. The Company represents and warrants that it
has not granted to any Person the right to request or require the Company to
register any securities issued by the Company. For so long as at least 30% of
the shares of Series A Preferred Stock issued by the Company remain outstanding,
the Company shall not, except with the prior written consent of at least a
majority in interest of the Registrable Securities held by the Pequot
Stockholders, enter into any agreement with respect to its securities that shall
grant to any Person registration rights that in any way conflict with or are
prior to or equal in right to the rights provided under this Agreement.
(k) Notices. All notices, requests, demands, or other communications that
are required or may be given pursuant to the terms of this Agreement shall be in
writing and properly addressed to the addresses of the parties set forth in the
Purchase Agreement or to such other address(es) as the respective parties hereto
shall from time to time designate to the other(s) in writing. All notices shall
be effective upon receipt.
(l) Specific Performance. Each of the parties agrees that damages for a
breach of or default under this Agreement would be inadequate and that in
addition to all other remedies available at law or in equity that the parties
and their successors and assigns shall be entitled to specific performance or
injunctive relief, or both, in the event of a breach or a threatened breach of
this Agreement.
14
(m) Validity of Provisions. Should any part of this Agreement for any
reason be declared by any court of competent jurisdiction to be invalid, that
decision shall not affect the validity of the remaining portion, which shall
continue in full force and effect as if this Agreement had been executed with
the invalid portion eliminated; provided, however, that this Agreement shall be
interpreted to carry out to the greatest extent possible the intent of the
parties and to provide to each party substantially the same benefits as such
party would have received under this Agreement if such invalid part of this
Agreement had been enforceable. Whenever the words "include" or "including" are
used in the Agreement, they shall be deemed to be followed by the words "without
limitation."
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY:
MTM TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
PEQUOT STOCKHOLDERS:
PEQUOT PRIVATE EQUITY FUND III, L.P.
By: Pequot Capital Management, Inc.,
as Investment Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: General Counsel
Notice to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
C/o Pequot Capital Management, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Pequot Capital Management, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Citicorp Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PEQUOT OFFSHORE PRIVATE EQUITY PARTNERS III, L.P.
By: Pequot Capital Management, Inc.,
as Investment Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: General Counsel
Notice to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
C/o Pequot Capital Management, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Pequot Capital Management, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Citicorp ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
EXECUTIVES:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE I
Pequot Stockholders
Name and Address
of Stockholder
----------------------------------------------------
1. Pequot Private Equity Fund III, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇ ▇▇▇▇▇
c/o Pequot Capital Management, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Citicorp Center, ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
2. Pequot Offshore Private Equity Partners III, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇ ▇▇▇▇▇
c/o Pequot Capital Management, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Citicorp Center, ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇