Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of March 2, 2007, between
Five Star Products, Inc., a Delaware corporation ("FS"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇
( "▇▇▇▇▇▇").
WHEREAS, pursuant to that certain Agreement, dated as of the date
hereof (the "FS Agreement"), between FS and ▇▇▇▇▇▇, ▇▇ is issuing to ▇▇▇▇▇▇
2,000,000 shares (the "FS Shares") of FS Common Stock; and
WHEREAS, as a condition to entering into the FS Agreement, ▇▇▇▇▇▇ has
required that FS extend to him certain registration rights as provided in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises set forth in this Agreement and in the FS Agreement, the parties
hereto, intending to be legally bound, agree as follows:
Section 1. General
1.1 Definitions. As used in this Agreement, in addition to terms defined
elsewhere herein, the following terms shall have the following respective
meanings:
(a) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
(b) "Five Star Shares" means the FS Common Stock owned by NPDC or any subsidiary
of NPDC (other than Five Star or any subsidiary of Five Star), including without
limitation any shares of FS Common Stock that JL Distributors, Inc. has the
right to acquire upon conversion of that certain convertible promissory note
issued by FS.
(c) "Form S-3" means such form under the Securities Act (including Rule 415
thereunder) as in effect on the date hereof or any successor registration form
under the Securities Act subsequently adopted by the SEC which permits inclusion
or incorporation of substantial information by reference to other documents
previously or hereafter filed by FS with the SEC.
(d) "FS Common Stock" means FS's common stock, par value $.01 per share.
(e) "Lock-Up Period" has the meaning given to such term in the FS Agreement.
(f) "NPDC" means National Patent Development Corporation, a Delaware
corporation.
(g) "NPDC Common Stock" means NPDC's common stock, par value $.01 per share.
(h) "NPDC Shares" means the 200,0000 shares of NPDC Common Stock issued to
▇▇▇▇▇▇ pursuant to the Purchase Agreement.
(i) "Purchase Agreement" means the Purchase Agreement, dated as of the date
hereof, between NPDC and ▇▇▇▇▇▇.
(j) "Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
(k) "Registrable Securities" means the FS Shares owned by ▇▇▇▇▇▇, any shares of
FS Common Stock (i) owned by ▇▇▇▇▇▇ and issued in exchange for the NPDC Shares
or (ii) issuable in exchange for the NPDC Shares owned by ▇▇▇▇▇▇, and any shares
of capital stock of FS issued in connection with (or issuable upon the
conversion or exercise of any warrant, right, or other security which is issued
as) a dividend, stock split, reclassification, recapitalization or other
distribution with respect to, or in exchange for or in replacement of, the FS
Shares or such shares of FS Common Stock; provided, however, that Registrable
Securities shall not include any securities which are eligible for sale under
paragraph (k) of Rule 144.
(l) "Registration Expenses" means all expenses incurred by FS in complying with
Sections 2.1 and 2.2, hereof, including, without limitation, all registration
and filing fees, printing expenses, escrow fees, listing fees, fees and
disbursements of counsel for FS (but excluding any fees and disbursements of
counsel for ▇▇▇▇▇▇), blue sky fees and expenses (including reasonable fees and
disbursements of underwriter's counsel in connection with blue sky
qualifications and filings), and the expense of any special audits and/or
comfort letters incident to or required by any such registration (but excluding
the compensation of regular employees of FS).
(m) "Rule 144" means Rule 144 promulgated by the SEC under the Securities Act.
(n) "SEC" means the Securities and Exchange Commission.
(o) "Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
(p) "Selling Expenses" means all underwriting discounts and selling commissions
applicable to a sale of Registrable Securities.
Section 2. Registration.
2.1 Demand Registration.
(a) Subject to the conditions of this Section 2.1, if FS receives a written
request from ▇▇▇▇▇▇ that FS file a registration statement under the
Securities Act covering the registration of all or a part of his
Registrable Securities, then FS shall use its commercially reasonable
efforts to effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities that he has requested to
be registered (such request to include the number of Registrable
Securities sought to be included and the intended method or methods of
distribution of such Registrable Securities), subject to and in
accordance with the terms, conditions, procedures, and limitations
contained in this Agreement. ▇▇▇▇▇▇ may at any time prior to the
effective date of the registration statement relating to a requested
registration under this Section 2.1 revoke his request by providing
written notice to FS, in which case the Registration Expenses will be
borne in accordance with Section 2.4.
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(b) FS shall not be required to effect a registration pursuant to this
Section 2.1:
(i) prior to the expiration of the Lock-Up Period;
(ii) after FS has effected one registration pursuant to this Section 2.1,
provided, however, that a registration shall not count as having been
effected unless and until it has become effective, and unless and until
▇▇▇▇▇▇ shall have had the opportunity to register and sell 100% of his
Registrable Securities initially requested to be registered pursuant
thereto, except that a registration the request for which has been
revoked by ▇▇▇▇▇▇ shall count as having been effected unless the
revocation is based upon material adverse information concerning the
business or financial condition of FS, of which ▇▇▇▇▇▇ was not aware at
the time of his request for registration;
(iii) during the period starting with the date of filing of, and ending on
the date 90 days following the effective date of, a registration
statement pertaining to any underwritten public offering in which
▇▇▇▇▇▇ was given the opportunity to participate pursuant to Section
2.2; provided that FS uses commercially reasonable efforts to cause
such registration statement to become effective; or
(iv) during any period when FS is not eligible to use Form S-3
to register the Registrable Securities.
2.2 Piggyback Registrations.
(a) FS shall notify ▇▇▇▇▇▇ at least 15 days prior to the filing of any
registration statement under the Securities Act for a public offering of
securities of FS (including, but not limited to, registration statements
relating to secondary offerings of securities of FS, but excluding registration
statements relating to employee benefit plans or corporate reorganizations or
other transactions under Rule 145 of the Securities Act) and will afford ▇▇▇▇▇▇
an opportunity to include in such registration statement all or part of the
Registrable Securities held by ▇▇▇▇▇▇; provided, that (x) no such notice shall
be required, and this Section 2.2 shall not be applicable, at any time when a
registration statement filed under Section 2.1 is effective. Such notice shall
(i) offer ▇▇▇▇▇▇ the opportunity to register such number of Registrable
Securities as he may request and (ii) describe such securities and specify the
form and manner and other relevant facts involved in such proposed registration
(including, without limitation, if known, the price at which such securities are
reasonably expected to be sold to the public, whether or not such registration
will be in connection with an underwritten offering and, if so, the identity of
the managing underwriter, whether such underwritten offering will be pursuant to
a "best efforts" or "firm commitment" underwriting, and, if known, the amount of
underwriting discount reasonably expected to be incurred in connection
therewith). If ▇▇▇▇▇▇ desires to include in any such registration statement all
or part of the Registrable Securities held by him, he shall, within 15 days
after receipt of the above-described notice from FS, so notify FS in writing.
Such notice shall state the number of Registrable Securities which ▇▇▇▇▇▇
requests to be included in such registration and his intended method of
disposition of the Registrable Securities. If ▇▇▇▇▇▇ decides not to include all
or any part of his Registrable Securities in any registration statement filed by
FS, he shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration statements
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as may be filed by FS, all upon the terms and conditions set forth herein. In
addition, inclusion of any part of the Registrable Securities in a registration
pursuant to this Section 2.2(a) shall not affect ▇▇▇▇▇▇'▇ rights under Section
2.1.
(b) Notwithstanding the provisions of Section 2.2(a), FS shall not be required
to give ▇▇▇▇▇▇ notice of its intent to file any registration statement of the
type described in Section 2.2(a) which is filed prior to the expiration of the
Lock-Up Period (a "Lock-up Period Registration Statement"), and (except as set
forth in the last sentence of this Section 2.2(b)) ▇▇▇▇▇▇ shall not have the
right to include any of his Registrable Securities in any Lock-Up Period
Registration Statement, unless such Lock-Up Period Registration Statement
includes all or a part of the Five Star Shares (such registration statement, a
"Qualifying Registration Statement"). In the event that FS shall file a
Qualifying Registration Statement, ▇▇▇▇▇▇ shall be entitled to include his
Registrable Securities in such Qualifying Registration Statement; provided,
however, that the number of Registrable Securities that he shall be entitled to
include shall be limited to such number of his Registrable Securities as equals
the total number of Registrable Securities then owned by ▇▇▇▇▇▇ multiplied by a
fraction, the numerator of which is the number of shares of Five Star Shares
that are being included in such Qualifying Registration Statement and the
denominator of which is the total number of Five Star Shares. If a Lock-Up
Period Registration Statement, other than a Qualifying Registration Statement,
is not declared effective by the SEC prior to the expiration of the Lock-Up
Period, FS shall give ▇▇▇▇▇▇ a reasonable opportunity to include any of his
Registrable Securities in such Lock-Up Period Registration Statement.
(c) If the registration statement under which FS gives notice under this Section
2.2 is for an underwritten offering, ▇▇▇▇▇▇'▇ right to be included in a
registration pursuant to this Section 2.2 shall be conditioned upon his
participation in the underwriting to the extent provided herein and his entering
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by FS. Notwithstanding any other
provision of this Section 2.2, if the underwriter determines in good faith that
marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities), then FS shall so advise ▇▇▇▇▇▇,
and the number of securities that may be included in the underwriting shall be
allocated first, to FS; and second, to ▇▇▇▇▇▇ and to any other stockholders of
FS having comparable rights, on a pro rata basis based on the total number of
Registrable Securities requested to be sold by ▇▇▇▇▇▇ and such other
stockholders. If ▇▇▇▇▇▇ disapproves of the terms of any such underwriting, he
may elect to withdraw therefrom by written notice to FS and the underwriter,
delivered at least 10 business days prior to the effective date of the
registration statement, which withdrawal shall not affect ▇▇▇▇▇▇'▇ rights under
Section 2.1 or 2.2. Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration.
(d) FS shall have the right to terminate or withdraw any registration initiated
by it under this Section 2.2 prior to the effectiveness of such registration
whether or not ▇▇▇▇▇▇ has elected to include securities in such registration.
The Registration Expenses of such withdrawn registration shall be borne by FS in
accordance with Section 2.4.
2.3 Suspension of Registration. Under any registration statement filed pursuant
to Section 2 hereof, FS may restrict disposition of Registrable Securities and
▇▇▇▇▇▇ will not be able to dispose of such Registrable Securities, if FS shall
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have delivered a certificate to ▇▇▇▇▇▇ signed by an officer of FS stating that
in the good faith judgment of the Board of Directors of FS a delay in the
disposition of such Registrable Securities is necessary because FS has
determined that such sales would require public disclosure by FS of material
nonpublic information that is not included in such registration statement. In
the event of the delivery of such certificate to ▇▇▇▇▇▇, ▇▇ shall use its
commercially reasonable efforts to amend such registration statement or amend or
supplement the related prospectus as necessary, and take all other actions
necessary, to allow the proposed sale to take place as promptly as possible (or,
if in the reasonable judgment of the Board of Directors of FS disclosure of such
event would be detrimental to FS, promptly after the earlier of (a) the date
that disclosure of such event would not be detrimental to FS and (b) 120 days
after the date of such certificate, provided, however, that such right to delay
the sales of Registrable Securities may be exercised by FS not more than twice
in any 12-month period and that the aggregate delay in the sale of the
Registrable Securities included in the registration statement shall not exceed
180 days from the date of the respective certificates.
2.4 Expenses of Registration. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration pursuant to
Section 2.1 or 2.2 shall be borne by FS. All Selling Expenses incurred in
connection with any registrations hereunder shall be borne by the holders of the
securities so registered pro rata on the basis of the number of shares so
registered. FS shall not, however, be required to pay for expenses of (a) any
registration begun pursuant to Section 2.1, the request for which has been
subsequently withdrawn by ▇▇▇▇▇▇, unless (i) the withdrawal is based upon
material adverse information concerning the business or financial condition of
FS, of which ▇▇▇▇▇▇ was not aware at the time of such request; or (ii) ▇▇▇▇▇▇
agrees to forfeit his requested registration under Section 2.1. If FS is not
required to pay the Registration Expenses, such expenses shall be borne by
▇▇▇▇▇▇; and, if FS has previously paid any such expenses, ▇▇▇▇▇▇ shall promptly
reimburse FS therefore.
2.5 Obligations of FS. Whenever required to register any Registrable Securities,
FS shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to such
Registrable Securities and use its commercially reasonable efforts to cause such
registration statement to become effective.
(b) Use its commercially reasonable efforts to keep such registration statement
effective in the case of a registration statement under Section 2.1, for up to
90 days, or, if earlier, until ▇▇▇▇▇▇ has completed the distribution related
thereto.
(c) Prepare and file with the SEC such amendments (including post effective
amendments and supplemental opinions of counsel, if required) and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in Section 2.5(b).
(d) Furnish to ▇▇▇▇▇▇ such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
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Act, and such other documents as they may reasonably request to facilitate the
disposition of Registrable Securities owned by him.
(e) Use its commercially reasonable efforts to register and qualify the
Registrable Securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as ▇▇▇▇▇▇ shall be reasonably
request, and do any and all other acts and things which may be reasonably
necessary or advisable to enable ▇▇▇▇▇▇ to consummate the disposition of the
Registrable Securities owned by him in such jurisdictions; provided that FS
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(f) Use its commercially reasonable efforts to cause the Registrable Securities
covered by such registration statement to be registered or qualified with or
approved by such other governmental agencies or authorities (including, without
limitation, state securities commissions) as may be necessary to enable ▇▇▇▇▇▇
to consummate the disposition of such Registrable Securities.
(g) Notify ▇▇▇▇▇▇, promptly after FS shall receive notice thereof, of the date
and time the registration statement and each post-effective amendment thereto
has become effective or a supplement to any prospectus forming a part of such
registration statement has been filed.
(h) Notify ▇▇▇▇▇▇, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and, at
▇▇▇▇▇▇'▇ request, subject to Section 2.3, deliver a reasonable number of copies
of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(i) Within a reasonable time before each filing of the registration statement or
any amendment or supplement thereto with the SEC, furnish to one counsel,
selected by ▇▇▇▇▇▇, copies of such documents proposed to be filed, which
documents shall be subject to the reasonable approval of such counsel.
(j) Use its commercially reasonable efforts to prevent the issuance of any order
suspending the effectiveness of a registration statement and, if one is issued,
immediately notify ▇▇▇▇▇▇ of the receipt of such notice and use its commercially
reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of a registration statement at the earliest possible moment.
(k) Make available to ▇▇▇▇▇▇ and any attorney, accountant, or other agent or
representative retained by him (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents, and properties of FS, as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause FS's officers, directors, and employees to supply all
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information requested by any such Inspector in connection with such registration
statement, subject, in each case, to such confidentiality agreements as FS shall
reasonably request.
(l) Use its commercially reasonable efforts to cause the securities covered by
such registration statement to be listed on any securities exchange or quoted on
any quotation system on which similar securities issued by FS are then listed or
quoted.
(m) Otherwise use its commercially reasonable efforts to cooperate with the SEC
and other regulatory agencies and take all reasonable actions and execute and
deliver or cause to be executed and delivered all documents reasonably necessary
to effect the registration of any securities under this Agreement.
(n) Provide a transfer agent and registrar for all such Registrable Securities
not later than the effective date of such registration statement.
(o) If such registration involves an underwritten offering, obtain and furnish a
comfort letter, dated the effective date of such registration statement, and the
date of the closing under the underwriting agreement, signed by FS's independent
public accountants and addressed to ▇▇▇▇▇▇, in customary form and covering such
matters as are customarily covered by comfort letters by independent public
accountants in such public offerings and such other financial matters as ▇▇▇▇▇▇
may reasonably request.
(p) If such registration involves an underwritten offering, furnish a legal
opinion of FS's counsel, dated the date of the closing under the underwriting
agreement and addressed to ▇▇▇▇▇▇, with respect to the registration statement,
each amendment and supplement thereto, the prospectus included therein
(including the preliminary prospectus) and other documents relating thereto, in
customary form and covering such matters as are customarily covered by legal
opinions of issuers' counsel in such public offerings.
(q) During the period when a prospectus is required to be delivered under the
Securities Act, promptly file all documents required to be filed with the SEC
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act.
2.6 Termination of Registration Rights. ▇▇▇▇▇▇'▇ registration rights shall
expire if all Registrable Securities held by and issuable to him may be sold
under SEC Rule 144 during any 90 day period.
2.7 Furnishing Information. It shall be a condition precedent to the obligations
of FS to take any action pursuant to Section 2.1, or 2.2 that ▇▇▇▇▇▇ shall
furnish to FS such information regarding himself, the Registrable Securities
held by him, and the intended method of disposition of such securities as shall
be required to effect the registration of his Registrable Securities.
2.8 Indemnification. If any Registrable Securities are included in a
registration statement under Section 2.1 or 2.2:
(a) To the extent permitted by law, FS will indemnify and hold harmless ▇▇▇▇▇▇
and his heirs, executors, personal representatives and agents, against any
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losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act, or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions, or violations (collectively a "Violation") by FS: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by FS of the Securities Act, the
Exchange Act, or any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act, or any state securities law in
connection with the offering covered by such registration statement; and,
subject to Section 2.8(c), FS will pay as incurred to ▇▇▇▇▇▇ and his heirs,
executors, personal representatives and agents any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 2.8(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of FS, which consent shall not be
unreasonably withheld, nor shall FS be liable in any such case for any such
loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by such person. With respect to any untrue statement or alleged
untrue statement made in, or omission or alleged omission from, any preliminary
prospectus, any Rule 430A prospectus, or any prospectus, the indemnity agreement
contained in this Section 2.8(a) with respect to such preliminary prospectus,
Rule 430A prospectus, or prospectus, to the extent it is based on the claim of a
person who purchased securities directly from a person, shall not inure to the
benefit of such person (or to the benefit of any of its partners, members,
officers, directors, trustees, stockholders, employees, agents, or counsel, or
any person controlling such person ) if the prospectus (or the prospectus as
amended or supplemented if FS shall have filed with the SEC any amendment or
supplement thereto) which shall have been furnished to such person prior to the
time it sent written confirmation of or otherwise confirmed such sale to such
purchaser does not contain such statement, alleged statement, omission, or
alleged omission and a copy of the prospectus (or the prospectus as amended or
supplemented if FS shall have filed with the SEC any amendment or supplement
thereto) shall not have been sent or given to such purchaser and such purchaser
shall not otherwise have received a copy thereof at or prior to the written
confirmation of such sale.
(b) To the extent permitted by law, ▇▇▇▇▇▇ will, if Registrable Securities held
by ▇▇▇▇▇▇ are included in the securities as to which such registration is being
effected, indemnify and hold harmless FS, each of its directors, its officers,
and each person, if any, who controls FS within the meaning of the Securities
Act, against any losses, claims, damages, or liabilities (joint or several) to
which FS or any such person may become subject under the Securities Act, the
Exchange Act, or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) 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 by ▇▇▇▇▇▇ specifically for use in connection with such
registration; and, subject to Section 2.8(c), ▇▇▇▇▇▇ will pay as incurred any
legal or other expenses reasonably incurred by FS or any such person in
connection with investigating or defending any such loss, claim, damage,
liability, or action if it is judicially determined that there was such a
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Violation; provided, however, that the indemnity agreement contained in this
Section 2.8(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of ▇▇▇▇▇▇, which consent shall not be unreasonably withheld; provided
further, that in no event shall any indemnity obligation of ▇▇▇▇▇▇; under this
Section 2.8 exceed the net proceeds received by ▇▇▇▇▇▇ from the sale of
Registrable Securities pursuant to such registration statement.
(c) Promptly after receipt by an indemnified party under this Section 2.8 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 2.8, 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
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.8.
(d) If the indemnification provided for in this Section 2.8 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any losses, claims, damages, or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage, or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage,
or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by ▇▇▇▇▇▇ hereunder exceed the
net proceeds from the offering received by him. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 2.8
were determined by pro rata allocation or any other method of allocation which
does not take into account the equitable consideration referred to in this
Section 2.8(d).
(e) The obligations of FS and ▇▇▇▇▇▇ under this Section 2.8 shall survive
completion of any offering of Registrable Securities in a registration statement
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and the termination of this Agreement. No indemnifying party, in the defense of
any such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
2.9 Rule 144. With a view to making available to ▇▇▇▇▇▇ the benefits of certain
rules and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, FS agrees to use its commercially
reasonable efforts to, at all times at which any Registrable Securities are
eligible for sale under Rule 144 (other than paragraph (k) thereof):
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 or any similar or analogous rule
promulgated under the Securities Act;
(b) file with the SEC, in a timely manner, all reports and other documents
required of FS under the Exchange Act;
(c) furnish to ▇▇▇▇▇▇, forthwith upon request, a written statement by FS as
to its compliance with the reporting requirements of Rule 144 and of
the Exchange Act, a copy of the most recent annual or quarterly report
of FS, and such other reports and documents as ▇▇▇▇▇▇ may reasonably
request to sell Registrable Securities under Rule 144; and
(d) cooperate with ▇▇▇▇▇▇ in good faith to enable ▇▇▇▇▇▇ to deliver,
promptly upon any sale of Registrable Securities (or securities which,
in the absence of eligibility for sale under Rule 144, would be
Registrable Securities) by him under Rule 144 under the Securities Act,
certificates representing such securities which shall not contain any
restrictive legend.
Section 3. Miscellaneous.
3.1 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to conflict of laws.
3.2 No Assignment. Neither this Agreement or any rights hereunder may be
assigned by either party.
3.3 Entire Agreement. This Agreement, the FS Agreement, the Purchase Agreement,
and the other documents delivered pursuant thereto set forth the entire
understanding of the parties with respect to the subject matter hereof and
supersede all existing agreements among them concerning such subject matter.
3.4 Severability. If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
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3.5 Amendment and Waiver.
(a) Any provision of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), by written instrument executed by FS and
▇▇▇▇▇▇.
(b) Any waiver of a breach of any provision of this Agreement shall not operate
as or be construed to be a waiver of any other breach of such provision or of
any breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing.
3.6 Notices and Consents. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be given by
Federal Express, Express Mail, or similar overnight delivery or courier service
or delivered (in person or by telecopy, telex, or similar telecommunications
equipment) against receipt to the party to whom it is to be given (a) in the
case of FS, to its address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or (b) in the case of ▇▇▇▇▇▇, to his address at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ (or, in either case, to such other
address as the party shall have furnished in writing in accordance with the
provisions of this Section 3.6). Any notice shall be deemed given at the time of
receipt thereof.
3.7 Specific Performance. In addition to any other remedy provided at law or
equity, the parties hereto shall be entitled to specific performance of this
Agreement.
3.8 Headings. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
3.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument. The transmission by facsimile by each party of a signed
counterpart copy of this Agreement to the other party shall be deemed proof of
signature of the original and the signed facsimile so transmitted shall be
deemed an original for the purposes of this Agreement.
3.10 Pronouns. All pronouns contained herein, and any variations thereof, shall
be deemed to refer to the masculine, feminine or neutral, singular or plural, as
to the identity of the parties hereto may require.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
FIVE STAR PRODUCTS, INC.
By:_________________________
Name:
Title:
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