EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
August 31, 2000 between Constellation 3D, Inc., a Florida corporation with
offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "Company") and each of the
entities listed under "Investors" on the signature page hereto (each an
"Investor" and collectively the "Investors"), each with offices at the address
listed under such Investor's name on Schedule I hereto.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Common Stock Investment Agreement,
dated the date hereof, among the Company and the Investors (the "Purchase
Agreement"), the Company has agreed to sell and issue to the Investors, and the
Investors have agreed to purchase from the Company, inter alia, an aggregate of
197,026 shares (the "Initial Shares") of the Company's common stock, $.001 par
value ("Common Stock"), and certain warrants, all as more fully specified and
subject to the terms and conditions set forth in the Purchase Agreement;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to issue the Initial Warrants, Optional Warrants and Adjustment Warrants
described therein (collectively, the "Warrants") exercisable for shares of
Common Stock ("Warrant Shares", "Optional Warrant Shares" and "Adjustment
Shares", respectively); and
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Investors with certain registration rights with respect to
the Initial Shares, Warrant Shares, Optional Warrant Shares, Adjustment Shares,
Anti-Dilution Shares, and MDP Shares (as defined herein), as well as certain
other rights and remedies as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Investors agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement and/or
the Warrants. As used in this Agreement, the following terms shall have the
following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Purchase Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Effectiveness Deadline" has the meaning specified in Section 2(a).
"Fair Market Value" shall have the meaning ascribed to such term in the
Warrants.
"Holder" and "Holders" shall mean the Investor or the Investors,
respectively, and any transferee of Registrable Securities and/or Warrants which
have not been sold to the public to whom the registration rights conferred by
this Agreement have been transferred in compliance with this Agreement.
"Interfering Events" shall have the meaning set forth in Section 2(b).
"Monthly Delay Payment" shall have the meaning specified in Section
2(b)(i)(C).
"Premium Redemption Price" shall mean the following:
(a) as to the Initial Shares, Optional Warrant Shares and
Warrant Shares, the greater of (i) 120% of the Share Purchase Price (with
respect to the Initial Shares and the Optional Warrant Shares) or 120% of the
exercise price of the Initial Warrants (with respect to the Warrant Shares) and
(ii) the highest Common Stock closing price on the Principal Market between and
including date of the event triggering the right of redemption and the trading
day immediately prior to the actual redemption of the Purchased Shares;
(b) as to the Adjustment Shares, Deficiency Shares and
Anti-Dilution Shares, 120% of the dollar amount which is the product of (i) the
number of shares to be redeemed, or the number of Deficiency Shares, as
applicable, and (ii) the Fair Market Value for shares of Common Stock in
existence at the time (x) of the closing of a redemption of shares, or a payment
for Deficiency Shares, as applicable, or (y) of the event triggering the right
to redemption or payment, whichever results in a greater Premium Redemption
Price.
(c) as to the Initial Warrants, Adjustment Warrants and
Optional Warrants, 120% of the dollar amount which is the product of (i) the
number of Warrant Shares, Adjustment Shares or Optional Warrant Shares to be
issued to the Holder upon exercise thereof multiplied by (ii) the Fair Market
Value for Shares of Common Stock in existence at the time (x) of the closing of
the redemption or (y) of the event triggering the right to redemption, whichever
results in a greater Premium Redemption Price.
"Purchased Shares" shall mean the Initial Shares, Warrant Shares and
Optional Warrant Shares.
"Purchased Shares Purchase Price" shall mean (i) with respect to the
Initial Shares and the Optional Warrant Shares, the Share Purchase Price, and
(ii) with respect to the Warrant Shares, the exercise price of the Initial
Warrants.
"Put Notice" shall have the meaning set forth in Section 2(b)(i)(B).
"Registrable Securities" shall mean: (i) the Initial Shares; (ii) the
Warrant Shares (without regard to Section 16 of the Initial Warrants); (iii) the
Adjustment Shares (without regard to Section 14 of the Adjustment Warrants);
(iv) the Optional Warrant Shares (without regard to Section 16 of the Optional
Warrants); (v) the Anti-Dilution Shares; (vi) the MDP Shares; (vii) securities
issued or issuable upon any stock split, stock dividend, recapitalization or
similar event with respect to the foregoing; and (v) any other security issued
as a dividend or other distribution with respect to, in exchange for or in
replacement of the securities referred to in the preceding clauses.
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The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, "blue sky"
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities" means the Registrable Securities and the Warrants.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all reasonable
fees and disbursements of counsel for Holders not included within "Registration
Expenses" and if the Holders engage a third party as an underwriter for the
purpose of distributing Registrable Securities on an underwritten basis, the
fees and expenses of such underwriting and any additional expenses of an
accountant incurred in order to obtain a "Comfort Letter."
"Trading Day" shall mean (x) if the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (y) if the Common Stock is not listed on
either of such stock exchanges but sale prices of the Common Stock are reported
on an automated quotation system, a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the foregoing provisions are inapplicable, a day on which
quotations are reported by National Quotation Bureau Incorporated.
2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including without
limitation the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable "blue sky" or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
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the Registrable Securities in the manner (including manner of sale) reasonably
requested by the Holder and in all U.S. jurisdictions. Such best efforts by the
Company shall include the following:
(a) The Company shall, as expeditiously as reasonably possible
after the Closing Date:
(i) But in any event within 30 days thereafter, prepare
and file a registration statement with the Commission on Form
S-1 or Form S-3, as applicable, under the Securities Act (or
in the event that the Company is ineligible to use either such
form, such other form as the Company is eligible to use under
the Securities Act) covering the Registrable Securities (such
registration statement, including any amendments or
supplements thereto and prospectuses contained therein, is
referred to herein as the "Registration Statement"), which
Registration Statement, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including
Rule 416), shall state that such Registration Statement also
covers such number of additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock
splits, stock dividends or similar events. The number of
shares of Common Stock initially included in such Registration
Statement shall be no less than 2,142,197 shares. Thereafter,
the Company shall use its best efforts to cause such
Registration Statement to be declared effective as soon as
reasonably practicable, and in any event prior to the earlier
of (i) 120 calendar days following the Closing Date or (ii) 5
Trading Days after SEC clearance to request acceleration (the
"Effectiveness Deadline"). The Company shall provide Holders
and their legal counsel reasonable opportunity to review any
such Registration Statement or amendment or supplement thereto
prior to filing. Without limiting the foregoing, the Company
will promptly respond to all SEC comments, inquiries and
requests, and shall request acceleration of effectiveness at
the earliest possible date. If the Company is not initially
eligible to use Form S-3, it will, at the request of a
majority-in-interest of the holders of Registrable Securities,
amend its Form S-1 to a Form S-3 at such time that it becomes
eligible to do so.
(ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus
used in connection with such Registration Statement, or
prepare and file such additional registration statements, as
may be necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such
Registration Statement in accordance with the intended methods
of disposition by the seller thereof as set forth in the
Registration Statement and notify the Holders of the filing
and effectiveness of such Registration Statement and any
amendments or supplements.
(iii) After the registration, furnish to each Holder
such numbers of copies of a current prospectus conforming with
the requirements of the Act, copies of the Registration
Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other
documents as such Holder may reasonably require in order to
facilitate the disposition of Registrable Securities owned by
such Holder.
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(iv) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such
other securities or "blue sky" laws of all U.S. jurisdictions
(except in any such jurisdiction where the registration and
qualification of the securities covered by such Registration
Statement is exempt under the laws and regulations of such
jurisdiction); provided that the Company 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.
(v) Notify each Holder immediately of the happening of
any event (but not the substance or details of any such event
unless specifically requested by a Holder) as a result of
which the prospectus (including any supplements thereto or
thereof and any information incorporated or deemed to be
incorporated by reference therein) included in such
Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and, pursuant to Section 2(f),
use its best efforts to promptly update and/or correct such
prospectus.
(vi) Notify each Holder immediately of the issuance by
the Commission or any state securities commission or agency of
any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use its best efforts to
prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest
possible time.
(vii) Permit a single firm of counsel, designated as
Holders' counsel by the Holders of a majority of the
Registrable Securities included in the Registration Statement,
to review the Registration Statement and all amendments and
supplements thereto within a reasonable period of time prior
to each filing, and shall not file any document in a form to
which such counsel reasonably objects.
(viii) Use its best efforts to list the Registrable
Securities covered by such Registration Statement with all
securities exchange(s) and/or markets on which the Common
Stock is then listed and/or quoted and prepare and file any
required filings with the National Association of Securities
Dealers, Inc. or any exchange or market where the Common Stock
is then traded.
(ix) If applicable, take all steps necessary to enable
Holders to avail themselves of the prospectus delivery
mechanism set forth in Rule 153 (or successor thereto) under
the Act.
(b) Set forth below in this Section 2(b) are (I) events that
may arise that the Investors consider will interfere with the full enjoyment of
their rights under the Purchase Agreement and this Agreement (the "Interfering
Events"), and (II) certain remedies applicable in each of these events.
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Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an Interfering Event
occurs and provide that the Investors may require that the Company redeem
outstanding Securities at a specified price if certain Interfering Events are
not timely cured.
Paragraph (v) provides, inter alia, that if payments required as the
remedy in the case of certain of the Interfering Events are not paid when due,
the Company may be required by the Investors to redeem outstanding Securities at
a specified price.
The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement.
(A) In the event that the Registration
Statement has not been declared effective by the Effectiveness
Deadline, then the Company shall pay to each Holder a Monthly
Delay Payment (as defined below) for each 30 day period (or
portion thereof) thereafter during which the Registration
Statement has not been declared effective, which Monthly Delay
Payments shall not in the aggregate exceed the maximum
percentage permitted by law.
(B) If the Registration Statement has not
been declared effective by 30 days following the Effectiveness
Deadline, then each Holder shall have the right but not the
obligation to require the Company to redeem the Warrants
and/or Registrable Securities, in whole or in part at the
Premium Redemption Price. Each Holder shall exercise such
right by providing the Company with written notice thereof
(the "Put Notice"), which such Put Notice shall include the
type and amount of each security that the Holder seeks to
redeem and a date at least 5 business days from the date
thereof on which the Holder seeks the redemption to occur (the
"Redemption Date").
(C) As used in this Agreement, a "Monthly
Delay Payment" shall be a payment in shares of Common Stock
("MDP Shares") computed as equal to "X"% of the Purchased
Shares Purchase Price of the Purchased Shares held by a Holder
for each 30 day period (or portion thereof) that the specified
condition in this Section 2(b) has not been fulfilled or the
specified deficiency has not been remedied, (prorated in each
case as appropriate) divided by the lesser of (i) the Share
Purchase Price, and (ii) the Fair Market Value of shares of
Common Stock at the time delivery of MDP Shares is demanded.
For purposes of this section, "X" shall mean "2" for the first
30 day period (or portion thereof) referred to above, and
"1.5" for each subsequent 30 day period (or portion thereof)
(the "Default Rate"). Payment of the Monthly Delay Payments
and Premium Redemption Price shall be due and payable from the
Company to such Holder within 5 business days of demand
therefor. Without limiting the foregoing, if payment in
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immediately available funds of the Premium Redemption Price is
not made within such 5 business day period, the Holder may
revoke and withdraw in whole or in part its election to cause
the Company to make such mandatory purchase at any time prior
to its receipt of such cash, without prejudice to its ability
to elect to receive that particular or other Premium
Redemption Price payments in the future.
(ii) No Listing; Premium Price Redemption for Delisting
of Class of Shares.
(A) In the event that the Company fails,
refuses or is unable to cause the Registrable Securities
covered by the Registration Statement to be listed and/or
quoted, as the case may be, with the Approved Market and each
other securities exchange and market on which the Common Stock
is then traded at all times during the period ("Listing
Period") commencing the earlier of the effective date of the
Registration Statement or the Effectiveness Deadline and
continuing thereafter for so long as any Warrants are
outstanding, then the Company shall make to each Holder a
Monthly Delay Payment for each 30 day period (or portion
thereof) during the Listing Period from and after such
failure, refusal or inability to so list the Registrable
Securities until the Registrable Securities are so listed
and/or quoted.
(B) In the event that shares of Common Stock
of the Company are delisted or not quoted from the Approved
Market at any time following the Closing Date and remain
delisted for 5 consecutive business days, then at the option
of each Holder and to the extent such Holder so elects, the
Company shall on 2 business days notice either (1) make to
such Holder a Monthly Delay Payment for each 30 day period (or
portion thereof) that the shares are delisted or not quoted or
(2) redeem the Securities held by such Holder, in whole or in
part, at a redemption price equal to the Premium Redemption
Price (as defined above); provided, however, that such Holder
may revoke such request at any time prior to receipt of such
Monthly Delay Payments or Premium Redemption Price, as the
case may be.
(iii) Blackout Periods. In the event any Holder is
unable to sell Registrable Securities under the Registration
Statement for more than (A) 10 consecutive Trading Days or (B)
an aggregate of 30 Trading Days in any 12 month period
("Suspension Grace Period"), including without limitation by
reason of a suspension of trading of the Common Stock on the
Approved Market, any suspension or stop order with respect to
the Registration Statement or the fact that an event has
occurred as a result of which the prospectus (including any
supplements thereto) included in such Registration Statement
then in effect includes an untrue statement of material fact
or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, or the
number of shares of Common Stock covered by the Registration
Statement is insufficient at such time to make such sales (a
"Blackout"), then the Company shall make to each Holder a
Monthly Delay Payment for each 30 day period (or portion
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thereof) from and after the expiration of the Suspension Grace
Period. In lieu of receiving the Monthly Delay Payment as
provided above, a Holder shall have the right but not the
obligation to elect to have the Company redeem its Securities
at a price equal to the Premium Redemption Price.
(iv) Redemption for Exercise Deficiency. In the event
that the Company does not have a sufficient number of shares
of Common Stock available to satisfy the Company's obligations
to any Holder upon receipt of a notice of exercise of a
Warrant from an Investor, or is otherwise unable or unwilling
for any reason to issue Common Stock as required by, and in
accordance with the provisions of, the Warrants, this
Agreement or the Purchase Agreement (each, an "Exercise
Deficiency"), then at any time 5 days after the commencement
of the running of the first 30 day period following an
Exercise Deficiency, at the request of any Holder, the Company
promptly shall purchase from such Holder, on the terms set
forth in Section 2(b)(i)(B) above, the Warrants that are
unexercisable and/or the shares of Common Stock required to be
issued that have not been issued, in each case as a result of
the Exercise Deficiency, at their Premium Redemption Price.
(v) Premium Redemption Price for Defaults.
(A) The Company acknowledges that any
failure, refusal or inability by the Company to perform the
obligations described in the foregoing paragraphs (i) through
(iv) will cause the Holders to suffer damages in an amount
that will be difficult to ascertain, including without
limitation damages resulting from the loss of liquidity in the
Registrable Securities and the additional investment risk in
holding the Registrable Securities. Accordingly, the parties
agree, after consulting with counsel, that it is appropriate
to include in this Agreement the foregoing provisions for
Monthly Delay Payments and mandatory redemptions in order to
compensate the Holders for such damages. The parties
acknowledge and agree that the Monthly Delay Payments and
mandatory redemptions set forth above represent the parties'
good faith effort to quantify such damages and, as such, agree
that the form and amount of such payments and mandatory
redemptions are reasonable and will not constitute a penalty.
(B) In the event that the Company fails to
make any Monthly Delay Payment within 10 calendar days of
demand therefor, each Holder shall have the right to sell to
the Company any or all of its Securities at the Premium
Redemption Price on the terms set forth in Section 2(b)(i)(B)
above.
(vi) Cumulative Remedies. Each Monthly Delay Payment
triggered by an Interfering Event provided for in the
foregoing paragraphs (i) through (v) shall be in addition to
each other Monthly Delay Payment triggered by another
Interfering Event; provided, however, that in no event shall
the Company be obligated to make to any Holder Monthly Delay
Payments in an aggregate amount greater than the Default Rate
for any 30 day period (or portion thereof). Notwithstanding
anything in this Section 2 to the contrary, the Company shall
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only be obligated to make Monthly Delay Payments to the
Investor with respect to a particular Interfering Event for a
total of 3 full 30 day periods; provided, that if the Company
fails or has failed to make payment in full to the Investor of
a Premium Redemption Price on the applicable Redemption Date
(with regard to any Interfering Event), then the limitations
contained in this sentence shall cease to be of any force and
effect with regard to any current or future Interfering
Events. After the expiration of such 3 full 30 day periods,
the Investor shall be immediately entitled to sell the
applicable Securities to the Company at the Premium Redemption
Price. The Monthly Delay Payments and mandatory redemptions
provided for above are in addition to and not in lieu or
limitation of any other rights the Holders may have at law, in
equity or under the terms of the Transaction Documents
including without limitation the right to specific
performance. Each Holder shall be entitled to specific
performance of any and all obligations of the Company in
connection with the registration rights of the Holders
hereunder.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by investment bankers
reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities. In the event that
the offering in which the Registrable Securities are to be sold is deemed to be
an underwritten offering or an Investor selling Registrable Securities is deemed
to be an underwriter, the Company shall:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in secondary offerings;
(ii) cause to be delivered, if requested, to the sellers
of Registrable Securities and the underwriter or underwriters,
if any, opinions of independent counsel to the Company, on and
dated as of the effective day (or in the case of an
underwritten offering, dated the date of delivery of any
Registrable Securities sold pursuant thereto) of the
Registration Statement, and within 90 days following the end
of each fiscal year thereafter, which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to
the Holders and the underwriter(s), if any, and their counsel
and covering, without limitation, such matters as the due
authorization and issuance of the securities being registered
and compliance with securities laws by the Company in
connection with the authorization, issuance and registration
thereof and other matters that are customarily given to
underwriters in underwritten offerings, addressed to the
Holders and each underwriter, if any.
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case
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of an underwritten offering, at the time of delivery of any
Registrable Securities sold pursuant thereto), and at the
beginning of each fiscal year following a year during which
the Company's independent certified public accountants shall
have reviewed any of the Company's books or records, a
"comfort" letter from the Company's independent certified
public accountants addressed to the Holders and each
underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the
Securities Act and the applicable published rules and
regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are
customarily covered by letters of the independent certified
public accountants delivered in connection with secondary
offerings; such accountants shall have undertaken in each such
letter to update the same during each such fiscal year in
which such books or records are being reviewed so that each
such letter shall remain current, correct and complete
throughout such fiscal year; and each such letter and update
thereof, if any, shall be reasonably satisfactory to the
Holders.
(iv) if an underwriting agreement is entered into, the
same shall include customary indemnification and contribution
provisions to and from the underwriters and procedures for
secondary underwritten offerings;
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable
Securities being sold or the managing underwriter or
underwriters, if any, to evidence compliance with clause (i)
above and with any customary conditions contained in the
underwriting agreement, if any; and
(vi) deliver to the Holders on the effective day (or in
the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto)
of the Registration Statement, and at the beginning of each
fiscal quarter thereafter, a certificate in form and substance
as shall be reasonably satisfactory to the Holders, executed
by an executive officer of the Company and to the effect that
all the representations and warranties of the Company
contained in the Purchase Agreement are still true and correct
except as disclosed in such certificate; the Company shall, as
to each such certificate delivered at the beginning of each
fiscal quarter, update or cause to be updated each such
certificate during such quarter so that it shall remain
current, complete and correct throughout such quarter; and
such updates received by the Holders during such quarter, if
any, shall have been reasonably satisfactory to the Holders.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Purchase Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
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by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved shares within ten (10) business
days of any shareholders meeting authorizing or reserving same and shall use its
best efforts to cause such Registration Statement to become effective within
seventy-five (75) days of such shareholders meeting. If the Holders become
entitled, pursuant to an event described in clause (iii) of the definition of
Registrable Securities, to receive any securities in respect of Registrable
Securities that were already included in a Registration Statement, subsequent to
the date such Registration Statement is declared effective, and the Company is
unable under the securities laws to add such securities to the then effective
Registration Statement, the Company shall promptly file, in accordance with the
procedures set forth herein, an additional Registration Statement with respect
to such newly Registrable Securities. The Company shall use its best efforts to
(i) cause any such additional Registration Statement, when filed, to become
effective under the Securities Act, and (ii) keep such additional Registration
Statement effective during the period described in Section 5 below. All of the
registration rights and remedies under this Agreement shall apply to the
registration of such newly reserved shares and such new Registrable Securities,
including without limitation the provisions providing for Monthly Delay Payments
contained herein.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3; Other Forms. The Company shall use its
best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until the later to occur of (i) sales are
permitted of all Registrable Securities without registration under Rule 144(k)
or (ii) such time as there are no longer any Warrants outstanding or issuable.
6. Indemnification.
(a) The Company Indemnity. The Company will indemnify each
Holder, each of its officers, directors and partners, and each person
controlling each Holder, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any state securities law or in either case, any rule or regulation thereunder
11
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Holder, each of its officers, directors and partners,
and each person controlling such Holder, each such underwriter and each person
who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to a Holder to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the Company by such
Holder or the underwriter (if any) therefor and stated to be specifically for
use therein. The indemnity agreement contained in this Section 6(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 the Company
(which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors
and partners, and each person controlling such other Holder(s), against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company and such other
Holder(s) and their directors, officers and partners, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating and defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under
this Section 6 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
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(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Article
except to the extent that the Indemnifying Party is materially and adversely
affected by such failure to provide notice. 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. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying each of such Indemnified Parties, shall contribute to the amount
paid or payable by each such Indemnified Party as a result of such losses,
claims, damages or liabilities as between the Company on the one hand and any
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of any Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by such
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter 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.
13
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall reasonably promptly
furnish to the Company such information regarding such Holder and the
distribution and/or sale proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement. The
intended method or methods of disposition and/or sale (Plan of Distribution) of
such securities as so provided by such Investor shall be included without
alteration in the Registration Statement covering the Registrable Securities and
shall not be changed without written consent of such Holder, except that such
Holder may not require an intended method of disposition which violates
applicable securities law.
10. NASDAQ Limit on Stock Issuances. Section 3.14 of the Purchase
Agreement shall govern limits imposed by NASDAQ rules on the issuance of Common
Stock.
11. Replacement Certificates. The certificate(s) representing the
Registrable Securities held by the Investor (or then Holder) may be exchanged by
the Investor (or such Holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number of
Registrable Securities, as reasonably requested by the Investor (or such Holder)
upon surrendering the same. No service charge will be made for such registration
or transfer or exchange.
12. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Registrable Securities or Warrants, and all other rights granted
to the Investors by the Company hereunder may be transferred or assigned to any
transferee or assignee of any Registrable Securities or Warrants; provided in
each case that the Company must be given written notice by the such Investor at
the time of or within a reasonable time after said transfer or assignment,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned; provided that the transferee or assignee of such rights agrees in
writing to be bound by the provisions of this Agreement.
13. Miscellaneous.
(a) Remedies. The Company and the Investors acknowledge and
agree that irreparable damage would occur in the event that any of the
14
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.
(b) Jurisdiction. THE COMPANY AND EACH OF THE INVESTORS (I)
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED STATES
SITTING IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY WAIVES,
AND AGREES NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY CLAIM THAT
IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND EACH OF THE
INVESTORS CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR
NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS
PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
(c) Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
Constellation 3D, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
with copies to:
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
to the Investors:
To each Investor at the address and/or
fax number set forth on Schedule I of the
Purchase Agreement
with copies to:
Koor Underwriter and Issuer Ltd.
Hayetzira 29
Tel-Aviv
Telephone: ▇▇▇▇-▇-▇▇▇▇▇▇▇
Facsimile: ▇▇▇▇-▇-▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Any party hereto may from time to time change its address for notices
by giving at least 10 days' written notice of such changed address to the other
parties hereto.
(d) Indemnity. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees)
incurred as a result of such parties' breach of any representation, warranty,
covenant or agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter. The representations and warranties and
the agreements and covenants of the Company and each Investor contained herein
shall survive the Closing.
(f) Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
(g) Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of any Investor
without its express written approval, unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement. The Company agrees to deliver a copy of any public announcement
regarding the matters covered by this Agreement or any agreement or document
executed herewith to each Investor and any public announcement including the
name of an Investor to such Investor, prior to the publication of such
announcements.
(h) Entire Agreement. This Agreement, together with the
Purchase Agreement, the Warrants and the agreements and documents contemplated
16
hereby and thereby, contains the entire understanding and agreement of the
parties, and may not be modified or terminated except by a written agreement
signed by both parties.
(i) Governing Law. THIS AGREEMENT AND THE VALIDITY AND
PERFORMANCE OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
(j) Severability. The parties acknowledge and agree that the
Investors are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint, that no Investor shall have any responsibility or
liability for the representations, warrants, agreements, acts or omissions of
any other Investor, and that any rights granted to "Investors" hereunder shall
be enforceable by each Investor hereunder.
(k) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL
BY JURY.
(l) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Signature page follows
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
CONSTELLATION 3D, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
KOOR'S INVESTORS
By: /s/ Kobi Zecharia
----------------------
Name: Kobi Zecharia
Title:
Signature page to Registration Rights Agreement