REGISTRATION RIGHTS AGREEMENT
Exhibit
10.4
This
Registration Rights Agreement (“Agreement”), dated as of June 11, 2007, is made
by and between ▇▇▇▇▇▇▇▇ TECHNOLOGIES, INC., a Florida corporation (“Company”),
and SOUTHRIDGE
PARTNERS LP, a Delaware limited partnership, SOUTHSHORE CAPITAL FUND LTD, a
Cayman Islands corporation, ABERDEEN AVENUE LLC, a Cayman Islands limited
liability company, BRITTANY CAPITAL MANAGEMENT LTD., a Bahamian corporation,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and syndicated investors (each such investor is
an
“Investor,” and all such investors are, collectively, the
“Investors”).
RECITALS
WHEREAS,
upon
the terms and subject to the conditions of the Litigation Settlement, Securities
Purchase, Relinquishment and Exchange Agreement (“Purchase Agreement”), as of
even date, between the Investors and the Company, the Company has agreed to
transfer to the Investors (other than Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇) (i)
three
million one hundred fifty-five thousand nine hundred forty-nine
(3,155,949)
shares
of the Technest Common Stock (the “Purchased Technest Shares”), and (ii)
5,879,322 shares of Technest Common Stock pursuant to conversions of shares
of
the Company’s Series G Convertible Preferred Stock, $0.0001 par value per share
(the “Series G Conversion Shares,”), issued on even date; and
WHEREAS,
pursuant to the Purchase Agreement, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ have agreed
to
relinquish the Company’s outstanding Series F Preferred Stock;
WHEREAS,
pursuant to the terms an equity grant dated October 20, 2006 ▇▇. ▇▇▇▇▇▇ and
▇▇.
▇▇▇▇▇▇▇ are entitled to an immediate grant of 500,000 shares of Common Stock
of
Technest as a consequence of the transactions contemplated by the Purchase
Agreement which may be deemed to include a “change of control” of the Company
and have agreed to relinquish such right in exchange for the immediate issuance
to each of them of 375,000 shares of Technest Common Stock (750,000 shares
in
the aggregate, which, together with the Purchased Technest Shares and the Series
G Conversion Shares, are referred to herein as the “Registrable Securities”);
and
WHEREAS,
to
induce the Investors to execute and deliver the Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act
of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, “Securities Act”), and applicable state
securities laws with respect to the Registrable Securities;
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and the Investors hereby agree as
follows:
1. Definitions.
(a) As
used
in this Agreement, the following terms shall have the following
meaning:
(i) “Business
Day” means any
day
that is not a Saturday, Sunday, or legal holiday in the State of New York when
commercial banking institutions are required to be closed.
(ii) “Closing
Date” means the date of this Agreement.
(iii) “Investor”
and “Investors” have the meaning set forth in the preamble to this
Agreement.
(iv) “Potential
Material Event” means any of the following: (a) possession by the Company of
material information not ripe for disclosure in a Registration Statement (as
defined below), which shall be evidenced by determinations in good faith by
the
Board of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of
the
Company, or (b) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in a Registration Statement at such time,
which
determination shall be accompanied by a good faith determination by the Board
of
Directors of the Company that the Registration Statement would be materially
misleading absent the inclusion of such information.
(v) “Register”,
“registered” and “registration” refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a delayed or continuous
basis (“Rule 415”), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the “SEC”).
(vi) “Registration
Statement” means a registration statement of the Company under the Securities
Act.
(vii) “Technest”
means Technest Holdings, Inc., a Nevada corporation.
(viii) “Technest
Common Stock” means the common stock of Technest, $0.001 par value per
share.
(b)
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement.
2. Requested
Registration. In
case
the Company shall receive from the Investors holding rights to a majority of
the
Registrable Securities (“Initiating Holders”) a written request that the Company
effect any registration, qualification or compliance with respect to Registrable
Securities, the Company will: (i) promptly give written notice of the proposed
registration, qualification or compliance to all other Investors; and (ii)
as
soon as practicable, use its best efforts to effect such registration,
qualification or compliance (including, without limitation, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the
Securities
2
Act
and
any other governmental requirements or regulations) as may be so requested
and
as would permit or facilitate the sale and distribution of all or such portion
of such Registrable Securities as are specified in such request, together
with
all or such portion of the Registrable Securities of any Investor or Investors
joining in such request as are specified in a written request received by
the
Company within twenty (20) days after receipt of such written notice from
the
Company; provided, however, that the Company shall not be obligated to take
any
action to effect any such registration, qualification or compliance pursuant
to
this Section 2:
(A) in
any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service
in
such jurisdiction and except as may be required by the Securities
Act;
(B) during
the period starting with the date sixty (60) days prior to the Company’s
estimated date of filing of, and ending on the date six months immediately
following the effective date of, any registration statement pertaining to
securities of the Company (other than a registration of securities in a Rule
145
transaction, or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith all reasonable efforts to cause
such
registration statement to become effective; or
(C) after
the
Company has effected two such registrations in any twelve month period pursuant
to this Section 2, and such registrations have been declared or ordered
effective.
Subject
to the foregoing clauses (A) through (C), the Company shall cause Technest
to
prepare and file a Registration Statement covering the Registrable Securities
so
requested to be registered as soon as practicable after receipt of the request
or requests of the Initiating Holders, but in any event within one hundred
eighty (180) days of such request or requests (the “Filing Date”). The Company
shall use its best efforts to cause the Registration Statement relating to
the
Registrable Securities for which a request for registration has been made to
become effective within two hundred seventy (270) days after the Filing Date
(“Effective Date”). Such Registration Statement shall state that, in accordance
with the Securities Act, it also covers such indeterminate number of additional
shares of Technest Common Stock as may become issuable to prevent dilution
resulting from stock splits, or stock dividends.
3. Obligation
of the Company. In
connection with the registration of the Registrable Securities set forth in
Section 2 above, the Company shall cause each of the following:
(a) Keep
the
Registration Statement effective at all times until the earliest of (i) the
date
when the Investors may sell all Registrable Securities under Rule 144 without
volume limitations, or (ii) the date the Investors no longer owns any of the
Registrable Securities (collectively, the “Registration Period”), which
Registration Statement (including any amendments or supplements, thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
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(b) Prepare
and file with the SEC such amendments (including post-effective amendments)
and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration
Statement effective at all times during the Registration Period, and, during
the
Registration Period, and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities of the Company
and
Technest covered by the Registration Statement until the expiration of the
Registration Period.
(c) Permit
a
single firm of counsel designated by Investors to review the Registration
Statement and all amendments and supplements thereto a reasonable period of
time
(but not less than three (3) Business Days) prior to their filing with the
SEC,
and not file any document in a form to which such counsel reasonably
objects.
(d) Notify
Investors and Investors’ legal counsel identified to the Company (“Investors’
Counsel”) (and, in the case of (i)(A) below, not less than one (1) Business Day
prior to such filing) and (if requested by any such person) confirm such notice
in writing no later than one (1) Business Day following the day (i): (A) when
a
prospectus or any prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) whenever the SEC notifies
the Company whether there will be a “review” of such Registration Statement; (C)
whenever the Company receives (or a representative of the Company receives
on
its behalf) any oral or written comments from the SEC with respect to a
Registration Statement (copies or, in the case of oral comments, written or
oral
summaries of such comments shall be promptly furnished by the Company to
Investors’ Counsel); and (D) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or the prospectus or
for
additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering any or
all
of the Registrable Securities or the initiation of any proceedings for that
purpose; (iv) if at any time any of the representations or warranties of the
Company contained in any agreement (including any securities purchase agreement)
contemplated hereby ceases to be true and correct in all material respects;
(v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any
proceeding for such purpose; and (vi) of the occurrence of any event that to
the
knowledge of the Company makes any statement made in the Registration Statement
or the prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires any
revisions to the Registration Statement, the prospectus or other documents
so
that, in the case of the Registration Statement or the prospectus, as the case
may be, it will not contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein, in the light of the circumstances under which they were
made, not misleading. In addition, the Company shall furnish Investors’ Counsel
with copies of all intended written responses to the comments contemplated
in
clause (C) of this Section not later than one (1) Business Day in advance of
the
filing of such responses with the SEC so that the Investors shall have the
opportunity to comment thereon.
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(e) Furnish
to the Investors, (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company, one (1) copy of
the
Registration Statement, each preliminary prospectus and the prospectus, and
each
amendment or supplement thereto, and (ii) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents, as the Investors may reasonably request in order
to
facilitate the disposition of the Registrable Securities owned by the
Investors;
(f) Use
all
diligent efforts to (i) register and/or qualify the Registrable Securities
covered by the Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Investors may reasonably request and in which
significant volumes of shares of Technest Common Stock are traded, (ii) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may
be
necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualification in effect at all times during
the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions:
provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(f), (B) subject itself
to general taxation in any such jurisdiction, (C) file a general consent to
service of process in any such jurisdiction, (D) provide any undertakings that
cause more than nominal expense or burden to the Company or (E) make any change
in its charter or by-laws or any then existing contracts, which in each case
the
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders;
(g) As
promptly as practicable after becoming aware of such event, notify the Investors
of the happening of any event of which the Company has knowledge, as a result
of
which the prospectus included in the Registration Statement, as then in effect,
includes any 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,
in the light of the circumstances under which they were made, not misleading
(“Registration Default”), and uses all diligent efforts to promptly prepare a
supplement or amendment to the Registration Statement or other appropriate
filing with the SEC to correct such untrue statement or omission, and any other
necessary steps to cure the Registration Default, and deliver a number of copies
of such supplement or amendment to the Investors as the Investors may reasonably
request. Failure to cure the Registration Default within fifteen (15) Business
Days shall result in the Company including liquidated damages of 1% of the
cost
of all Technest Common Stock constituting Registrable Securities then held
by
the Investors for each 15 day period or portion thereof, beginning on the date
of suspension.
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(h) As
promptly as practicable after becoming aware of such event, notify the Investors
(or, in the event of an underwritten offering, the managing underwriters) of
the
issuance by the SEC of any notice of effectiveness or any stop order or other
suspension of the effectiveness of the Registration Statement at the earliest
possible time;
(i) Notwithstanding
the foregoing, if at any time or from time to time after the date of
effectiveness of the Registration Statement, the Company notifies the Investors
in writing of the existence of a Potential Material Event (“Blackout Notice”),
the Investors shall not offer or sell any Registrable Securities, or engage
in
any other transaction involving or relating to the Registrable Securities,
from
the time of the giving of notice with respect to a Potential Material Event
until the Investors receive written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided,
however,
that (a)
the Company may not so suspend the right to such holders of Registrable
Securities for more than two ten (10) day periods in the aggregate during any
12-month period (“Blackout Period”) with at least a ten (10) Business Day
interval between such periods, during the periods the Registration Statement
is
required to be in effect, or (b) that if such Blackout Period exceeds the
permitted ten (10) day periods, the Company shall pay damages of 1% of the
cost
of all Technest Common Stock constituting Registrable Securities then held
by
the Investors for each fifteen (15) day period or portion thereof, beginning
on
the date of the suspension.
(j) Use
its
commercially reasonable efforts to secure and maintain NASD authorization and
quotation for such Registrable Securities on the over-the-counter bulletin
board
and, without limiting the generality of the foregoing, to arrange for at least
two market makers to register with the National Association of Securities
Dealers, Inc. (“NASD”) as such with respect to such Registrable Securities, or
if eligible, to cause all the Registrable Securities covered by the Registration
Statement to be listed on a national securities exchange and on each additional
national securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange;
provided, however,
that
the Investors acknowledge that the Company does not currently meet the
requirements for listing on a national securities exchange and that nothing
in
this section shall be construed to require the Company to pursue such
qualification until such time as the Company satisfies such requirements for
a
period of not less than forty-five (45) days:
(k) Provide
a
transfer agent for the Registrable Securities not later than the Closing Date
of
the Registration Statement;
(l) Cooperate
with the Investors to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Investors may reasonably request and registration in such names as the Investors
may request; and, within five (5) Business Days after a Registration Statement
which includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel selected by the Company
to
deliver, to the transfer agent for the Registrable Securities (with copies
to
the Investors) an appropriate instruction and opinion of such counsel, if so
required by the Company’s transfer agent; and
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(m) Take
all
other reasonable actions necessary to expedite and facilitate distribution
to
the Investors of the Registrable Securities pursuant to the Registration
Statement.
4. Obligations
of the Investors.
In
connection with the registration of the Registrable Securities, each Investor
shall have the following obligations;
(a) It
shall
be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of the Investor that the Investor shall timely furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of the Registrable Securities held by it,
as
shall be reasonably required to effect the registration of such Registrable
Securities and shall timely execute such documents in connection with such
registration as the Company may reasonably request.
(b) The
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement hereunder;
and
(c) The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Sections 3(g), 3(h) or 3(i)
above, the Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until the Investor receives the copies of the supplemented or amended
prospectus, or notice, contemplated by Sections 3(g), 3(h) or 3(i) and, if
so
directed by the Company, the Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of
destruction) all copies in the Investor’s possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such
notice.
(d) Each
Investor shall comply with all applicable securities laws in connection with
its
sale of Registrable Securities, including without limitation, any prospectus
delivery requirements.
5. Expenses
of Registration. (a)
All
reasonable expenses incurred in connection with Registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation,
all
Registration, listing, and qualifications fees, printers and accounting fees,
the fees and disbursements of counsel for the Company shall be borne by the
Company. A fee for a single counsel for an Investor for the initial Registration
Statement and for each Additional Registration Statement covering the
Registrable Securities shall be borne by the Company (not to exceed
$3,000).
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(b) Except
as
otherwise provided for in Schedule
5(b)
attached
hereto, the Company nor any of its subsidiaries has, as of the date hereof,
and
the Company shall not on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Investors in this Agreement or otherwise conflicts with the
provisions hereof. Except as otherwise provided for in Schedule
5(b),
the
Company has not previously entered into any agreement granting any registration
rights with respect to any of its securities to any person. Except as otherwise
provided for in this Section 5, and without limiting the generality of the
foregoing, without the written consent of the Investors, the Company shall
not
grant to any person the right to request the Company to Register any securities
of the Company under the Securities Act unless the rights so granted are subject
in all respects to the prior rights in full of the Investors set forth herein,
and are not otherwise in conflict or inconsistent with the provisions of this
Agreement and the other Transaction Documents (as defined in the Purchase
Agreement).
6. Indemnification. After
Registrable Securities are included in a Registration Statement under this
Agreement:
(a) To
the
extent permitted by law, the Company will indemnify and hold harmless, the
Investor(s), the directors, if any, of the Investor(s), the officers, if any,
of
the Investor(s), each person, if any, who controls Investor(s) within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities or expenses (joint or several) incurred
(collectively, “Claims”) to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or 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, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effectiveness of such Registration Statement, or contained in
the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in the light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or
any
rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being
collectively referred to as “Violations”). The Company shall reimburse the
Investor(s) promptly as such expenses are incurred and are due and payable,
for
any reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) shall not (i) apply to any Claims arising out
of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of
the
Registration Statement or any such amendment thereof or supplement thereto,
if
such prospectus was timely made available by the Company pursuant to Section
3(b) hereof; (ii) with respect to any preliminary prospectus, inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject
8
thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section 3(b)
hereof; (iii) be available to the extent such Claim is based on a failure of
the
Investors to deliver or cause to be delivered the prospectus made available
by
the Company; or (iv) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. The Investor(s) will indemnify
the
Company, its officers, directors and agents (including legal counsel) against
any claims arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company,
by
or on behalf of such Investor(s), expressly for use in connection with the
preparation of the Registration Statement, subject to such limitations and
conditions set forth in the previous sentence. Such indemnity shall remain
in
full force and effect regardless of any investigation made by or on behalf
of
the Indemnified Person or indemnified party.
(b) Promptly
after receipt by an Indemnified Person under this Section 6 of notice of the
commencement of any action (including any governmental action), such Indemnified
Person shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof and the indemnifying party shall
have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person, as the case may be; provided,
however,
that an
Indemnified Person shall have the right to retain its own counsel with the
reasonable fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person and any other party represented by such counsel
in such proceeding. In such event, the Company shall pay for only one separate
legal counsel for the Investor(s) selected by the Investor(s). The failure
to
deliver written notice to the indemnifying party within a reasonable time of
the
commencement of any such action shall not relieve such indemnifying party of
any
liability to the Indemnified Person under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due
and
payable.
7. Contribution. To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided,
however,
that
(a) no contribution shall be made under circumstances where the maker would
not
have been liable for indemnification under the fault standards set forth in
Section 6; (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities
who
was not guilty of such fraudulent misrepresentation; and (c) contribution by
any
seller of Registrable Securities shall be limited in amount to the net amount
of
proceeds received by such seller from the sale of such Registrable
Securities.
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8. Reports
under Exchange Act.
With a
view to making available to the Investors the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the SEC
that
may at any time permit the Investors to sell securities of the Company to the
public without registration ("Rule 144"), the Company agrees to use its
reasonable best efforts to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) file
with
the SEC in a timely manner all reports and other documents required of the
Company under the Exchange Act;
(c) furnish
to the Investors so long as the Investors own Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144, the Securities Act and the Exchange
Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company solely if unavailable
by ▇▇▇▇▇, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration; and
(d) at
the
request of any Investor of Registrable Securities, give its transfer agent
irrevocable instructions (supported by an opinion of Company counsel, if
required or requested by the transfer agent) to the effect that, upon the
transfer agent’s receipt from such Investor of:
(i)
a
certificate (a “Rule 144 Certificate”) certifying (A) that such Investor has
held the shares of Registrable Securities which the Investor proposes to sell
(the “Securities Being Sold”) for a period of not less than (1) year and (B) as
to such other matters as may be appropriate in accordance with Rule 144 under
the Securities Act, and
(ii)
an
opinion of counsel acceptable to the Company (for which purposes it is agreed
that the initial Investor’s Counsel shall be deemed acceptable if such opinion
is not given by Company Counsel) that, based on the Rule 144 Certificate,
Securities Being Sold may be sold pursuant to the provisions of Rule 144, even
in the absence of an effective Registration Statement,
the
transfer agent is to effect the transfer of the Securities Being Sold and issue
to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the transfer agent’s books and records (except to the extent any such
legend or restriction results from facts other than the identity of the
Investor, as the seller or transferor thereof, or the status, including any
relevant legends or restrictions, of the shares of the Securities Being Sold
while held by the Investor). If the transfer agent requires any additional
documentation at the time of the transfer, the Company shall deliver or cause
to
be delivered all such reasonable additional documentation as may be necessary
to
effectuate the issuance of an unlegended certificate.
10
9. Miscellaneous.
(a) Registered
Owners.
A person
or entity is deemed to be a holder of Registrable Securities whenever such
person or entity owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
(b) Rights
Cumulative; Waivers.
The
rights of each of the parties under this Agreement are cumulative. The rights
of
each of the parties hereunder shall not be capable of being waived or varied
other than by an express waiver or variation in writing. Any failure to exercise
or any delay in exercising any of such rights shall not operate as a waiver
or
variation of that or any other such right. Any defective or partial exercise
of
any of such rights shall not preclude any other or further exercise of that
or
any other such right. No act or course of conduct or negotiation on the part
of
any party shall in any way preclude such party from exercising any such right
or
constitute a suspension or any variation of any such right.
(c) Benefit;
Successors Bound.
This
Agreement and the terms, covenants, conditions, provisions, obligations,
undertakings, rights, and benefits hereof, shall be binding upon, and shall
inure to the benefit of, the undersigned parties and their heirs, executors,
administrators, representatives, successors, and permitted assigns.
(d) Entire
Agreement.
This
Agreement contains the entire agreement between the parties with respect to
the
subject matter hereof. There are no promises, agreements, conditions,
undertakings, understandings, warranties, covenants or representations, oral
or
written, express or implied, between them with respect to this Agreement or
the
matters described in this Agreement, except as set forth in this Agreement
and
in the other documentation relating to the transactions contemplated by this
Agreement. Any such negotiations, promises, or understandings shall not be
used
to interpret or constitute this Agreement.
(e) Assignment. The
rights to have the Company register the Registrable Securities pursuant to
this
Agreement may be assigned by the Investor(s) to any transferee or assignee
(the
"Transferee"), only if: (a) the assignment relates to not less than one million
dollars ($1,000,000) of Registrable Securities and the Transferee is an
Accredited Investor under Regulation D not in competition with the Company;
(b)
the Company receives a legal opinion in form and substance satisfactory to
the
Company that the proposed
11
transfer
complies with federal and state securities laws and does not adversely effect
the validity of the transactions executed (or to be executed) under this
Agreement and the Purchase Agreement under federal and state securities laws;
(c) the assignment requires that the Transferee be bound by all of the
provisions contained in this Agreement, and the Investors, the Company and
the
Transferee enter into a written agreement, which shall be enforceable by the
Company against the Transferee and by the Transferee against the Company, to
assign such rights; and (d) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws. Prior
to the assignment the Company shall have the right to perform its own due
diligence regarding the Transferee and have the right to approve the assignment,
provided that such approval shall not be unreasonably withheld. In the event
of
any delay in filing or effectiveness of the Registration Statement as a result
of such assignment, the Company shall not be liable for any damages arising
from
such delay.
(f) Amendment.
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), only with the written consent of the Company and the Investors.
Any amendment or waiver effected in accordance with this Section 9(f) shall
be
binding upon the Company and any subsequent Transferees.
(g) Severability.
Each
part of this Agreement is intended to be severable. In the event that any
provision of this Agreement is found by any court or other authority of
competent jurisdiction to be illegal or unenforceable, such provision shall
be
severed or modified to the extent necessary to render it enforceable and as
so
severed or modified, this Agreement shall continue in full force and
effect.
(h) Notices.
Notices
required or permitted to be given hereunder shall be in writing and shall be
deemed to be sufficiently given when personally delivered (by hand, by courier,
by telephone line facsimile transmission, receipt confirmed, or other means)
or
sent by certified mail, return receipt requested, properly addressed and with
proper postage pre-paid (i) if to the Company, at its executive office and
(ii)
if to the Investors, at the address set forth under its name in the Purchase
Agreement, with a copy to its designated attorney, or at such other address
as
each such party furnishes by notice given in accordance with this Section 9(h),
and shall be effective, when personally delivered, upon receipt and, when so
sent by certified mail, five (5) Business Days after deposit with the United
States Postal Service.
(i) Governing
Law.
This
Agreement shall be governed by the interpreted in accordance with the laws
of
the State of New York without reference to its conflicts of laws rules or
principles. Each of the parties consents to the exclusive jurisdiction of the
federal courts of the State of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by
law,
any objection, including any objection based on forum
non coveniens,
to the
bringing of any such proceeding in such jurisdictions. Each
of
the parties hereby waives a trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other in
respect of any matter arising out of or in connection with this
Agreement.
12
(j) Consents.
The
person signing this Agreement on behalf of each party hereby represents and
warrants that he has the necessary power, consent and authority to execute
and
deliver this Agreement on behalf of that party.
(k) Further
Assurances.
In
addition to the instruments and documents to be made, executed and delivered
pursuant to this Agreement, the parties hereto agree to make, execute and
deliver or cause to be made, executed and delivered, to the requesting party
such other instruments and to take such other actions as the requesting party
may reasonably require to carry out the terms of this Agreement and the
transactions contemplated hereby.
(l) Section
Headings.
The
Section headings in this Agreement are for reference purposes only and shall
not
affect in any way the meaning or interpretation of this Agreement.
(m) Construction.
Unless
the context otherwise requires, when used herein, the singular shall be deemed
to include the plural, the plural shall be deemed to include each of the
singular, and pronouns of one or no gender shall be deemed to include the
equivalent pronoun of the other or no gender.
(n) Execution
in Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by telephone line facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement. A facsimile
transmission of this signed Agreement shall be legal and binding on all parties
hereto.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
13
IN
WITNESS WHEREOF,
the
parties have caused this Registration Rights Agreement to be duly executed
by
their respective officers thereunto duly authorized as of the day and year
first
above written.
|
COMPANY:
▇▇▇▇▇▇▇▇
TECHNOLOGIES, INC.
By:
/s/ ▇▇▇▇
▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Chief Financial Officer
INVESTORS:
SOUTHRIDGE
PARTNERS LP
By:
/s/ ▇▇▇▇▇
▇▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Manager of General Partner
SOUTHSHORE
CAPITAL FUND LTD
By:
Illegible
Name:
Navigator Management, Ltd.
Title:
Director
ABERDEEN
AVENUE LLC
By:
Illegible
Name:
Navigator Management, Ltd.
Title:
Director
BRITTANY
CAPITAL MANAGEMENT LTD.
By:
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
President
▇▇▇▇▇▇
▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇
/s/ ▇▇▇▇
▇▇▇▇▇▇▇
|
14
Schedule
5(b)
15