EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
September 12, 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:
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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
14,774 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
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:
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(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. 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 immediately available funds of the Premium Redemption
Price is not made within such 5 business day period, the Holder may
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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
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portion 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 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
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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 of an
underwritten offering, at the time of delivery of any Registrable
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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 by any
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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
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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 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
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense
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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.
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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 provisions of
this Agreement were not performed in accordance with their specific terms or
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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.
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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:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Haifa
Telephone: +972-
Facsimile: +972-
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 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.
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(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
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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
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name:
Title:
Signature page to Registration Rights Agreement
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