REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT
(this
“Agreement”)
is
made as of November 29, 2007, between Neuro-Hitech, Inc., a Delaware corporation
(the “Company”),
and
the individuals and entities listed on Schedule A hereto (each, an “Investor”
and
collectively, the “Investors”).
RECITALS
WHEREAS,
the Company and the Investors are parties to the Stock and Warrant Purchase
Agreement dated November 29, 2007 (the “Purchase
Agreement”);
WHEREAS,
the Investors' obligations under the Purchase Agreement are conditioned upon
certain registration rights under the Securities Act of 1933, as amended (the
“Securities
Act”);
and
WHEREAS,
the Investors and the Company desire to provide for the rights of registration
under the Securities Act as are provided herein upon the execution and delivery
of this Agreement by such investors and the Company.
NOW,
THEREFORE, in consideration of the promises, covenants, and conditions set
forth
herein, the parties hereto hereby agree as follows:
1. REGISTRATION
RIGHTS.
1.1. Definitions.
As used
in this Agreement, the following terms shall have the meanings set forth
below:
(a) “Additional
Registration Statement”
means
the registration statement filed with the SEC pursuant to Section 1.4 of this
Agreement.
(b) “Additional
Registration Statement Filing Date”
means,
with respect to the Additional Registration Statement required to be filed
hereunder, the 210th
day
after the effectiveness of the Registration Statement.
(c) “Closing”
has
the
meaning ascribed to such term in the Purchase Agreement.
(d) “Common
Stock”
means
the Company's common stock, par value $0.001 per share.
(e) “Effectiveness
Date”
means
the 90th
day (or
the 120th
day if a
full review of the Initial Registration Statement is performed by the SEC)
following the Closing.
(f) “Effectiveness
Period”
means
the period beginning on the date of effectiveness of a Registration Statement
and ending on the earlier of when (i) all Registrable Securities have been
sold
or (ii) all Registrable Securities may be sold immediately without registration
under the Securities Act and without volume restrictions, as determined by
the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed and reasonably acceptable to the Company's transfer agent and the
affected Investors or (iii) the fourth anniversary of the date of the initial
effectiveness of the Initial Registration Statement.
(g) “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
(h) “Fair
Market Value”
means
the average of the high and low prices of publicly traded shares of Common
Stock, rounded to the nearest cent, on the principal national securities
exchange on which shares of Common Stock are listed (if the shares of Common
Stock are so listed), or on the NASDAQ Capital Market (if the shares of Stock
are regularly quoted on the NASDAQ Capital Market), or, if not so listed or
regularly quoted, the mean between the closing bid and asked prices of publicly
traded shares of Common Stock in the over-the-counter market, or, if such bid
and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Board of Directors in a manner consistent with the provisions of the Internal
Revenue Code, as amended.
(i) “Filing
Date”
means,
with respect to the Initial Registration Statement required to be filed
hereunder, the 30th
days
following the Closing.
(j) “Initial Registration
Statement”
means
the registration statement filed with the SEC pursuant to Section 1.2(a) of
this
Agreement.
(k) “Investor”
means
any person owning Registrable Securities.
(l) The
terms
“Register,”
“Registered”
and
“Registration”
refer
to a registration effected by preparing and filing a registration statement
or
similar document in compliance with the Securities Act, and the declaration
or
ordering of effectiveness of such registration statement or
document.
(m) “Registrable
Securities”
means
(i) the Shares, (ii) the Warrant Shares and (iii) any shares issued or issuable
upon the conversion or exercise of any warrant, right or other security that
is
issued as, or a dividend or other distribution with respect to, or in exchange
for, or in replacement of, the shares referenced in (i) and (ii) above;
provided, however, that Registrable Securities shall not include any shares
of
Common Stock which have previously been registered or which have been sold
to
the public either pursuant to a registration statement or Rule 144, or which
have been sold in a private transaction in which the transferor's rights under
this Section 1 are not assigned.
(n) “Registration
Statements”
means
the Initial Registration Statement and the Additional Registration Statement,
if
required.
(o) “Rule
144”
means
Rule 144 as promulgated by the SEC under the Securities Act, as such Rule may
be
amended from time to time, or any similar successor rule that may be promulgated
by the SEC.
(p) “Rule
145”
means
Rule 145 as promulgated by the SEC under the Securities Act, as such Rule may
be
amended from time to time, or any similar successor rule that may be promulgated
by the SEC.
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(q) “SEC”
means
the United States Securities and Exchange Commission.
(r) “Shares”
means
the shares of the Common Stock issued pursuant to the Purchase
Agreement.
(s) “Warrants”
means
the warrants to purchase Common Stock issued pursuant to the Purchase
Agreement.
(t) “Warrant
Shares”
means
the shares of Common Stock issued or issuable upon exercise of the Warrants
to
purchase Common Stock issued pursuant to the Purchase Agreement.
1.2. Company
Registration.
(a) On
or
prior to the Filing Date, the Company shall prepare and file with the SEC a
registration statement covering the Registrable Securities for an offering
to be
made on a continuous basis pursuant to Rule 415. The Initial Registration
Statement shall be on Form SB-2 or Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form SB-2 or
Form
S-3, in which case such registration shall be on another appropriate form in
accordance herewith). The Company shall cause the Initial Registration Statement
to become effective and remain effective as provided herein. The Company shall
use its reasonable commercial efforts to cause the Initial Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event no later than the
Effectiveness Date. The Company shall use its reasonable commercial efforts
to
keep the Initial Registration Statement continuously effective under the
Securities Act during the Effectiveness Period.
(b) If:
(i)
the Initial Registration Statement is not declared effective by the SEC by
the
Effectiveness Date; (ii) the Additional Registration Statement is not filed
on
or prior to the Additional Registration Statement Filing Date; or (iii) after
the Initial Registration Statement is filed with and declared effective by
the
SEC, the Initial Registration Statement ceases to be effective (by suspension
or
otherwise) as to all Registrable Securities to which it is required to relate
at
any time prior to the expiration of the Effectiveness Period (without being
succeeded immediately by an additional registration statement filed and declared
effective) for a period of time which shall exceed 30 days in the aggregate
per
year or more than 20 consecutive calendar days (defined as a period of 365
days
commencing on the date the registration statement is declared effective); (any
such failure or breach being referred to as an “Event,”
and
for purposes of clause (i) or (ii) the date on which such Event occurs, or
for
purposes of clause (iii) the date which such 30 day or 20 consecutive day period
(as the case may be) is exceeded, being referred to as the “Event
Date”),
then
until the applicable Event is cured, the Company shall pay to each Investor
affected by the Event in cash at Fair Market Value, as liquidated damages and
not as a penalty, equal to 1.0%, for each thirty (30) day period (prorated
for
partial periods), calculated on a daily basis of the aggregate amount of the
purchase price of the Shares purchased by such Investor and affected by the
Event. While such Event continues, such liquidated damages shall be paid to
the
affected Investor not less often than each thirty (30) days. Any unpaid
liquidated damages as of the date when an Event has been cured by the Company
shall be paid within three (3) days following the date on which such Event
has
been cured by the Company. Any amounts not paid within the time periods set
forth in this Section 1.2(b) will accrue interest at the then current Prime
Rate
as published by the Wall Street Journal, compounded monthly. Notwithstanding
anything to the contrary herein, additional liquidated damages (other than
interest on unpaid amounts) shall cease to accrue on the earlier of (x) the
first anniversary of the Closing or (y) the first day on which all
Registrable Securities may be sold immediately without registration under the
Securities Act and without volume restrictions.
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(c) The
Company shall bear and pay all expenses incurred in connection with any
registration, filing or qualification of Registrable Securities with respect
to
the registrations pursuant to this Section 1.2 for each Investor, including
(without limitation) all registration, filing and qualification fees, printer's
fees, accounting fees and fees and disbursements of counsel for the Company,
but
excluding underwriting discounts and commissions relating to Registrable
Securities and fees and disbursements of counsel for the Investors.
1.3. Piggyback
Registration.
The
Company shall notify all Holders of Registrable Securities in writing at least
30 days prior to filing any registration statement under the Securities Act
for
purposes of effecting a public offering of securities of the Company (including,
but not limited to, registration statements relating to secondary offerings
of
securities of the Company, but excluding
registration statements relating to any registration under Section 1.2 of this
Agreement or to any employee benefit plan or a corporate reorganization or
other
transaction covered by Rule 145 promulgated under the Securities Act, or a
registration on any registration form which does not permit secondary sales
or
does not include substantially the same information as would be required to
be
included in a registration statement covering the sale of Registrable
Securities) and will afford each such Holder an opportunity to include in such
registration statement all or any part of the Registrable Securities then held
by such Holder. Each Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by such Holder
shall, within 20 days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform
the
Company of the number of Registrable Securities such Holder wishes to include
in
such registration statement. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth
herein.
(a) Underwriting.
If a
registration statement under which the Company gives notice under this Section
1.3 is for an underwritten offering, then the Company shall so advise the
Holders of Registrable Securities. In such event, the right of any such Holder’s
Registrable Securities to be included in a registration pursuant to this Section
1.3 shall be conditioned upon such Holder’s participation in such underwriting
and the inclusion of such Holder’s Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriter(s) selected for such underwriting. Notwithstanding any other
provision of this Agreement, if the managing underwriter determine(s) in good
faith that marketing factors require a limitation of the number of shares to
be
underwritten, then the managing underwriter(s) may exclude shares (including
Registrable Securities) from the registration and the underwriting, and the
number of shares that may be included in the registration and the underwriting
shall be allocated, first,
to the
Company, second
to
Holders requesting inclusion of their Registrable Securities in such
registration statement on a pro rata basis based on the number of shares
proposed to be registered by the Company and the number of Registrable
Securities each such Holder has requested registration and underwriting as
described above shall be restricted so that the number of Registrable Securities
included in any such registration is not reduced below 20% of the shares
included in the registration. If any Holder disapproves of the terms of any
such
underwriting, such Holder may elect to withdraw therefrom by written notice,
given in accordance with Section 4.5 hereof, to the Company and the underwriter,
delivered at least 20 days prior to the effective date of the registration
statement. Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration. For any
Holder that is a partnership or corporation, the partner, retired partners
and
shareholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single “Holder”, and any pro rata
reduction with respect to such “Holder” shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such “Holder”, as defined in this sentence.
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(b) Expenses.
All
expenses incurred in connection with a registration pursuant to this Section
1.3, including without limitation all registration and qualification fees,
printers’ and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Holders (but excluding underwriters’ discounts and commissions), shall
be borne by the Company. Each Holder participating in a registration pursuant
to
this Section 1.3 shall bear such Holder’s proportionate share (based on the
number of shares sold by such Holder over the total number of shares included
in
such registration at the time it goes effective) of all discounts, commissions
or other amounts payable to underwriters or brokers in connection with such
offering.
1.4. Inability
to use Single Registration.
Notwithstanding any other provision of this Agreement, in the event the SEC
determines that a registration statement registering all of the Registrable
Securities that the Company seeks to register in a single registration statement
would not be includable in a secondary registration on a delayed basis pursuant
to Rule 415, or requires the Company to reduce the number of Shares and Warrant
Shares to be included in the registration statement, the Company shall have
the
right to, first,
exclude
the Warrant Shares from the registration statement; second,
exclude
the Shares of Holders requesting inclusion of their Registrable Securities
in
such registration statement on a pro rata basis based on the number of shares
proposed to be registered by the Company and the number of Registrable
Securities each such Holder has requested to have registered; provided
that,
prior to any exclusion pursuant to this Section 1.4, the Company shall have
excluded from such registration statement (i) the holders of which have no
right
to require to be included in such registration statement and (ii) all securities
with respect to which the holders have waived any applicable registration
rights. In such event, the obligation of the Company to pay the liquidated
damages penalty described in Section 1.2(b) for the failure of the Initial
Registration Statement to be declared effective by the SEC by the Effectiveness
Date shall apply only to the Registrable Securities included in such Initial
Registration Statement. In addition, the Company shall file an additional
registration statement to register any of the Registrable Securities that are
excluded from the Initial Registration Statement (the “Additional
Registration Statement”)
by the
Additional Registration Statement Filing Date. The Company shall use its
reasonable commercial efforts to cause the Additional Registration Statement
to
be declared effective under the Securities Act as promptly as possible after
the
filing thereof. The Company shall use its reasonable commercial efforts to
keep
the Additional Registration Statement continuously effective under the
Securities Act during the Effectiveness Period.
5
1.5. Obligations
of the Company.
Whenever required under this Section 1 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such
registration statement to become effective, and, upon the request of the
Investors holding at least a majority of the Registrable Securities registered
thereunder, keep such Registration Statement effective during the Effectiveness
Period;
(b) Prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection with such Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;
(c) Furnish
to the Investors such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them (provided that the Company
would not be required to print such prospectuses if readily available to
Investors from any electronic service, such as on the XXXXX filing database
maintained at xxx.xxx.xxx);
(d) Use
its
commercially reasonable efforts to register and qualify the securities covered
by such Registration Statement under such other securities' or blue sky laws
of
such jurisdictions as shall be reasonably requested by the Investors; 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;
(e) In
the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter(s) of such offering (each Investor participating in
such underwriting shall also enter into and perform its obligations under such
an agreement);
(f) Notify
each Investor of Registrable Securities covered by such Registration Statement
at any time when a prospectus relating thereto is required to be delivered
under
the Securities Act of the happening of any event as a result of which the
prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
6
(g) Cause
all
such Registrable Securities registered pursuant hereunder to be listed on each
securities exchange or nationally recognized quotation system on which similar
securities issued by the Company are then listed; and
(h) Provide
a
transfer agent and registrar for all Registrable Securities registered pursuant
hereunder and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration.
1.6. Furnish
Information.
It
shall be a condition precedent to the Company's obligations to take any action
pursuant to this Section 1 with respect to the Registrable Securities of any
selling Investor that such Investor shall furnish to the Company such
information regarding such Investor, the Registrable Securities held by such
Investor, and the intended method of disposition of such securities as shall
be
required by the Company or the managing underwriters, if any, to effect the
registration of such Investor's Registrable Securities.
1.7. Delay
of Registration.
No
Investor shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this Section
1.
1.8. Indemnification.
(a) To
the
extent permitted by law, the Company will indemnify and hold harmless each
Investor, any underwriter (as defined in the Securities Act) for such Investor
and each person, if any, who controls such Investor or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject under the Securities Act, the Exchange Act or other Federal
or state securities law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a “Violation”):
(i)
any untrue statement or alleged untrue statement of a material fact contained
in
any Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto
(collectively, the “Filings”),
(ii)
the omission or alleged omission to state in the Filings a material fact
required to be stated therein, or necessary to make the statements therein
not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law; and the Company will pay any legal or other expenses reasonably
incurred by any person to be indemnified pursuant to this Section 1.8(a) in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 1.8(a) shall not apply to amounts paid in settlement of any
such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by
any such Investor, underwriter or controlling person.
7
(b) To
the
extent permitted by law, each Investor will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed any
Registration Statement, each person, if any, who controls the Company within
the
meaning of the Securities Act, any underwriter, any other Investor selling
securities in such Registration Statement and any controlling person of any
such
underwriter or other Investor, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject under the Securities Act, the Exchange Act or other Federal or state
securities law insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs
in
reliance upon and in conformity with written information furnished by such
Investor expressly for use in connection with such registration; and each such
Investor will pay any legal or other expenses reasonably incurred by any person
to be indemnified pursuant to this Section 1.8(b) in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 1.8(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Investor (which consent shall not be unreasonably withheld); provided, however,
in no event shall any indemnity under this subsection 1.8(b) exceed the gross
proceeds from the offering received by such Investor.
(c) Promptly
after receipt by an indemnified party under this Section 1.8 of notice of the
commencement of any action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1.6, 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 the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties that
may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of
any such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 1.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to
any
indemnified party otherwise than under this Section 1.8.
(d) If
the
indemnification provided for in Sections 1.8(a) and (b) is held by a court
of
competent jurisdiction to be unavailable to an indemnified party with respect
to
any loss, claim, damage or expense referred to therein, then the indemnifying
party in lieu of indemnifying such indemnified party hereunder, shall contribute
to the amount paid or payable by such indemnified party as a result of such
loss, claim, damage or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
or
alleged statements or omissions that resulted in such loss, liability, claim
or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or
omission. In no event shall any Investor be required to contribute an amount
in
excess of the gross proceeds from the offering received by such
Investor.
8
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions of the underwriting agreement shall
control.
(f) The
obligations of the Company and Investors under this Section 1.8 shall survive
the completion of any offering of Registrable Securities in any Registration
Statement under this Section 1, and otherwise.
1.9. Reports
Under Securities Exchange Act.
With a
view to making available the benefits of certain rules and regulations of the
SEC, including Rule 144, that may at any time permit an Investor to sell
securities of the Company to the public without registration or pursuant to
a
registration on Form SB-2, the Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) take
such
action as is necessary to enable the Investors to utilize Form SB-2 for the
sale
of their Registrable Securities;
(c) file
with
the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and
(d) furnish
to any Investor, so long as the Investor owns any Registrable Securities,
forthwith 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, or that it qualifies as a registrant whose securities may be
resold pursuant to Form SB-2, (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, and (iii) such other information as may be reasonably requested in
availing any Investor of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such
form.
9
1.10. Transfer
or Assignment of Registration Rights.
The
rights to cause the Company to register Registrable Securities pursuant to
this
Section 1 may be transferred or assigned, but only with all related obligations,
by an Investor (a) to a transferee or assignee who acquires at least 50,000
shares (subject to appropriate adjustment for stock splits, stock dividends
and
combinations) of Registrable Securities from such transferring Investor (or,
if
less, all Registrable Securities then held by such transferring Investor),
(b)
to a transferee or assignee who holds Registrable Securities immediately prior
to such transfer or assignment, (c) in the case of an Investor that is an
investment fund, to an investment fund under common management with such
Investor, (d) in the case of an Investor that is a partnership or limited
liability company, to any partners or members of such partnership or limited
liability company, (e) in the case of an Investor that is a corporation, to
any
stockholders of such corporation, and (f) in the case of an Investor that is
a
trust, to any beneficiaries of such trust.; provided that in the case of (a),
(i) prior to such transfer or assignment, the Company is furnished with written
notice stating the name and address of such transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned, (ii) such transferee or assignee agrees in
writing to be bound by and subject to the terms and conditions of this Agreement
and (iii) such transfer or assignment shall be effective only if immediately
following such transfer or assignment the further disposition of such securities
by the transferee or assignee is restricted under the Securities
Act.
2. COVENANTS
OF THE COMPANY TO THE INVESTORS.
2.1. Information
Rights.
The
Company shall deliver to each Investor who holds (and continues to hold) at
least 50,000 shares of Registrable Securities (subject to appropriate adjustment
for stock splits, stock dividends and combinations), upon the request of such
Investor (which may be satisfied by filing of Company quarterly and annual
reports under the Exchange Act):
(a) as
soon
as practicable, but in any event within ninety (90) calendar days after the
end
of each fiscal year of the Company, consolidated balance sheets of the Company
and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of cash flows
of
the Company and its subsidiaries, if any, for such year, prepared in accordance
with generally accepted accounting principles (“GAAP”),
all
in reasonable detail; and
(b) as
soon
as practicable, but in any event within forty-five (45) calendar days after
the
end of each of the first three (3) quarters of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries, if any, as
of
the end of such quarter, and consolidated statements of income and consolidated
statements of cash flows of the Company and its subsidiaries, if any, for such
quarter prepared in accordance with GAAP, all in reasonable detail.
2.2. Confidentiality.
Each
Investor receiving any non-public information of the Company hereby agrees
to
hold in confidence and trust and to act in a fiduciary manner with respect
to
all information so provided; provided, however, that notwithstanding the
foregoing, an Investor may include summary financial information concerning
the
Company and general statements concerning the nature and progress of the
Company's business in an Investor's reports to its affiliates.
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2.3. Other
Registration Rights.
Except
for the shares of Common Stock to be registered pursuant to the Company's
Registration Rights Agreements dated January 5, 2006 and November 29, 2006
(the
“Existing
Registration Rights Agreements”),
neither the Company nor any of its other security holders may include securities
of the Company in any Registration Statement without the consent of a majority
in interest of the Investors. The Company shall not file any other registration
statements with the SEC until all Registration Statements required hereunder
are
declared effective by the SEC, except registration statements on Form S-8 solely
covering employee stock benefits. No other person shall be granted the right
to
cause the Company to effect the registration under the Securities Act of any
securities of the Company prior to filing the Initial Registration Statement,
nor shall the Company effect any amendment, modification or waiver of any
provision of the Existing Registration Rights Agreement in any manner that
would
adversely affect the rights of the Investors hereunder .
3. LEGEND.
(a) Each
certificate representing the shares of Common Stock held by the Investors shall
be endorsed with the following legend (the “Legend”):
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT CERTAIN REGISTRATION
RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THESE SHARES,
A
COPY OF WHICH MAY BE OBTAINED AT THE COMPANY'S PRINCIPAL OFFICE. THE
REGISTRATION RIGHTS AGREEMENT IS BINDING ON TRANSFEREES OF THESE
SHARES.
(b) The
Company agrees that, during the term of this Agreement, it will not remove,
and
will not permit to be removed (upon registration of transfer, re-issuance or
otherwise), the Legend from any such certificate and will place or cause to
be
placed the Legend on any new certificate theretofore represented by a
certificate carrying the Legend.
4. MISCELLANEOUS.
4.1. Governing
Law.
This
Agreement shall be governed in all respects by the laws of the State of New
York
as such laws are applied to agreements between New York residents entered into
and to be performed entirely within New York, without regard to conflict of
laws
rules.
4.2. Waivers
and Amendments.
This
Agreement may be terminated and any term of this Agreement may be amended or
waived (either generally or in a particular instance and either retroactively
or
prospectively) with the written consent of the Company and Investors holding
at
least two thirds of the Registrable Securities then outstanding (the
“Super
Majority Investors”).
Notwithstanding the foregoing, additional parties may be added as Investors
under this Agreement with the written consent of the Company and the Super
Majority Investors. No such amendment or waiver shall reduce the aforesaid
percentage of the Registrable Securities, the holders of which are required
to
consent to any termination, amendment or waiver without the consent of the
record holders of all of the Registrable Securities. Any termination, amendment
or waiver effected in accordance with this Section 4.2 shall be binding upon
each holder of Registrable Securities then outstanding, each future holder
of
all such Registrable Securities and the Company.
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4.3. Successors
and Assigns.
Except
as otherwise expressly provided herein, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
4.4. Entire
Agreement.
This
Agreement constitutes the full and entire understanding and agreement among
the
parties with regard to the subject matter hereof, and no party shall be liable
or bound to any other party in any manner by any warranties, representations
or
covenants except as specifically set forth herein.
4.5. Notices.
All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be delivered personally by hand or by courier,
mailed by United States first-class mail, postage prepaid, sent by facsimile
or
sent by electronic mail directed (a) if to an Investor, at such Investor's
address, facsimile number or electronic mail address set forth in the Company's
records, or at such other address, facsimile number or electronic mail address
as such Investor may designate by ten (10) days' advance written notice to
the
other parties hereto or (b) if to the Company, to its address, facsimile number
or electronic mail address set forth on its signature page to this Agreement
and
directed to the attention of the President, or at such other address, facsimile
number or electronic mail address as the Company may designate by ten (10)
days'
advance written notice to the other parties hereto. All such notices and other
communications shall be effective or deemed given upon personal delivery, on
the
date of mailing, upon confirmation of facsimile transfer or upon confirmation
of
electronic mail delivery.
4.6. Interpretation.
The
words “include,” “includes” and “including” when used herein shall be deemed in
each case to be followed by the words “without limitation.” The titles and
subtitles used in this Agreement are used for convenience only and are not
considered in construing or interpreting this Agreement.
4.7. Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement, and the
balance of the Agreement shall be interpreted as if such provision were so
excluded, and shall be enforceable in accordance with its terms.
4.8. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
4.9. Telecopy
Execution and Delivery.
A
facsimile, telecopy or other reproduction of this Agreement may be executed
by
one or more parties hereto, and an executed copy of this Agreement may be
delivered by one or more parties hereto by facsimile or similar electronic
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party hereto,
all
parties hereto agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
12
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day, month
and
year first set forth above.
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By:
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Xxxxx
Xxxxxxx
Chief
Financial Officer
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ADDRESS:
Xxx
Xxxx Xxxxx, Xxxxx 0000
Xxx
Xxxx, Xxx Xxxx 00000
Telephone:
(000) 000-0000
facsimile:
(000) 000-0000
Email:
xxxx@xxxxxxxxxxx.xxx
Attention:
Chief Executive Officer
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“Investors”
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By:
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ADDRESS:
______________________________
______________________________
______________________________
Telephone:_____________________
Telecopy:______________________
Email:_________________________
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By:
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ADDRESS:
______________________________
______________________________
______________________________
Telephone:_____________________
Telecopy:______________________
Email:_________________________
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By:
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ADDRESS:
______________________________
______________________________
______________________________
Telephone:_____________________
Telecopy:______________________
Email:_________________________
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