REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (“Agreement”)
made
as of this 25th day of July, 2008, by and among SRKP 19, Inc., a Delaware
corporation (the “Company”);
NIVS
Holding Company Limited, a British Virgin Islands corporation and upon the
Closing Date (as defined below) a 100%-owned subsidiary of the Company
("NIVS");
and
the undersigned (each a “Holder”
and
together the “Holders”).
WHEREAS,
the Company, NIVS, and all of the shareholders of NIVS are parties to a certain
Share Exchange Agreement dated as of June 27, 2008, as amended on the date
hereof (the “Exchange
Agreement”),
pursuant to which NIVS will become a 100%-owned subsidiary of the Company and
100% of the outstanding securities of NIVS will be exchanged for securities
in
the Company (the “Share
Exchange”);
WHEREAS,
immediately after the effective time of the Share Exchange (the “Closing
Date”),
the
Company will assume the business and operations of NIVS;
WHEREAS,
the Company agreed to file, within thirty (30) days after the Closing Date
with
the U.S. Securities and Exchange Commission (the “Commission”
or
“SEC”)
a
registration statement (the “Initial
Registration Statement”)
covering the resale of shares issued in connection with the Company’s private
offering that closed concurrently with the Share Exchange and covering the
resale of shares of Common Stock held by those persons that are stockholders
of
the Company immediately prior to the Closing Date, except for the WestPark
Affiliates (as defined below); and
WHEREAS,
as set forth in Section 9.1 of the Exchange Agreement, and as a condition to
the
closing of the Share Exchange, the Company agreed to enter into a registration
rights agreement requiring the Company to file with the Commission, within
the
time periods as set forth herein, a registration statement covering the resale
of shares of Common Stock of the Company, as set forth on Schedule
I
hereof
(the “Shares”),
held
by those persons (and/or their designees) that are stockholders of the Company
immediately prior to the Closing Date who are affiliates of WestPark Capital,
Inc. (“WestPark
Affiliates”
or
“Holders”).
NOW,
THEREFORE, for and in consideration of the promises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:
1. Registration
Rights
1.1 Registration
Requirement.
Subject
to the terms and limitations hereof, the parties hereto agree and acknowledge
that the Company shall prepare and file a registration statement (the
“Registration
Statement”)
on
Form S-1 or other appropriate registration document under the Securities Act
of
1933, as amended (the “Act”)
for
resale of the Shares (the “Registrable
Securities”)
and
shall use its reasonable best efforts to maintain the Registration Statement
effective for a period of twelve (12) months at the Company’s expense (the
“Effectiveness
Period”).
The
Company shall file such Registration Statement no later than the tenth
(10th)
day
after the end of the six (6) month period that immediately follows the filing
date of the Initial Registration Statement (the “Required
Filing Date”),
provided that if such day is not a Business Day, then the Required Filing Date
shall be the next business day thereafter. The Company shall use reasonable
best
efforts to cause such Registration Statement to become effective within one
hundred fifty (150) days after the Required Filing Date or the actual filing
date, whichever is earlier, or one hundred eighty (180) days after the Required
Filing Date or the actual filing date, whichever is earlier, if the Registration
Statement is subject to a full review by the SEC (the “Required
Effectiveness Date”).
If
the Company fails to file the Registration Statement by the Required Filing
Date
or if the Registration Statement does not become effective on or before the
Required Effectiveness Date due to the failure of the Company to fulfill its
obligations hereunder, the Company shall be required to issue, as liquidated
damages, to each of the Holders shares (the “Penalty
Shares”)
equal
to a total of 0.0333% of their respective Shares for each calendar day that
the
Registration Statement has not been filed or declared effective by the SEC
(and
until the Registration Statement is filed with or declared effective by the
SEC), as applicable.
1.2 Limitation
to Registration Requirement.
Notwithstanding the foregoing, no Penalty Shares shall be due to the Holders
if
the Company is using its best efforts to cause the Registration Statement to
be
filed and declared effective in a timely manner. In addition, the Company shall
not be obligated to effect any registration of the Registrable Securities or
take any other action pursuant to this Section 1: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Act; or (ii) during any period in which
the
Company suspends the rights of a Holder after giving the Holder written
notification of a Potential Material Event (defined below) pursuant to Section
1.6 hereof.
1.3 Expenses
of Registration.
Except
as otherwise expressly set forth, the Company shall bear all expenses incurred
by the Company in compliance with the registration obligation of the Company,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement and all underwriting discounts, selling commissions and expense
allowances applicable to the sale of any securities by the Company for its
own
account in any registration. All underwriting discounts, selling commissions
and
expense allowances applicable to the sale by a Holder of Registrable Securities
and all fees and disbursements of counsel for a Holder shall be borne by the
Holder.
2
1.4 Indemnification.
(a) To
the
extent permitted by law the Company will indemnify each Holder, each of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, with respect to each registration, qualification or compliance
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, and their respective counsel against all
claims, losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document prepared by the Company (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
the
Company of the Act or 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 subject to the
provisions of Section 1.4(c) below, will reimburse each such Holder, each of
its
officers, directors, agents, employees 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 as they are 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 the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement (or alleged untrue statement)
or omission (or alleged omissions) based upon written information furnished
to
the Company by (or on behalf of) such Holder or underwriter, or if the person
asserting any such loss, claim, damage or liability (or action or proceeding
in
respect thereof) did not receive a copy of an amended preliminary prospectus
or
the final prospectus (or the final prospectus as amended and supplemented)
at or
before the written confirmation of the sale of such Registrable Securities
to
such person because of the failure of the Holder or underwriter to so provide
such amended preliminary or final prospectus (or the final prospectus as amended
and supplemented); provided,
however,
that
the indemnity agreement contained in this subsection 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 which occurs in reliance upon and
in
conformity with written information furnished expressly for use in connection
with such registration by the Holder, any such partner, officer, director,
employee, agent or controlling person of such Holder, or any such underwriter
or
any person who controls any such underwriter; provided, however, that the
obligations of the Company hereunder shall be limited to an amount equal to
the
portion of net proceeds represented by the Registrable Securities pursuant
to
this Agreement.
(b) To
the
extent permitted by law, each Holder whose Registrable Securities are included
in any registration, qualification or compliance effected pursuant to this
Agreement will indemnify the Company, and its directors, officers, agents,
employees 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 the Act and the rules and regulations
thereunder, each other such Holder and each of their officers, directors,
partners, agents and employees, and each person controlling such Holder, and
their respective counsel 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 statements therein not misleading, and will reimburse
the Company and such Holders, directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses as they
are
reasonably incurred in connection with investigating or 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;
provided,
however,
that
the obligations of any Holder hereunder shall be limited to an amount equal
to
the net proceeds to such Holder from Registrable Securities sold under such
registration statement, prospectus, offering circular or other document as
contemplated herein; provided, further, that the indemnity agreement contained
in this subsection 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 Holder, which consent shall not be unreasonably withheld
or
delayed.
3
(c) Each
party entitled to indemnification under this Section (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 or 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 unreasonably be withheld or
delayed), and the Indemnified Party may participate in such defense at such
party’s expense; and provided further that if any Indemnified Party reasonably
concludes that there may be one or more legal defenses available to it that
are
not available to the Indemnifying Party, or that such claim or litigation
involves or could have an effect on matters beyond the scope of this Agreement,
then the Indemnified Party may retain its own counsel at the expense of the
Indemnifying Party; 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 Agreement unless and only to the extent that
such
failure to give notice results in material prejudice to the Indemnifying Party.
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 defense of such claim and
litigation resulting therefrom.
(d) If
the
indemnification provided for in this Section is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any
loss,
liability, claim, damage or expense referred to herein, 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, liability, 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 which resulted in such loss, liability, claim, damage 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 or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties’
relative intent, knowledge, access to information and opportunity to correct
or
prevent such statement or omission.
4
1.5 Transfer
or Assignment of Registration Rights.
The
Registrable Securities, and any related benefits to the Holder hereunder may
be
transferred or assigned by the Holder to a permitted transferee or assignee,
provided that the Company is given written notice of such transfer or
assignment, stating the name and address of said transferee or assignee and
identifying the Registrable Securities with respect to which such registration
rights are being transferred or assigned; provided further that the transferee
or assignee of such Registrable Securities shall be deemed to have assumed
the
obligations of the Holder under this Agreement by the acceptance of such
assignment and shall, upon request from the Company, evidence such assumption
by
delivery to the Company of a written agreement assuming such obligations of
the
Holder.
1.6 Registration
Procedures.
In the
case of the registration effected by the Company pursuant to this Agreement,
the
Company will keep the Holder advised in writing as to the initiation of each
registration and as to the completion thereof. The Company will:
(a) 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 Act with respect to
the
disposition of securities covered by such registration statement;
(b) Respond
as promptly as reasonably practicable to any comments received from the SEC
with
respect to a registration statement or any amendment thereto;
(c) Notify
the Holders as promptly as reasonably practicable and (if requested by any
such
persons) confirm such notice in writing no later than one trading day following
the day (i) when a prospectus or any prospectus supplement or post-effective
amendment to a registration statement is proposed to be filed and (ii) with
respect to a registration statement or any post-effective amendment, when the
same has become effective;
(d) Furnish
such number of prospectuses and other documents incident thereto, including
supplements and amendments, as the Holders may reasonably request;
(e) Furnish
to the Holders, upon request, a copy of all documents filed with and all
correspondence from or to the SEC in connection with any such registration
statement other than non-substantive cover letters and the like;
(f) Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a registration
statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment; and
(g) Use
its
reasonable best efforts to comply with all applicable rules and regulations
of
the SEC.
Notwithstanding
the foregoing, if at any time or from time to time after the date hereof, the
Company notifies the Holders in writing of the existence of an event or
circumstance that is not disclosed in the Registration Statement and that may
have a material effect on the Company or its business (a “Potential
Material Event”),
the
Holders shall not offer or sell any Registrable Securities, or engage in any
other transaction involving or relating to the Registrable Securities, from
the
time of the giving of notice with respect to a Potential Material Event until
the Company notifies the Holders that such Potential Material Event either
has
been added to the Registration Statement by amendment or supplement or no longer
constitutes a Potential Material Event; provided,
that
the Company may not so suspend the right of Holders for more than one hundred
twenty (120) days in the aggregate.
5
1.7 Statement
of Beneficial Ownership.
The
Company may require each Holder to furnish to the Company a certified statement
as to the number of shares of Common Stock beneficially owned, including
derivative instruments underlying Common Stock, by such Holder and the
controlling person thereof and any other such information regarding the Holder,
the Registrable Securities held by the Holder and the intended method of
disposition of such securities as shall be reasonably required with respect
to
the registration of the Holder’s Registrable Securities. Each Holder hereby
understands and agrees that the Company may, in its sole discretion, exclude
the
Holder’s shares of Common Stock from the Registration Statement in the event
that the Holder fails to provide such information requested by the Company
within the time period reasonably specified by the Company or is required to
do
so by law or the SEC.
1.8 Compliance.
Each
Holder covenants and agrees that he, she or it will comply with the prospectus
delivery requirements of the Act as applicable to such Holder in connection
with
sales of Registrable Securities pursuant to the registration statement required
hereunder.
1.9 Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective registration
statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the SEC a registration statement relating
to
an offering for its own account or the account of others under the Act of any
of
its Common Stock, other than an offering of securities issued pursuant to a
Strategic Issuance (as defined below) and other than a Form S-4 or Form S-8
registration statement (each as promulgated under the Act or their then
equivalents relating to equity securities to be issued solely in connection
with
any business combination transaction, acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans), then the Company shall send to the Holders (together with any
other holders of its Common Stock possessing “piggyback registration rights”
comparable to those granted to the Holders hereunder (“Rightsholders”))
written notice of such determination and, if within fifteen (15) days after
receipt of such notice, a Holder shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided that the Company
shall not be required to register any Registrable Securities pursuant to this
Section that are eligible for resale pursuant to Rule 144 promulgated under
the
Act; and provided further that the Company may, without the consent of the
Holder, withdraw such registration statement before its becoming effective
if
the Company or other stockholders have elected to abandon the proposal to
register the securities proposed to be registered thereunder. If the
registration statement is being filed for an underwritten public offering,
a
Holder must timely execute and deliver the usual and customary agreement among
the Company, such Holder and the underwriters relating to the registration.
If
the registration statement is being filed for an underwritten offer and sale
by
the Company of securities for its own account and the managing underwriters
advise the Company in writing that in their opinion the offering contemplated
by
the registration statement cannot be successfully completed if the Company
were
to also register the Registrable Shares of the Holders requested to be included
in such registration statement, then the Company will include in the
registration: (i) first, any securities the Company proposes to sell, (ii)
second, any securities of any person whose securities are being registered
as a
result of the exercise of a demand registration right, and (iii) third, that
portion of the aggregate number of shares being requested for inclusion in
the
registration statement by (X) the Holders and (Y) all other Rightsholders,
which
in the opinion of such managing underwriters can successfully be sold, such
number of shares to be taken pro
rata
from the
Rightsholders on the basis of the total number of shares being requested for
inclusion in the registration statement by each Rightsholder. “Strategic
Issuance”
shall
mean an issuance of securities: (i) in connection with a “corporate partnering”
transaction or a “strategic alliance” (as determined by the Board of Directors
of the Company in good faith); (ii) in connection with any financing transaction
in respect of which the Company is a borrower; or (iii) to a vendor, lessor,
lender, or customer of the Company, or a research, manufacturing or other
commercial collaborator of the Company, in a transaction approved by the Board
of Directors, provided in any case, that such issuance is not being made
primarily for the purpose of avoiding compliance with this
Agreement.
6
2. Miscellaneous
2.1 Any
notice or other communication given hereunder shall be deemed sufficient if
in
writing and sent by registered or certified mail, return receipt requested,
addressed to the Company, at NIVS Industry Park, Shuikou, Huizhou, Guangdong,
China, Attention: Xx. Xxxxxx Xx, with
a copy to
(which
shall not constitute notice) K&L Gates LLP, 00000 Xxxxx Xxxxxx Xxxx.,
Xxxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx,
Esq., and to the Holders at their respective addresses indicated on the
signature page of this Agreement. Notices shall be deemed to have been given
three (3) business days after the date of mailing, except notices of change
of
address, which shall be deemed to have been given when received.
2.2 This
Agreement may only be amended through a written instrument signed by the
Holders, NIVS and the Company.
2.3 This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and assigns.
This Agreement sets forth the entire agreement and understanding between the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among
them.
2.4 Notwithstanding
the place where this Agreement may be executed by any of the parties hereto,
the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of Delaware.
2.5 This
Agreement may be executed in counterparts. Upon the execution and delivery
of
this Agreement, this Agreement shall become a binding obligation of the parties
hereto. This Agreement may be executed and delivered by facsimile.
2.6 The
holding of any provision of this Agreement to be invalid or unenforceable by
a
court of competent jurisdiction shall not affect any other provision of this
Agreement, which shall remain in full force and effect.
2.7 It
is
agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
2.8 The
parties agree to execute and deliver all such further documents, agreements
and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
2.9 The
Company agrees not to disclose the names, addresses or any other information
about the Holders, except as required by law, provided that the Company may
provide information relating to the Holders as required in any registration
statement under the Act that may be filed by the Company pursuant to the
requirements of this Agreement.
7
2.10 The
obligation of each Holder hereunder is several and not joint with the
obligations of any other Holders (the “Other
Holders”),
and
each Holder shall not be responsible in any way for the performance of the
obligations of any Other Holders. Nothing contained herein or in any other
agreement or document delivered at the Closing, and no action taken by a Holder
pursuant hereto, shall be deemed to constitute the Holder and the Other Holders
as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Holder and the Other Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce the Holder’s rights, including without limitation the rights arising out
of this Agreement, and it shall not be necessary for any Other Holder to be
joined as an additional party in any proceeding for such purpose. The language
used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be
applied against any party. No Holder is acting as part of a “group” (as that
term is used in Section 13(d) of the 0000 Xxx) in negotiating and entering
into
this Agreement or purchasing the Shares or acquiring, disposing of or voting
any
of the underlying shares of Common Stock. The Company hereby confirms that
it
understands and agrees that the Holders are not acting as part of any such
group.
[SIGNATURE
PAGE FOLLOWS]
8
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first written above.
|
/s/
Xxxxxxx Xxxxxxxxx
|
|
Xxxxxxx
Xxxxxxxxx
|
|
/s/
Xxxxxxx X. Xxxxxxxxxxxx
|
|
Xxxxxxx
X. Xxxxxxxxxxxx
|
|
/s/
Xxxxx XxXxxxxx
|
|
Xxxxx
XxXxxxxx
|
|
/s/
Xxxxx Xxxxx
|
|
Xxxxx
Xxxxx
|
Xxxxxx
Xxxxxxxxx Trust
By:
/s/
Xxxxxxx
Xxxxxxxxx
Name:
Xxxxxxx
Xxxxxxxxx
Title:
Trustee
Xxxxxx
Xxxxxxxxx Trust
By:
/s/
Xxxxxxx
Xxxxxxxxx
Name:
Xxxxxxx
Xxxxxxxxx
Title:
Trustee
WestPark
Financial Services, LLC
By:
/s/
Xxxxxxx
Xxxxxxxxx
Name:
Xxxxxxx
Xxxxxxxxx
Title:
_____________________________
|
SRKP
19, INC.
|
NIVS
HOLDING COMPANY LIMITED
|
|
|
By:
/s/
Xxxxxxx
Xxxxxxxxx
|
|
By: /s/
Li
Tianfu
|
|
Name:
Xxxxxxx
Xxxxxxxxx
|
Name:
Li
Tianfu
|
|
|
Title: President
|
Title:
CEO
|
9
SCHEDULE
I
HOLDERS
AND REGISTRABLE SECURITIES
|
HOLDER
|
NO. OF SHARES
OUTSTANDING
BEING
REGISTERED
|
NO. OF SHARES BEING
REGISTERED THAT ARE
ISSUABLE UPON EXERCISE OF
OUTSTANDING WARRANTS
|
||||||||
|
1.
|
Xxxxxxx Xxxxxxxxx |
374,400
|
151,467
|
|||||||
|
2.
|
Xxxxxxx X. Xxxxxxxxxxxx |
234,000
|
94,667
|
|||||||
|
3.
|
Xxxxx XxXxxxxx |
81,900
|
33,133
|
|||||||
|
4.
|
Xxxxx Xxxxx |
46,800
|
18,933
|
|||||||
|
5.
|
Xxxxxx Xxxxxxxxx Trust |
105,300
|
42,600
|
|||||||
|
6.
|
Xxxxxx Xxxxxxxxx Trust |
105,300
|
42,600
|
|||||||
|
7.
|
WestPark Financial Services, LLC |
914,706
|
370,052
|
|||||||
|
|
TOTALS
|
1,862,406
|
753,453
|
|||||||
10
