Registration Rights Provisions
EXHIBIT
99.4
Registration
Rights Provisions
These
Registration Rights Provisions constitute an integral part of the Stock Exchange
Agreement (the “Agreement”) dated January , 2006, by and among the Stockholders
named therein, and Xxxxxxxxxx Holdings I, Inc.
1. Definitions.
Unless
otherwise defined herein, capitalized terms used herein shall have the following
meanings:
“Affiliate”
of a Person means any Person that controls, is under common control with, or
is
controlled by, such Person. For purposes of this definition, “control” means the
ability of one Person to direct the management and policies of another
Person.
“Agreement”
shall have the meaning set forth in the introduction to these Registration
Rights Provisions.
“Business
Day” means any day except a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to be
closed.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock” shall mean the common stock, par value $.0001 of the
Company.
“Company”
shall mean Xxxxxxxxxx Holdings I, Inc., a Delaware corporation.
“Exchange”
means the principal stock exchange or market on which the Company’s Common Stock
is traded, if any.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, or any similar or successor statute.
“Excusable
Reason” means the occurrence of negotiations with respect to a material
agreement prior to either the announcement of the execution of the agreement
or
the termination of the negotiations with respect to such proposed agreement
and
other similar material corporate events to which the Company is a party or
expects to be a party if, in the reasonable judgment of the Company, disclosure
of the negotiations or other event would be adverse to the best interests of
the
Company provided that the Company is continuing to treat such negotiations
as
confidential and provided further that the period during which the Company
is
precluded from filing the registration statement (or suspended the use of an
effective registration statement) as a result thereof has not exceeded ninety
(90) days and provided further that the Company shall not be permitted to avoid
filing a registration statement (or to suspend the use of an effective
registration statement) for an Excusable Reason more than twice in any one-year
period.
“Expenses”
means all expenses incident to the Company’s performance of or compliance with
its obligations under these Registration Rights Provisions, including, without
limitation, all registration, filing, listing, stock exchange and NASD fees,
all
fees and expenses of complying with state securities or blue sky laws (including
fees, disbursements and other charges of counsel for the underwriters only
in
connection with blue sky filings), all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees, disbursements and other
charges of counsel for the Company and of its independent public accountants,
including the expenses incurred in connection with “cold comfort” letters
required by or incident to such performance and compliance, any fees and
disbursements of underwriters customarily paid by the issuer of securities,
but
excluding from the definition of Expenses underwriting discounts and commissions
and applicable transfer taxes, if any, or legal and other expenses incurred
by
any sellers, which discounts, commissions, transfer taxes and legal and other
expenses shall be borne by the seller or sellers of Registrable Common Stock
in
all cases.
“Holder”
shall mean any of the Stockholders and any Transferee who has rights of a Holder
pursuant to Section 12 of these Registration Rights Provisions.
“NASD”
means the National Association of Securities Dealers, Inc. and NASD Regulation,
Inc.
“Nasdaq”
means the Nasdaq Stock Market and includes The Nasdaq National Market and The
Nasdaq SmallCap Market.
“Person”
means any individual, corporation, partnership, limited liability company,
firm,
joint venture, association, joint stock company, trust, unincorporated
organization, governmental or regulatory body or subdivision thereof or other
entity.
“Public
Offering” means a public offering and sale of Registrable Common Stock pursuant
to an effective registration statement under the Securities Act.
“Registrable
Common Stock” means the shares of Common Stock issued pursuant to the Agreement
and the shares of Common Stock issuable upon exercise of the Warrants, as
defined in the Agreement, but only for so long as registration pursuant to
the
Securities Act is required for public sale without regard to volume limitations
pursuant to Rule 144(k), and as adjusted to reflect any merger, consolidation,
recapitalization, reclassification, split-up, stock dividend, rights offering
or
reverse stock split made, declared or effected with respect to the Registrable
Common Stock.
“Requesting
Holders” has the meaning set forth in Section 3 of these Registration Rights
Provisions.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar or successor statute.
“Selling
Holders” means the Holders of Registrable Common Stock requested to be
registered pursuant to Section 2(a) of these Registration Rights
Provisions.
“Shelf
Registration” means a shelf registration statement pursuant to Rule 415
promulgated under the Securities Act.
“Transfer”
means any transfer, sale, assignment, pledge, hypothecation or other disposition
of any interest. “Transferor” and “Transferee” have correlative
meanings.
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Any
terms
which are defined in the Agreement and not separately defined in these
Registration Rights Provisions shall have the same meanings in these
Registration Rights Provisions as in the Agreement.
All
references to laws, rules and forms shall relate to the laws, rules and forms
as
in effect on the date of the Agreement and shall include any amendments thereto
and any subsequent successor laws, rules and forms.
2. Securities
Act Registration on Request.
(a) If
the
Company shall not have provided the holders of Registrable Common Stock with
the
right to have their Registrable Common Stock included in a registration
statement prior to December 31, 2006, at any time after December 31, 2006,
any
Holder or Holders holding at least thirty five percent (35%) of the Registrable
Common Stock which is then outstanding or are otherwise included in the Holder’s
request, may make a written request (the “Initiating Request”) to the Company
for the registration with the Commission under the Securities Act of all or
part
of such Holder’s Registrable Common Stock; provided, however, that if such
Initiating Request is not for all of the total number of Registrable Common
Stock which could be registered by the Initiating Holder, then the Initiating
Request shall cover not less than thirty five percent (35%) of the total number
of the then-outstanding shares of Registrable Common Stock. Upon the receipt
of
any Initiating Request for registration pursuant to this Section 2(a), the
Company promptly shall notify in writing all other Holders of the Registrable
Common Stock of the receipt of such request and will use its commercially
reasonable efforts to effect, at the earliest possible date, such registration
under the Securities Act, including a Shelf Registration (if then eligible),
of
(i) the
Registrable Common Stock which the Company has been so requested to register
by
such Initiating Holder, and
(ii) all
other
Registrable Common Stock which the Company has been requested to register by
any
other Holders by written request given to the Company within 30 days after
the
giving of written notice by the Company to such other Holders of the Initiating
Request,
all
to
the extent necessary to permit the disposition (in accordance with Section
2(b)
of these Registration Rights Provisions) of the Registrable Common Stock so
to
be registered; provided, that any Holder whose Registrable Common Stock was
to
be included in any such registration, by written notice to the Company, may
withdraw such request, and the Company shall not be required to effect any
registration pursuant to this Section 2(a) if either (x) the Initiating Holder
or (y) the Holders of more than 40% of the shares of Registrable Common Stock
withdraw the request for inclusion. The sale of Registrable Common Stock
pursuant to this Section 2(a) shall not be pursuant to an underwritten public
offering without the prior written consent of the Company. The Holders shall
have one registration right pursuant to this Section 2, and the Company shall
not be required to file a registration statement pursuant to these Registration
Rights Provisions prior to November 30, 2006. Notwithstanding the foregoing,
without the consent of the Company, no Holder may sell, pursuant to any
registration statement filed pursuant to these Registration Rights Provisions
in
any three month period, more than one percent (1%) of the outstanding Common
Stock, provided, however, that for purposes of this sentence, all shares of
Common Stock which are issuable upon conversion of the Company’s Series A
Convertible Preferred Stock shall be deemed to be treated as outstanding shares
of Common Stock, even if there are restrictions on the issuance of such
shares.
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(b) Registration
under Section 2(a) of these Registration Rights Provisions shall be on such
appropriate registration form prescribed by the Commission under the Securities
Act as shall be selected by the Company and as shall permit the disposition
of
the Registrable Common Stock pursuant to the method of disposition determined
by
the Selling Holders; provided, however, that if the Company is eligible to
use a
registration statement on Form S-3, the Company shall use such
form.
(c) The
Holders of Registrable Common Stock to be included in a registration statement
may, at any time on written notice to the Company, terminate a request for
registration made pursuant to this Section 2.
(d) The
Company shall use its commercially reasonable efforts to keep any Shelf
Registration effective for nine (9) months from the effective date of the
registration statement or until such earlier date as all of the Registrable
Common Stock covered by the registration statement shall have been
sold.
(e) No
registration effected under this Section 2 shall relieve the Company of its
obligation to permit the registration of Registrable Common Stock pursuant
to
Section 3 of these Registration Rights Provisions.
(f) As
a
condition to the inclusion of a Holder’s Registrable Common Stock in a
registration statement pursuant to Sections 2(a) and 3 of these Registration
Rights Provisions, each Holder shall:
(i) furnish
the information and indemnification as set forth in these Registration Rights
Provisions and update such information immediately upon the occurrence of any
events or condition which make the information concerning the Holder inaccurate
in any material respect;
(ii) not
sell
any Registrable Common Stock pursuant to the registration statement except
in
the manner set forth in the registration statement;
(iii) comply
with the prospectus delivery requirements and the provisions of Regulation
M of
the Commission pursuant to the Securities Act;
(iv) not
sell
or otherwise transfer or distribute any Registrable Common Stock shares if
the
Holder possesses any material nonpublic information concerning the Company;
and
(v) not
sell
or otherwise transfer any Registrable Common Stock pursuant to a registration
statement upon receipt of advice from the Company that the registration
statement is no longer current until the Holder is advised that the Registrable
Common Stock may be sold pursuant to the registration statement;
and
(vi) provide
any other information requested by the Commission, the NASD, any stock exchange
or market on which the Common Stock is traded and any state securities
commission.
3. Piggyback
Registration.
(a) If
at any
time after December 31, 2006, the Company proposes to register any of its
securities under the Securities Act by registration on any forms other than
Form
S-4 or S-8, whether or not pursuant to registration rights granted to other
holders of its securities and whether or not for sale for its own account,
it
shall give prompt written notice to all of the Holders of its intention to
do so
and of such Holders’ rights (if any) under this Section 3, which notice, in any
event, shall be given at least fifteen (15) days prior to such proposed
registration. Upon the written request of any Holder receiving notice of such
proposed registration that is a Holder of Registrable Common Stock (a
“Requesting Holder”) made within ten (10) days after the receipt of any such
notice, the Company shall, subject to Section 6(b) of these Registration Rights
Provisions, effect the registration under the Securities Act of all Registrable
Common Stock which the Company has been so requested to register by the
Requesting Holders thereof; provided, however, that this Section 3(a) shall
not
apply to Registrable Common Stock which has been registered pursuant to Section
2(a) of these Registration Rights Provisions and is subject to a current and
effective registration statement.
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(b) If
at any
time after giving written notice of its intention to register any securities
and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each Requesting Holder
and (i) in the case of a determination not to register, shall be relieved of
its
obligation to register any Registrable Common Stock in connection with such
registration (but not from any obligation of the Company to pay the Expenses
in
connection therewith), without prejudice, however, to the rights of any Holder
to include Registrable Common Stock in any future registration (or
registrations) pursuant to this Section 3 or to cause such registration to
be
effected as a registration under Section 2(a) of these Registration Rights
Provisions, as the case may be, and (ii) in the case of a determination to
delay
registering, shall be permitted to delay registering any Registrable Common
Stock, for the same period as the delay in registering such other
securities.
(c) If
such
registration involves an underwritten offering, the provision of Section 6
of
these Registration Rights Provisions shall apply.
4. Expenses.
the
Company shall pay all Expenses in connection with any registration initiated
pursuant to Section 2(a) or 3 of these Registration Rights Provisions, whether
or not such registration shall become effective and whether or not all or any
portion of the Registrable Common Stock originally requested to be included
in
such registration is ultimately included in such registration. Each Holder
shall
pay any underwriting discounts and commissions and applicable transfer taxes,
if
any, legal fees and other expenses incurred by such Holder.
5. Registration
Procedures.
(a) If
and
whenever the Company is required to effect any registration under the Securities
Act as provided in Sections 2(a) and 3 of these Registration Rights Provisions,
the Company shall, as expeditiously as possible:
(i) Subject
to Section 5(b) of these Registration Rights Provisions, prepare and file with
the Commission (promptly and, in the case of any registration pursuant to
Section 2(a), in any event within one hundred twenty (120) days unless the
Initiating Request is made subsequent to first day of the eleventh month of
any
fiscal year and prior to the fifteenth day of the second month of the following
year, in which event the registration statement shall be filed within thirty
(30) days after the earlier of the date a Form 10-K or 10-KSB is required to
be
filed or the date of such filing) the requisite registration statement to effect
such registration and thereafter use its commercially reasonable efforts to
cause such registration statement to become effective; provided, however, that
the Company may discontinue any registration of its securities that are not
shares of Registrable Common Stock (and, under the circumstances specified
in
Section 3 of these Registration Rights Provisions, its securities that are
shares of Registrable Common Stock) at any time prior to the effective date
of
the registration statement relating thereto.
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(ii) Notify
each seller of Registrable Common Stock and other securities covered by such
registration statement at any time after an Initiating Request when an Excusable
Reason shall have occurred.
(iii) Notify
each Selling Holder at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, upon discovery that, or upon 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 any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the
circumstances under which they were made, and subject to Section 5(a)(iv) of
these Registration Rights Provisions and except during the time the Company
may
delay a registration for an Excusable Reason, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Common Stock covered by such registration statement until such
time
as all of such Registrable Common Stock has been disposed of in accordance
with
the method of disposition set forth in such registration statement, subject
to
Section 2(e) of these Registration Rights Provisions.
(iv) If
requested by the holders of a majority of the Registrable Common Stock included
or to be included in the registration statement being filed pursuant to Section
2(a) or 3 of these Registration Rights Provisions, before filing any
registration statement or prospectus or any amendments or supplements thereto,
furnish to and afford the Holders of the Registrable Common Stock, one firm
of
counsel for the Holders designated by the Holders of a majority of the
Registrable Common Stock included or to be included in the registration
statement (the “Holders Counsel”), and provides Holders Counsel a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed (at least ten (10) Business Days prior to such filing).
The
Company shall not file any registration statement or prospectus or any
amendments or supplements thereto in respect of which the Holders must be
afforded an opportunity to review prior to the filing of such document, if
the
Holders of a majority of the shares of Registrable Common Stock covered by
such
registration statement, the Holders Counsel, or the managing underwriters,
if
any, shall reasonably object. Any registration statement, when declared
effective by the Commission or when subsequently amended (by an amendment which
is declared effective by the Commission) or any prospectus in the form included
in the registration statement as declared effective by the Commission or when
subsequently supplemented will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(v) Use
its
commercially reasonable efforts to obtain the prompt withdrawal of any order
suspending the effectiveness of a registration statement, and in any event
shall, within thirty (30) days of such cessation of effectiveness, use its
commercially reasonable efforts to amend the registration statement in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof,
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(vi) Furnish
to each seller of Registrable Common Stock covered by such registration
statement such reasonable number of copies of such drafts and final conformed
versions of such registration statement and of each such amendment and
supplement thereto (in each case including, if requested, one copy of all
exhibits and any documents incorporated by reference), such number of copies
of
such drafts and final versions of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary prospectus)
and
any other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in writing.
(vii) Use
its
commercially reasonable efforts to register or qualify all Registrable Common
Stock under such other securities or blue sky laws of such states or other
jurisdictions of the United States of America as the sellers of Registrable
Common Stock covered by such registration statement shall reasonably request
in
writing, except that the Company shall not for any such purpose be required
to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this Section 5(a)(vii) be
obligated to be so qualified, to subject itself to taxation in such jurisdiction
or to consent to general service of process in any such
jurisdiction.
(viii) Make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and furnish to each seller of Registrable Common Stock
at least ten days prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus.
(ix) Cause
all
such Registrable Common Stock covered by such registration statement to be
listed on the Exchange, if any.
(b) Each
seller of Registrable Common Stock as to which any registration is being
effected shall furnish the Company and the underwriters, if any, such
information regarding such seller and the distribution of the securities covered
by such registration statement as the Company may from time to time reasonably
request in writing and as is required by applicable laws and
regulations.
(c) Each
Holder agrees that as of the date that a final prospectus is made available
to
it for distribution to prospective purchasers of Registrable Common Stock it
shall cease to distribute copies of any preliminary prospectus prepared in
connection with the offer and sale of such Registrable Common Stock. Each Holder
further agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Sections 5(a)(ii) and (iii)
of
these Registration Rights Provisions, such Holder shall forthwith discontinue
such Holder’s disposition of Registrable Common Stock pursuant to the
registration statement relating to such Registrable Common Stock until such
Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by said Sections 5(a)(ii) and (iii), and, if so directed by the
Company, shall deliver to the Company (at the Company’s expense) all copies,
other than permanent file copies, then in such Holder’s possession of the
prospectus relating to such Registrable Common Stock current at the time of
receipt of such notice.
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6. Underwritten
Offerings.
(a) If
the
Company proposes to register any of its securities under the Securities Act
as
contemplated by Section 3 of these Registration Rights Provisions and such
securities are to be distributed by or through one or more underwriters, the
Company shall, if requested by any Requesting Holders, request that such
underwriters include all of the Registrable Common Stock to be offered and
sold
by such Requesting Holders among the securities of the Company to be distributed
by such underwriters; provided, that, if the managing underwriter of such
underwritten offering shall advise the Company in writing (with a copy to the
Requesting Holders) that if all the Registrable Common Stock requested to be
included in such registration (together with all other shares of Common Stock
of
other stockholders of the Company requested to be so included pursuant to
“piggyback” rights granted to such stockholders) were so included, in its
opinion, the number and type of securities proposed to be included in such
registration would exceed the number and type of securities which could be
sold
in such offering within a price range acceptable to the Company, then the
Company shall include in such registration, to the extent of the number and
type
of securities which the Company is advised by the managing underwriter can
be
sold in such offering, (i) first, securities that the Company proposes to issue
and sell for its own account and (ii) second, securities held by any person
exercising demand registration rights, and (iii) third, Registrable Common
Stock
requested to be registered by Requesting Holders pursuant to Section 3 of these
Registration Rights Provisions and Common Stock of any other stockholders of
the
Company having such registration rights who request registration as aforesaid
(other than stockholders referred to in clause (ii) of this Section 6(a)),
pro
rata, among such holders on the basis of the number of shares of Common Stock
requested to be registered by all such holders.
(b) Any
Requesting Holder may withdraw its request to have all or any portion of its
Registrable Common Stock included in any such offering by notice to the Company
within ten (10) Business Days after receipt of a copy of a notice from the
managing underwriter pursuant to Section 6(a) of these Registration Rights
Provisions.
(c) The
Holders of Registrable Common Stock to be distributed by underwriters in an
underwritten offering contemplated by Section 6(a) of these Registration Rights
Provisions, shall be parties to the underwriting agreement between the Company
and such underwriters and any such Holder, at its option, may require that
any
or all of the conditions precedent to the obligations of such underwriters
under
such underwriting agreement be conditions precedent to the obligations of such
Holders. No such Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters except that
each such Holder shall be required to make representations, warranties and
agreements regarding such Holder, such Holder’s Registrable Common Stock and
such Holder’s intended method of distribution. The Holders whose Registrable
Common Stock is being sold to the underwriters shall appoint an attorney-in-fact
who shall be authorized to negotiate with the underwriter on behalf of such
Holders and to execute the underwriting agreement and related documentation
on
their behalf.
(d) In
connection with any underwritten public offering, regardless of whether the
Holder is selling Registrable Common Stock pursuant to the registration
statement, the Holder shall agree to such lock-up as may be requested by the
managing underwriter provided that such lock-up is not for a period longer
than
the lock-up required of the Company’s principal stockholders, officers and
directors.
7. Preparation;
Reasonable Investigation.
(a) In
connection with the preparation and filing of each registration statement under
the Securities Act pursuant to these Registration Rights Provisions, the Company
shall give each Holder of Registrable Common Stock registered under such
registration statement, the underwriter, if any, and its respective counsel
and
accountants the reasonable opportunity to participate in the preparation of
such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and shall give
each of them such reasonable access to its books and records and such reasonable
opportunities to discuss the business of the Company with its officers and
the
independent public accountants who have certified its financial statements
as
shall be necessary, in the reasonable opinion of any such Holders’ and such
underwriters’ respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
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(b) Each
Holder of Registrable Common Stock shall maintain the confidentiality of any
confidential information received from or otherwise made available by the
Company to such Holder of Registrable Common Stock and identified in writing
by
the Company as confidential and shall not make any sales or purchases of the
Company’s securities while in possession of material confidential information;
provided, however, that any information relating to an Excusable Reason shall
be
deemed to be material confidential information regardless of whether it is
expressly marked as confidential. Information that (i) is or becomes available
to a Holder of Registrable Common Stock from a public source, (ii) is disclosed
to a Holder of Registrable Common Stock by a third-party source who has the
right to disclose such information shall not be deemed to be confidential
information for purposes of these Registration Rights Provisions. Each Holder
shall indemnify and hold harmless the Company, its officer, directors and
counsel from and against any loss, liability, damage or expense which they
may
incur as a result of any breach of the provisions of this Section
7(b).
8. Indemnification.
(a) In
connection with any registration statement filed by the Company pursuant to
Section 2(a) or 3 of these Registration Rights Provisions, the Company shall,
and hereby agrees to, indemnify and hold harmless, each Holder and seller of
any
Registrable Common Stock covered by such registration statement and each other
Person, if any, who controls such Holder or seller, and their respective
directors, officers, partners, agents and Affiliates from and against any and
all losses, claims, damages or liabilities, joint or several, to which they
or
any of them may become subject under the Securities Act, the Exchange Act,
or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof), which are collectively referred to as “Losses,” arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact made by the Company contained in the Registration Statement, or any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or any
amendment thereof or supplement thereto, or in any blue sky application or
other
document executed by the Company specifically for that purpose (or based upon
written information furnished by the Company) filed in any state or other
jurisdiction in order to qualify any of the Securities or other Securities
under
the securities laws thereof (any such application, document or information
being
referred to as a "Blue Sky Application"); or (ii) the omission or alleged
omission to state in any such Registration Statement, Preliminary Prospectus
or
Prospectus, or amendment thereof or supplement thereto, or Blue Sky Application
a material fact required to be stated therein or necessary to make the
statements made therein not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by it
in
connection with investigating or defending against any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
in
any such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein or omitted therefrom
in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Holder specifically for use in connection with
the preparation thereof, and further provided, however, that the foregoing
indemnity with respect to any untrue statement, alleged untrue statement,
omission, or alleged omission contained in any Preliminary Prospectus shall
not
inure to the benefit of any Holder from whom the person asserting any such
loss,
claims any of, damage, or liability purchased any of the securities that are
the
subject thereof (or to the benefit of any person who controls such Holder or
other Person), if a copy of the prospectus was not delivered to such person
with
or prior to the written confirmation of the sale of such security to such
person. The indemnify provided for in this Section 8(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party and shall survive any transfer of the Registrable Shares
by
the indemnified party. This indemnity agreement will be in addition to any
liability that the Company may otherwise have.
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(b) In
connection with any registration statement filed by the Company pursuant to
Section 2(a) or 3 of these Registration Rights Provisions in which a Holder
has
registered for sale Registrable Common Stock, each Holder or seller of
Registrable Common Stock shall, and hereby agrees to, indemnify and hold
harmless the Company and each of its directors, officers, employees and agents,
each other Person, if any, who controls the Company and each other seller and
such seller’s directors, officers, stockholders, partners, employees, agents and
affiliates from and against any and all Losses to which they or any of them
may
become subject under the Securities Act, the Exchange Act, or other Federal
or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement
of
a material fact contained in the Registration Statement, or any amendment
thereof, or in any Preliminary Prospectus or the Prospectus, or any amendment
thereof or supplement thereto, or in a Blue Sky Application, or (ii) the
omission or the alleged omission to state in any such Registration Statement,
Preliminary Prospectus or Prospectus, amendment thereof or supplement thereto,
or Blue Sky Application a material fact required to be stated therein or
necessary to make the statements made therein not misleading, in each case
to
the extent, but only to the extent, that the same was made therein or omitted
therefrom in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Holder specifically for use in the
preparation thereof, and agrees to reimburse each such indemnified party for
any
legal or other expenses reasonably incurred by it in connection with
investigating or defending against any such loss, claim, damage, liability
or
action. The indemnify provided for in this Section 8(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party and shall survive any transfer of the Registrable Shares
by
the indemnified party. This indemnity agreement will be in addition to any
liability that the Company may otherwise have.
(c) Within
five (5) business days after receipt by an indemnified party under Section
8(a)
or (b) of these Registration Rights Provisions of notice of the commencement
of
any action, such indemnified party shall, if a claim in respect thereof is
to be
made against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; the failure so to
notify the indemnifying party shall relieve the indemnifying party from any
liability under this Section 8 as to the particular item for which
indemnification is then being sought, unless such indemnifying party has
otherwise received actual notice of the action at least thirty (30) days before
any answer or response is required by the indemnifying party in its defense
of
such action, but will not relieve it from any liability that it may have to
any
indemnified party otherwise than under this Section 8. If any such action is
brought against any indemnified party and it notifies the indemnifying party
of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to
the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof; provided, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and either (i) the indemnifying party or parties agree,
or
(ii) in the opinion of counsel for the indemnifying parties, representation
of
both the indemnifying party or parties and the indemnified party or parties
by
the same counsel is inappropriate under applicable standards of professional
conduct because of actual or potential conflicting interests between them,
then
the indemnified party or parties shall have the right to select separate counsel
to assume such legal defense and to otherwise participate in the defense of
such
action. The indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred
by
such indemnified party in connection with the defense thereof unless (x) the
indemnified party shall have employed counsel in connection with the assumption
of legal defenses in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that the indemnifying party shall not
be
liable for the expenses of more than one separate counsel in each jurisdiction
which counsel is approved by indemnified parties (whether pursuant to this
Agreement or other agreements if the claim relates to the same or similar
allegations) holding a majority of the shares as to which indemnification is
claimed), (ii) the indemnifying party shall not have employed counsel to
represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized
the
employment of counsel for the indemnified party at the expense of the
indemnifying party. In no event shall an indemnifying party be liable under
this
Section 8 for any settlement, effected without its written consent, which
consent shall not be unreasonably withheld, of any claim or action against
an
indemnified party.
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(d) If
the
indemnification provided for in this Section 8 shall for any reason be
unavailable to an indemnified party under Section 8(a) and (b) of these
Registration Rights Provisions in respect of any Losses, then, in lieu of the
amount paid or payable under said Section 8(a) or (b), the indemnified party
and
the indemnifying party under said Section 8(a) or (b) shall contribute to the
aggregate Losses (including legal or other expenses reasonably incurred in
connection with investigating the same) (i) in such proportion as is appropriate
to reflect the relative fault of the Company and the prospective sellers of
Registrable Common Stock covered by the registration statement which resulted
in
such Loss or action in respect thereof, with respect to the statements,
omissions or action which resulted in such Loss or action in respect thereof,
as
well as any other relevant equitable considerations, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received
by
the Company, on the one hand, and such prospective sellers, on the other hand,
from their sale of Registrable Common Stock; provided, that, for purposes of
this clause (ii), the relative benefits received by any prospective sellers
shall be deemed not to exceed (and the amount to be contributed by any
prospective seller shall not exceed) the amount received by such seller. 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. The obligations, if
any, of the Selling Holders of Registrable Common Stock to contribute as
provided in this Section 8(d) are several in proportion to the relative value
of
their respective Registrable Common Stock covered by such registration statement
and not joint. In addition, no Person shall be obligated to contribute hereunder
any amounts in payment for any settlement of any action or Losses effected
without such Person’s consent.
9. Registration
Rights to Others.
Nothing
in these registration rights provisions shall restrict the Company from granting
registration rights to others.
10. Restrictions
on Sale.
Each
Stockholder agrees that he will not publicly transfer any of the shares of
Registrable Common Stock during the eighteen (18) months following the Effective
Date, as defined in the Agreement. Any person who acquired Common Stock or
Warrants from a Stockholder (other than pursuant to a registration statement
or
Rule 144) shall be subject to the provisions of this Section 10.
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11. Amendments
and Waivers.
Any
provision of these Registration Rights Provisions may be amended, modified
or
waived if, but only if, the written consent to such amendment, modification
or
waiver has been obtained from (i) except as provided in clause (ii) below,
the
Holder or Holders of at least 66 2/3% of the shares of Registrable Common Stock
affected by such amendment, modification or waiver and (ii) in the case of
any
amendment, modification or waiver of any provision of Section 4 of these
Registration Rights Provisions or this Section 11, or as to the percentages
of
Holders required for any amendment, modification or waiver, or any amendment,
modification or waiver which adversely affects any right and/or obligation
under
these Registration Rights Provisions of any Holder, the written consent of
each
Holder so affected.
12. Assignment.
The
provisions of these Registration Rights Provisions shall be binding upon and
inure to the benefit of the parties hereto, and, in the event of the death
or
incompetence of any Holder to their legal representatives, heirs, distributees
or legatees, provided that the such Transferee shall agree in writing with
the
parties hereto prior to the assignment to be bound by these Registration Rights
Provisions as if he or she were an original party hereto, whereupon such
Transferee shall for all purposes be deemed to be a Holder under these
Registration Rights Provisions. Except as provided above or otherwise permitted
by these Registration Rights Provisions, neither these Registration Rights
Provisions nor any right, remedy, obligation or liability arising hereunder
or
by reason hereof shall be assignable by any Holder without the prior written
consent of the Company.
13. Miscellaneous.
(a) Each
of
the parties hereto shall execute such documents and other papers and perform
such further acts as may be reasonably required or desirable to carry out the
provisions of these Registration Rights Provisions and the transactions
contemplated hereby.
(b) The
headings in these Registration Rights Provisions are for convenience of
reference only and shall not control or affect the meaning or construction
of
any provisions of these Registration Rights Provisions.
(c) Notwithstanding
any provision of these Registration Rights Provisions, neither the Company
nor
any other party hereto shall be required to take any action which would be
in
violation of any applicable federal or state securities law. The invalidity
or
unenforceability of any provision of these Registration Rights Provisions in
any
jurisdiction shall not affect the validity, legality or enforceability of any
other provision of these Registration Rights Provisions in such jurisdiction
or
the validity, legality or enforceability of these Registration Rights
Provisions, including any such provision, in any other jurisdiction, it being
intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
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