REGISTRATION RIGHTS AGREEMENT
Exhibit
99.4
REGISTRATION
RIGHTS AGREEMENT (this "AGREEMENT"), dated as of April 16, 2007, by and between
QPC LASERS, INC., a Nevada corporation (the "COMPANY"), and each buyer
identified on the signature pages hereto (collectively, the “BUYERS” and each
individually, the “BUYER”).
WHEREAS:
A.
In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the Company
has agreed, upon the terms and subject to the conditions contained therein,
to
issue and sell to the Buyer the following (as each capitalized term not
otherwise defined herein shall have the meaning ascribed to it in the Securities
Purchase Agreement):
(i)
Convertible debentures of the Company (the “DEBENTURES”) issued pursuant to the
Securities Purchase Agreement, and
(ii)
Warrants in the amount described in the Securities Purchase
Agreement,
where
the
Debenture is convertible into shares of the Company's common stock, par value
$0.001
per
share (the "COMMON STOCK"), upon the terms and subject to the limitations and
conditions set forth in the Debenture and where each of the Warrants is
exercisable into shares of the Company's common stock, par value $0.001
per
share, each upon the terms and conditions and subject to the limitations and
conditions set forth in the Warrants, all subject to the terms and conditions
of
the Securities Purchase Agreement; and
B.
To
induce the Buyer to execute and deliver the Securities Purchase Agreement,
the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "1933 ACT"), and applicable state
securities laws;
NOW,
THEREFORE,
In
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and the Buyer hereby agree as
follows:
1.
DEFINITIONS.
a.
As
used in this Agreement, the following terms shall have the following
meanings:
(i)
"BUYER" means the buyer identified on the signature pages hereto and any
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii)
“FILING DEADLINE,” shall mean May 15, 2007.
(iii)
“REGISTRATION DEADLINE” shall mean the date that is one hundred twenty (120)
days after the date of Closing of the Debenture for which such registration
is
being effected.
(iv)
“WARRANTS” means the warrants issued by the Company in conjunction with the
Debenture issued by the Company.
(v)
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected
by
preparing and filing a Registration Statement or Statements in compliance with
the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a continuous basis ("RULE 415"), and the
declaration or ordering of effectiveness of such Registration Statement by
the
United States Securities and Exchange Commission (the "SEC").
(vi)
"REGISTRABLE SECURITIES," for a given Registration, means (a) the shares of
Common Stock (the “CONVERSION SHARES”) issued or issuable upon full conversion
of the Debenture or otherwise pursuant to the Debenture for which such
Registration is being effected (including, without limitation, any shares issued
or issuable as “Payment Shares” or otherwise pursuant to the Securities Purchase
Agreement), (b) any shares of Common Stock (the “WARRANT SHARES”) issued or
issuable upon exercise of or otherwise pursuant to the Warrant(s), and (c)
any
shares of capital stock issued or issuable as a dividend on or in exchange
for
or otherwise with respect to any of the foregoing, and (d) any other shares
of
common stock issued pursuant to the terms of the Securities Purchase Agreement,
the Debenture, the Warrants, this Registration Rights Agreement or any other
Transaction Document (as defined in the Securities Purchase Agreement), and
(e)
any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing.
(vii)
"REGISTRATION STATEMENT(S)" means a registration statement(s) of the Company
under the 0000 Xxx.
b.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
2.
REGISTRATION.
a.
MANDATORY REGISTRATION.
Following the Closing of any Debenture pursuant to the Securities Purchase
Agreement, the Company shall prepare, and, on or prior to the applicable Filing
Deadline (as defined above) file with the SEC a Registration Statement on Form
SB-2 (or, if Form SB-2 is not then available, on such form of Registration
Statement as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Buyer, which consent will not be
unreasonably withheld) covering the resale of the Registrable Securities which
Registration Statement, to the extent allowable under the 1933 Act and the
rules
and regulations promulgated thereunder (including Rule 416), shall state that
such Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of or otherwise
pursuant to the Debenture and exercise of or otherwise pursuant to the Warrants
to prevent dilution resulting from stock splits, stock dividends or similar
transactions. The number of shares of Common Stock initially included in such
Registration Statement shall be no less than one and one-half (1.5) times the
aggregate number of Conversion Shares that are then issuable upon conversion
of
the Debenture or otherwise pursuant to the Debenture (based on the Conversion
Price [as defined in the Debenture] then in effect) plus the aggregate number
of
Warrant Shares that are then issuable upon exercise of or otherwise pursuant
to
the Warrants, without regard to any limitation on the Buyer's ability to convert
the Debenture or exercise the Warrants (collectively, the “Target Registration
Amount”). Notwithstanding the foregoing, if the Company is advised by the staff
of the SEC that it is not eligible to conduct the offering under Rule 415
promulgated under the 1933 Act because of the number of shares sought to be
included in the Registration Statement, then the Company may reduce (an “SEC
Share Reduction”) the number of shares covered by such Registration Statement to
the maximum number which would enable the Company to conduct such offering
in
accordance with the provisions of Rule 415 (“Rule 415 Eligible”), provided that
in no event shall the number of shares covered by such Registration
Statement
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be
reduced to a number less than thirty-three percent (33%) (or such lower
percentage of the Company’s Public Float as may be required, in writing, in
correspondence from the SEC staff to the Company or in a telephone conversation
with the SEC staff which includes a representative of the Lead Investor) of
the
Company’s Public Float (as defined below), on the actual filing date of the
subject Registration Statement, where “PUBLIC FLOAT” shall mean the number of
shares of Common Stock of the Company that are outstanding, excluding shares
held by Affiliates, where “AFFILIATES” shall mean directors, officers and
holders of 10% or greater of the outstanding Common Stock of the Company. In
such event, any reduction in Registrable Securities covered by the Registration
Statement shall be effected on a pro rata basis among all holders of the
Registrable Securities. In the event that, due to an SEC Share Reduction or
otherwise, the initial Registration Statement shall register a number of shares
of Common Stock which less than the Target Registration Amount (an “Initial
Target Registration Shortfall”), the unregistered portion of the Target
Registration Amount (the “Initial Target Registration Shortfall Amount”) shall
be included in the next Follow-On Registration (in accordance with Section
3(b)
below). The Company acknowledges that the number of shares initially included
in
each Registration Statement represents a good faith estimate of the maximum
number of shares issuable upon conversion of the Debenture or otherwise pursuant
to the Debenture and exercise of or otherwise pursuant to the Warrants and
shall
be amended if not sufficient. Each Registration Statement (and each amendment
or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided to (and subject to the approval of) the Buyer and its counsel
prior to its filing or other submission.
b.
PIGGY-BACK REGISTRATIONS.
If at
any time prior to the expiration of the Registration Period (as hereinafter
defined) the Company shall determine to file with the SEC a Registration
Statement relating to an offering for its own account or the account of others
under the 1933 Act of any of its equity securities (other than on Form S-4
or
Form S-8 or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans), the Company shall send to Buyer written notice of such determination
and, if within fifteen (15) days after the effective date of such notice, the
Buyer shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities the Buyer
requests to be registered, except that if, (i) inclusion of such shares would
result in the offering not being Rule 415 Eligible, or (ii) in connection with
any underwritten public offering for the account of the Company, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which the Buyer has
requested inclusion hereunder (i) as would enable the offering to be Rule 415
Eligible or (ii) as the underwriter shall permit;
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PROVIDED,
HOWEVER,
that
the Company shall not exclude any Registrable Securities unless the Company
has
first excluded all outstanding securities, the holders of which are not entitled
by contract to inclusion of such securities in such Registration Statement
or
are not entitled to pro rata inclusion with the Registrable Securities;
and
PROVIDED,
FURTHER, HOWEVER,
that,
after giving effect to the immediately preceding proviso, any exclusion of
Registrable Securities shall be made pro rata with holders of other securities
having the contractual right to include such securities in the Registration
Statement other than holders of securities entitled to inclusion of their
securities in such Registration Statement by reason of demand registration
rights. No right to registration of Registrable Securities under this Section
2(b) shall be construed to limit any registration required under Section 2(a)
hereof. If an offering in connection with which the Buyer is entitled to
registration under this Section 2(d) is an underwritten offering, then the
Buyer
shall, unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms
and conditions as other shares of Common Stock included in such underwritten
offering. Notwithstanding anything to the contrary set forth herein, the
registration rights of the Buyer pursuant to this Section 2(b) shall only be
available in the event the Company fails to timely file, obtain effectiveness
or
maintain effectiveness of any Registration Statement to be filed pursuant to
Section 2(a) in accordance with the terms of this Agreement.
3.
OBLIGATIONS OF THE COMPANY.
In
connection with the registration of the Registrable Securities, the Company
shall have the following obligations:
a.
The
Company shall prepare promptly, and file with the SEC as soon as practicable
after the date of the Closing under the Securities Purchase Agreement (the
"CLOSING DATE") (but no later than the Filing Deadline), Registration Statements
with respect to the number of Registrable Securities provided in Section 2(a),
and thereafter use its best efforts to cause each such Registration Statement
relating to Registrable Securities to become effective as soon as possible
after
such filing, but in any event shall cause each such Registration Statement
relating to Registrable Securities to become effective no later than the
Registration Deadline, and shall keep the Registration Statement current and
effective pursuant to Rule 415 at all times until such date as is the earlier
of
(i) the date on which all of the Registrable Securities for such Registration
Statement have been sold and (ii) the date on which all of the Registrable
Securities for such Registration Statement (in the opinion of counsel to the
Buyer) may be immediately sold to the public without registration or restriction
(including without limitation as to volume by each holder thereof) under the
1933 Act (the "REGISTRATION PERIOD"), which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein
not misleading.
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b.
The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to each Registration Statements
and
the prospectus used in connection with the Registration Statements as may be
necessary to keep the Registration Statements current and effective at all
times
during the Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statements until such
time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statements. In the event of an Initial Target
Registration Shortfall, or in the event that on any Trading Day (as defined
in
the Debenture) (the "REGISTRATION TRIGGER DATE") the number of shares available
under a Registration Statement filed pursuant to this Agreement is insufficient
to cover all of the Registrable Securities issued or issuable upon conversion
of
the Debenture or otherwise pursuant to the Debenture (based on the Conversion
Price [as defined in the Debenture] then in effect), exercise of or otherwise
pursuant to the Warrants, and otherwise issuable pursuant to the Transaction
Documents, in each case without giving effect to any limitations on the Buyer'
ability to convert the Debenture, exercise the Warrants or otherwise receive
shares of Common Stock pursuant to the Transaction Documents, the Company shall
amend the Registration Statement, or file a new Registration Statement (on
the
short form available therefore, if applicable), or both (each, a “Follow-On
Registration Statement”), so as to cover one and one-half (1.5) times the total
number of Registrable Securities so issued or issuable (without giving effect
to
any limitations on conversion contained in the Debenture, limitations on
exercise contained in the Warrants or limitations on conversion or exercise
or
other payment of shares contained in the Securities Purchase Agreement) as
of
the Registration Trigger Date (subject to an SEC Share Reduction, if
applicable), in each case, as soon as practicable, but in any event within
twenty (20) days after the Registration Trigger Date (based on the Conversion
Prices of the Debenture, the Exercise Prices of the Warrants, and other relevant
factors on which the Company reasonably elects to rely). The Company shall
use
its best efforts to cause such amendment and/or new Registration Statement
to
become effective as soon as practicable following the filing thereof, but in
any
event the Company shall cause such amendment and/or new Registration Statement
to become effective within sixty (60) days of the Registration Trigger Date
or
as promptly as practicable in the event the Company is required to increase
its
authorized shares. Each Follow-On Registration Statement shall be filed as
soon
as practicable, but in any event, subject to compliance with then applicable
SEC
policy (as confirmed in writing, in correspondence from the SEC staff to the
Company or in a telephone conversation with the SEC staff which includes a
representative of the Lead Investor), not later than the date that is five
(5)
Business Days after the later of (A) the date that is six (6) calendar months
following the date of effectiveness of the most recently effective Registration
Statement or Follow-On Registration Statement filed hereunder, and (B) the
date
that is sixty (60) days following the date that “substantially all” (as such
term is then interpreted by the SEC) of the then registered Registrable
Securities have been sold.
5
c.
The
Company shall furnish to the Buyer and its legal counsel (i) promptly after
the
same is prepared and publicly distributed, filed with the SEC, or received
by
the Company, one copy of each Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto, and, in the case of the Registration Statement referred to in Section
2(a), each letter written by or on behalf of the Company to the SEC or the
staff
of the SEC, and each item of correspondence from the SEC or the staff of the
SEC, in each case relating to such Registration Statement (other than any
portion of any thereof which contains information for which the Company has
sought confidential treatment), and (ii) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as the Buyer may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by the Buyer.
The
Company will immediately notify the Buyer by facsimile of the effectiveness
of
each Registration Statement or any post-effective amendment. The Company will
promptly respond to any and all comments received from the SEC, with a view
towards causing each Registration Statement or any amendment thereto to be
declared effective by the SEC as soon as practicable and shall file an
acceleration request as soon as practicable, but no later than three (3)
business days (the "ACCELERATION REQUEST DEADLINE"), following the resolution
or
clearance of all SEC comments or, if applicable, following notification by
the
SEC that any such Registration Statement or any amendment thereto will not
be
subject to review.
d.
The
Company shall use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statements under such other securities
or
"blue sky" laws of such jurisdictions in the United States as the Buyer shall
reasonably request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations
and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary
to
maintain such registrations and qualifications in effect at all times during
the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such
jurisdictions;
e.
As
promptly as practicable after becoming aware of such event, the Company shall
notify the Buyer of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in any 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, and use its best efforts promptly
to
prepare a supplement or amendment to any Registration Statement to correct
such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to the Buyer as the Buyer may reasonably request;
provided that, for not more than twenty (20) consecutive days (or a total of
not
more than sixty (60) days in any twelve (12) month period), the Company may
delay the disclosure of material non-public information concerning the Company
(as well as prospectus or Registration Statement updating) the disclosure of
which at the time is not, in the good faith opinion of the Company, in the
best
interests of the Company (an "ALLOWED DELAY"); provided, further, that the
Company shall promptly (i) notify the Buyer in writing of the existence of
(but
in no event, without the prior written consent of the Buyer, shall the Company
disclose to the Buyer any of the facts or circumstances regarding) material
non-public information giving rise to an Allowed Delay and (ii) advise the
Buyer
in writing to cease all sales under such Registration Statement until the end
of
the Allowed Delay, provided the above actions are consistent with the
requirements of the 1933 Act and/or 1934 Act or other applicable law. Upon
expiration of the Allowed Delay, the Company shall again be bound by the first
sentence of this Section 3(e) with respect to the information giving rise
thereto. Nothing herein relieves the obligations set forth in the Debenture
or
the Warrants relative to Failure Payments or payments of the Default Amount
pursuant to Events of Default.
6
f.
The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of any Registration Statement, and, if such
an
order is issued, to obtain the withdrawal of such order at the earliest possible
moment and to notify the Buyer who holds Registrable Securities being sold
(or,
in the event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof.
g.
The
Company shall permit a single firm of counsel designated by the Buyer to review
such Registration Statement and all amendments and supplements thereto (as
well
as all requests for acceleration or effectiveness thereof), at Buyer’s own cost,
a reasonable period of time prior to their filing with the SEC (not less than
three (3) business days but not more then five (5) business days) and not file
any document in a form to which such counsel reasonably objects and will not
request acceleration of such Registration Statement without prior notice to
such
counsel.
h.
The
Company shall hold in confidence and not make any disclosure of information
concerning the Buyer provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall,
upon
learning that disclosure of such information concerning the Buyer is sought
in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Buyer prior to making such disclosure, and
allow the Buyer, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such
information.
i.
If the
Company becomes eligible for listing on a national exchange, the Company shall
use its best efforts to (i) cause all the Registrable Securities covered by
the
Registration Statement to be listed on each national securities exchange on
which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) to the extent the securities of the
same class or series are not then listed on a national securities exchange,
secure the designation and quotation, of all the Registrable Securities covered
by the Registration Statement on the NNM or, if not eligible for the NNM on
the
Nasdaq Small Cap or, if not eligible for the Nasdaq Small Cap, on the Over
the
Counter electronic bulletin board and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities.
7
j.
The
Company shall provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of
the
Registration Statement.
k.
The
Company shall cooperate with the Buyer who holds Registrable Securities being
offered and the managing underwriter or underwriters, if any, to facilitate
the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to such
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the managing underwriter or underwriters,
if
any, or the Buyer may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or the Buyer may request, and,
within three (3) business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver,
to
the transfer agent for the Registrable Securities (with copies to the Buyer)
an
appropriate instruction and an opinion of such counsel in the form required
by
the transfer agent in order to issue the Registrable Securities free of
restrictive legends.
l.
At the
request of the holders of a majority-in-interest of the Registrable Securities,
the Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
any
prospectus used in connection with the Registration Statement as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
m.
The
Company shall not, and shall not agree to, allow the holders of any securities
of the Company to include any of their securities in any Registration Statement
under Section 2(a) hereof or any amendment or supplement thereto under Section
3(b) hereof without the consent of the holders of a majority-in-interest of
the
Registrable Securities, except for securities which have contractual piggyback
registration rights in effect at the time of the Initial Closing (as defined
in
the Securities Purchase Agreement). In addition, the Company shall not offer
any
securities for its own account or the account of others in any Registration
Statement under Section 2(a) hereof or any amendment or supplement thereto
under
Section 3(b) hereof without the consent of the holders of a majority-in-interest
of the Registrable Securities.
n.
The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Buyer of Registrable Securities pursuant to a
Registration Statement.
o.
The
Company shall comply with all applicable laws related to a Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including
without limitation the 1933 Act and the 1934 Act and the rules and regulations
promulgated by the SEC).
8
p. Further
Registration Statements. Except for a registration statement filed on behalf
of
the Buyer pursuant to Section 2 of this Agreement, except for an underwritten
public offering, and except for a
registration statement on Form S-8 to cover no more than 5,800,000 shares issued
pursuant to the Company’s stock option plan(s), described on SCHEDULE 3(p)
hereto,
the
Company will not file any registration statements or amend any already filed
registration statement with the Commission (other than registration statement
on
Form SB-2, File #333-137413) or with state regulatory authorities without the
consent of the Subscriber until the expiration of the "EXCLUSION PERIOD," which
shall be defined as the sooner of (i) the date that the Registration Statement
shall have been current and available for use in connection with the resale
of
the Registrable Securities for a period of 180 days, or (ii) until all the
Shares and Warrant Shares have been resold or transferred by the Subscribers
pursuant to the Registration Statement or are eligible for immediate
unrestricted resale pursuant to Rule 144(k), without volume limitations. The
Exclusion Period will be tolled during the pendency of an Event of Default
as
defined in the Debenture or an Event of Default as defined in the Warrants.
4.
OBLIGATIONS OF THE BUYER.
In
connection with the registration of the Registrable Securities, the Buyer shall
have the following obligations:
a.
It
shall be a condition precedent to the obligations of the Company to complete
the
registration pursuant to this Agreement with respect to the Registrable
Securities of the Buyer that the Buyer shall comply with the Plan of
Distribution attached hereto as Exhibit
A
and
furnish to the Company the Selling Securityholder Notice and Questionnaire
in
the form attached hereto as Exhibit
A,
along
with such information regarding its beneficial ownership of the Company at
the
time of filing the registration statement and the name of the person(s) that
has
voting and dispositive control over the Registrable Securities. At least three
(3) business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify the Buyer of the information the Company
requires from each the Buyer.
b.
The
Buyer, by the Buyer's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statements hereunder, unless
the Buyer has notified the Company in writing of the Buyer's election to exclude
all of the Buyer's Registrable Securities from the Registration
Statements.
c.
In the
event of an underwritten offering pursuant to Section 2(b) in which any
Registrable Securities are to be included, the Buyer agrees to enter into and
perform the Buyer's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless the Buyer
has
notified the Company in writing of the Buyer's election to exclude all of the
Buyer's Registrable Securities from such Registration Statement.
9
d.
The
Buyer agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(f) or 3(g), the Buyer will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until the Buyer's
receipt of the copies of the supplemented or amended prospectus contemplated
by
Section 3(f) or 3(g) and, if so directed by the Company, the Buyer shall deliver
to the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in the Buyer's possession,
of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
e.
No
Buyer may participate in any underwritten registration hereunder unless the
Buyer (i) agrees to sell the Buyer's Registrable Securities on the basis
provided in any underwriting arrangements in usual and customary form entered
into by the Company, (ii) completes and executes all questionnaires, powers
of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (iii) agrees
to
pay its pro rata share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to Section 5
below.
5.
EXPENSES OF REGISTRATION.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualification fees, printers and accounting fees, the fees and disbursements
of
counsel for the Company shall be borne by the Company.
6.
INDEMNIFICATION.
In the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
a.
To the
extent permitted by law, the Company will indemnify, hold harmless and defend
(i) the Buyer, (ii) the directors, officers, partners, managers, members,
employees, agents and each person who controls any Buyer within the meaning
of
the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
ACT"), if any, (iii) any underwriter (as defined in the 0000 Xxx) for the Buyer
in connection with an underwritten offering pursuant to Section 2(b) hereof,
and
(iv) the directors, officers, partners, employees and each person who controls
any such underwriter within the meaning of the 1933 Act or the 1934 Act, if
any
(each, an "INDEMNIFIED PERSON"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "CLAIMS") to which any
of
them may become subject insofar as such Claims arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material fact in
a
Registration Statement or the omission or alleged omission to state therein
a
material fact required to be stated or necessary to make the statements therein
not misleading; (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation,
any
state securities law, or any rule or regulation thereunder relating to the
offer
or sale of the Registrable Securities (the matters in the foregoing clauses
(i)
through (iii) being, collectively, "VIOLATIONS"). Subject to the restrictions
set forth in Section 6(c) with respect to the number of legal counsel, the
Company shall reimburse the Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs
in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of such Registration
Statement or any such amendment thereof or supplement thereto; (ii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the untrue statement
or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented,
such corrected prospectus was timely made available by the Company pursuant
to
Section 3(c) hereof, and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer
of
the Registrable Securities by the Buyer pursuant to Section 9.
10
b.
[Intentionally Omitted].
c.
Promptly after receipt by an Indemnified Person under this Section 6 of notice
of the commencement of any action (including any governmental action), such
Indemnified Person shall, if Claim in respect thereof is to be made against
any
the Company under this Section 6, deliver to the Company a written notice of
the
commencement thereof, and the Company shall have the right to participate in,
and, to the extent the Company so desires, to assume control of the defense
thereof with counsel mutually satisfactory to the Company and the Indemnified
Person, as the case may be.
PROVIDED,
HOWEVER,
that an
Indemnified Person shall have the right to retain its own counsel with the
fees
and expenses to be paid by the Company, if, in the reasonable opinion of counsel
retained by the Company, the representation by such counsel of the Indemnified
Person and the Company would be inappropriate due to actual or potential
differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding. The Company shall pay for only
one separate legal counsel for the Indemnified Persons, and such legal counsel
shall be selected by Buyer, if the Buyer is entitled to indemnification
hereunder. The failure to deliver written notice to the Company within a
reasonable time of the commencement of any such action shall not relieve the
Company of any liability to the Indemnified Person under this Section 6, except
to the extent that the Company is actually prejudiced in its ability to defend
such action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
11
d.
To the
extent permitted by law, the Buyer will indemnify, hold harmless and defend
(i)
the Company, and (ii) the directors, officers, partners, managers, members,
employees, or agents of the Company, if any (each, a "COMPANY INDEMNIFIED
PERSON"), against any joint or several losses, claims, damages, liabilities
or
expenses (collectively, together with actions, proceedings or inquiries by
any
regulatory or self-regulatory organization, whether commenced or threatened,
in
respect thereof, "CLAIMS") to which any of them may become subject insofar
as
such Claims arise out of or are based upon a Claim arising out of or based
upon
any violation or alleged violation by the Company of the 1933 Act, the 1934
Act,
any other law, including, without limitation, any state securities law, or
any
rule or regulation thereunder relating to the offer or sale of the Registrable
Securities, which occurs due to the inclusion by the Company in a Registration
Statement of false or misleading information about the Buyer, where such
information was furnished in writing to the Company by the Buyer for the purpose
of inclusion in such Registration Statement. In no event shall the liability
of
any selling Holder hereunder be greater in amount than the dollar amount of
the
net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
7.
CONTRIBUTION.
To the
extent any indemnification by the Company is prohibited or limited by law,
the
Company agrees to make the maximum contribution with respect to any amounts
for
which it would otherwise be liable under Section 6 to the fullest extent
permitted by law, based upon a comparative fault standard. In no event shall
the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation.
8.
REPORTS UNDER THE 1934 ACT.
With a
view to making available to the Buyer the benefits of Rule 144 promulgated
under
the 1933 Act or any other similar rule or regulation of the SEC that may at
any
time permit the Buyer to sell securities of the Company to the public without
registration ("RULE 144"), the Company agrees to:
a.
make
and keep public information available, as those terms are understood and defined
in Rule 144;
b.
file
with the SEC in a timely manner all reports and other documents required of
the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company's obligations under Section 4(c) of the Securities Purchase
Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and
c.
furnish to the Buyer so long as the Buyer owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii)
a
copy of the most recent annual or quarterly report of the Company and such
other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the Buyers to sell such securities
pursuant to Rule 144 without registration.
12
9.
ASSIGNMENT OF REGISTRATION RIGHTS.
The
rights under this Agreement shall be automatically assignable by the Buyers
to
any transferee of all or any portion of Registrable Securities if: (i) the
Buyer
agrees in writing with the transferee or assignee to assign such rights, and
a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment, (ii) the Company is, within a reasonable time after
such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect
to
which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all
of
the provisions contained herein, (v) the transferee is either an affiliate
of
the Buyer or is a Qualified Institutional Buyer (as defined in Rule 144A of
the
Securities Act of 1933), and (vi) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement. In the event that the Buyer transfers all or any portion of its
Registrable Securities pursuant to this Section, the Company shall have at
least
ten (10) days to file any amendments or supplements necessary to keep the
Registration Statement current and effective pursuant to Rule 415, and the
commencement date of any Event of Failure or Event of Default under the
Debenture or the Warrants caused thereby will be extended by ten (10)
days.
10.
AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be
waived (either generally or in a particular instance and either retroactively
or
prospectively), only with written consent of the Company, the Buyer (to the
extent such Buyer still owns Registrable Securities) and Buyers who hold a
majority interest of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon the Buyer
and
the Company.
11.
MISCELLANEOUS.
a.
A
person or entity is deemed to be a holder of Registrable Securities whenever
such person or entity owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b.
Any
notices required or permitted to be given under the terms hereof shall be sent
by certified or registered mail (return receipt requested) or delivered
personally or by courier (including a recognized overnight delivery service)
or
by facsimile and shall be effective five days after being placed in the mail,
if
mailed by regular United States mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for such
communications shall be:
13
If
to the
Company: To the address set forth immediately below such Company’s
name on the signature pages hereto.
With
copy
to:
Xxxxxx
X.
Xxxx , Esq.
Xxxxxxxx
& Xxxxxxxx
000
Xxxx
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
If
to a
Buyer: To the address set forth immediately below such Buyer's name on the
signature pages hereto.
Each
party shall provide notice to the other party of any change in
address.
c.
Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.
d.
Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that
all
legal proceedings concerning the interpretations, enforcement and defense of
the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits
to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding
is
improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in
any way any right to serve process in any other manner permitted by law. The
parties hereby waive all rights to a trial by jury. If either party shall
commence an action or proceeding to enforce any provisions of the this
Agreement, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
14
e.
This
Agreement and the Securities Purchase Agreement (including all schedules and
exhibits thereto) constitute the entire agreement among the parties hereto
with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to
herein and therein. This Agreement and the Securities Purchase Agreement
supersede all prior agreements and understandings among the parties hereto
with
respect to the subject matter hereof and thereof.
f.
Subject to the requirements of Section 9 hereof, this Agreement shall inure
to
the benefit of and be binding upon the successors and assigns of each of the
parties hereto.
g.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j.
Except
as otherwise provided herein, all consents and other determinations to be made
by the Buyer pursuant to this Agreement shall be made by Buyers holding a
majority of the Registrable Securities, determined as if the all of the
Debenture and Warrants then outstanding have been converted or exercised into
for Registrable Securities.
k.
The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for breach of its obligations hereunder will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of any
of
the provisions hereunder, that the Buyer shall be entitled, in addition to
all
other available remedies in law or in equity, to an injunction or injunctions
to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being
required.
l.
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.
15
m.
In the
event that any provision of this Agreement is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
n.
The
initial number of Registrable Securities included in any Registration Statement
and each increase to the number of Registrable Securities included therein
shall
be allocated pro rata among the Buyers based on the number of Registrable
Securities held by the Buyer at the time of such establishment or increase,
as
the case may be (each Buyer’s portion referred to herein as its “Pro-Rata
Share”). In the event an Buyer shall sell or otherwise transfer any of such
holder's Registrable Securities, each transferee shall be allocated a pro rata
portion of the number of Registrable Securities included in a Registration
Statement for such transferor. Any shares of Common Stock included on a
Registration Statement and which remain allocated to any person or entity which
does not hold any Registrable Securities shall be allocated to the remaining
Buyers, pro rata based on the number of shares of Registrable Securities then
held by the Buyers. For the avoidance of doubt, the number of Registrable
Securities held by a Buyer shall be determined as if all the Debenture and
Warrants then outstanding and held by a Buyer were converted into or exercised
for Registrable Securities, without regard to any limitation on the Buyer's
ability to convert the Debenture or exercise the Warrants.
o.
There
shall be no oral modifications or amendments to this Agreement. This Agreement
may be modified or amended only in writing.
16
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
Agreement to be duly executed as of the 16th day of April, 2007.
| COMPANY: | BUYER: | ||
| QPC LASERS, INC. | |||
| By: ________________ | By: ________________ | ||
|
_______,
____________
|
|||
| ADDRESS: | ADDRESS: | ||
|
00000
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Phone:
000-000-0000
Fax:
000-000-0000
|
[Signature
page of Registration Rights Agreement]
