REGISTRATION RIGHTS AGREEMENT
Exhibit 10.3
This Registration Rights Agreement (the
“Agreement”) is made and entered into as of this 26th
day of April, 2019 by and
among True Drinks Holdings, Inc., a Nevada corporation (the
“Company”), and the Members and Direct Investors
receiving securities in connection with the Securities Exchange
Agreement by and among the Company, Charlie’s Chalk Dust,
LLC, and the Members and Direct Investors (the
“Exchange
Agreement”). Capitalized
terms used herein have the respective meanings ascribed thereto in
the Exchange Agreement unless otherwise defined herein. Unless
stated otherwise herein, or the context otherwise requires, the
term “Members” as set forth in this Agreement shall
include Direct Investors.
The
parties hereby agree as follows:
1. Certain
Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means, with respect to any Person, any other Person that (either
directly or indirectly) controls, is controlled by, or is under
common control with the specified Person, and shall also include
any Related Fund of such Person. The term “control” includes the
possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through the ownership
of securities, by contract or otherwise.
“Common
Stock” means the Company’s common stock, par
value $0.001 per share, and any securities into which such Common
Stock may hereinafter be reclassified.
“Conversion
Shares” means the shares of Common Stock issuable upon
conversion of the Preferred Stock issued pursuant to the Exchange
Agreement.
“Direct
Investors”
means the investors identified in the Exchange Agreement and any
Affiliate or permitted transferee of any Direct Investor who is a
subsequent holder of any Registrable Securities.
“Person”
means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company,
association, trust, joint venture or any other entity, or a
governmental authority.
“Preferred
Stock” means those shares of the Company’s
preferred stock, par value $0.001 per share, issued to the Members
or Direct Investors pursuant to the Exchange
Agreement.
“Prospectus”
means (i) the prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by
reference in such prospectus, and (ii) any “free writing prospectus” as
defined in Rule 405 under the 1933 Act.
“Members”
means individuals identified in the Exchange Agreement and any
Affiliate or permitted transferee of any Member who is a subsequent
holder of any Registrable Securities.
“Register,”
“registered”
and “registration”
refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as
defined below), and the declaration or ordering of effectiveness of
such Registration Statement or document.
“Registrable
Securities” means the shares of Common Stock issued to
the Members and Direct Investors pursuant to the Exchange
Agreement, including the Warrant Shares and Conversion Shares, as
well as any shares of Common Stock
issued or issuable with respect to such shares upon any stock
split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing; provided, however, that, a security shall cease
to be a Registrable Security upon sale pursuant to a Registration
Statement or Rule 144 under the 1933 Act.
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“Registration
Statement” means any registration statement of the
Company filed under the 1933 Act that covers the resale of any of
the Registrable Securities pursuant to the provisions of this
Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.
“Related
Fund” means, with respect to any Person, any fund,
account or investment vehicle that is controlled or managed by (i)
such Person, (ii) an Affiliate of such Person or (iii) the same
investment manager, advisor or subadvisor as such Person or an
Affiliate of such investment manager, advisor or
subadvisor.
“Required
Members” means, as of any date of determination, the
Members and Direct Investors holding a majority of the Registrable
Securities as of such date.
“SEC”
means the U.S. Securities and Exchange Commission.
“1933
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
“1934
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
2.
Registration.
(a) Registration
Statements.
(i) The
Company shall use its best efforts to prepare and file with the SEC
one Registration Statement (the “Initial Registration Statement”)
covering the resale of all of the Registrable Securities on a
continuous basis pursuant to Rule 415 of the Securities Act or
before 30 days from the date of this Agreement (the
“Filing
Deadline”). The Initial Registration Statement filed
hereunder shall be on Form S-1, or any other form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the resale by the
Members of all the Registerable Securities, provided, that the Company shall
maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by
the staff of the SEC. No Member shall be named as an
“underwriter” in the Initial Registration Statement
without such Member’s prior written consent. Such Initial
Registration Statement also shall cover, to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including
Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities. Such
Initial Registration Statement shall not include any shares of
Common Stock or other securities for the account of any other
Person (including the Company) without the prior written consent of
the Required Members. The Initial Registration Statement (and each
amendment or supplement thereto, and each request for acceleration
of effectiveness thereof) shall be provided in accordance with
Section 3(c) to the Members and their counsel prior to its filing
or other submission.
(b) Expenses.
The Company will pay all expenses associated with each Registration
Statement (whether or not such Registration Statement becomes
effective), including filing and printing fees, the Company’s
counsel and accounting fees and expenses, costs associated with
clearing the Registrable Securities for sale under applicable state
securities laws, listing fees, and the reasonable fees and expenses
of counsel to, (i) with respect to the Initial Registration
Statement, the Required Members, (ii) with respect to a Demand
Registration, the Requesting Holders and (iii)
with respect to any Piggyback Registration, Members that at the
relevant time hold at least a majority of the Registrable
Securities held by all Members to be included in such Piggyback
Registration.
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(c) Effectiveness
of Registration Statements. The Company shall use its best
efforts to have the Initial Registration Statement declared
effective by the 120th calendar day following the date of this
Agreement. The Company shall notify the Members by facsimile or
e-mail as promptly as practicable, and in any event, within
twenty-four (24) hours, after any Registration Statement is
declared effective and shall simultaneously provide the Members
with copies of any related Prospectus to be used in connection with
the sale or other disposition of the securities covered
thereby.
(d) Rule
415; Cutback. If at any time the SEC takes the position that
the offering of some or all of the Registrable Securities in any
Registration Statement filed pursuant to the terms and conditions
of this Agreement is not eligible to be made on a delayed or
continuous basis under the provisions of Rule 415 under the 1933
Act or requires any Member to be named as an
“underwriter”, the Company shall use its best efforts
to persuade the SEC that the offering contemplated by such
Registration Statement is a valid secondary offering and not an
offering “by or on behalf of the issuer” as defined in
Rule 415 and that none of the Members is an
“underwriter”. In the event that, despite the
Company’s best efforts and compliance with the terms of this
Section 2(d), the SEC refuses to alter its position, the Company
shall (i) remove from such Registration Statement such portion of
the Registrable Securities that the SEC requires to be removed from
such Registration Statement, while still including the maximum
number of Registrable Securities permitted to be registered by the
SEC under such Registration Statement at such time (such removed
Registrable Securities, the “Cut Back Shares”), and/or (ii)
agree to such restrictions and limitations on the registration and
resale of the Registrable Securities as the SEC may require to
assure the Company’s compliance with the requirements of Rule
415 (collectively, the “SEC
Restrictions”); provided, however, that the Company
shall not agree to name any Member as an “underwriter”
in any Registration Statement without the prior written consent of
such Member. Any cut-back imposed on the Members pursuant to this
Section 2(d) shall be allocated, first, among all securities that
are not Registrable Securities (to the extent previously permitted
by the Required Members, or, in the case of a Demand Registration,
by the Requesting Members), second, among the Series B Members,
third, among Katalyst Securities LLC and its affiliates, and
fourth, among the Members on a pro rata basis, unless the SEC
Restrictions otherwise require or provide or the Members otherwise
agree. In the event of any cut-back imposed on the Members pursuant
to this Section 2(d), the Company will use its best efforts to file
with the SEC, as promptly as allowed by the SEC, one or more
Registration Statements on Form S-1 covering the resale of the Cut
Back Shares or such other form available to register for resale the
Cut Back Shares.
(e)
Right to Piggyback
Registration.
(i) If
at any time following the date of this Agreement that any
Registrable Securities remain outstanding the Company proposes for
any reason to register any shares of Common Stock under the 1933
Act (other than pursuant to a registration statement on Form S-4 or
Form S-8 (or a similar or successor form)) with respect to an
offering of Common Stock by the Company for its own account or for
the account of any of its stockholders, it shall, unless a holder
of Registrable Securities has provided written notice to the
Company that it does not want to receive such information, at each
such time promptly give written notice to the holders of the
Registrable Securities of its intention to do so (but in no event
less than thirty (30) days before the anticipated filing date) and,
to the extent permitted under the provisions of Rule 415 under the
1933 Act, include in such registration all Registrable Securities
with respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after receipt of the
Company’s notice (a “Piggyback Registration”). Such
notice shall offer the holders of the Registrable Securities the
opportunity to register such number of shares of Registrable
Securities as each such holder may request and shall indicate the
intended method of distribution of such Registrable
Securities.
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(ii) Notwithstanding
the foregoing, (A) if such registration involves an underwritten
public offering, the Members must sell their Registrable Securities
to, if applicable, the underwriter(s) at the same price and subject
to the same underwriting discounts and commissions that apply to
the other securities sold in such offering (it being acknowledged
that the Company shall be responsible for other expenses as set
forth in Section 2(b)) and subject to the Members entering into
customary underwriting documentation for selling stockholders in an
underwritten public offering, and (B) if, at any time after giving
written notice of its intention to register any Registrable
Securities pursuant to Section 2(e)(i) 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
cause such registration statement to become effective under the
1933 Act, the Company shall deliver written notice to the Members
and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration. Any
Member may elect to withdraw such Member’s request for
inclusion of Registrable Securities in any Piggyback Registration
by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement or the
pricing of an underwritten offering, as applicable.
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(f)
Demand
Registration.
(i) At
any time and from time to time after the Initial Registration
Statement has been declared effective, any Member or group of
Members (acting together) that own or control Registrable
Securities representing at least fifty percent (50%) of the
then-issued and outstanding Registrable Securities (collectively,
the “Requesting
Members”), may deliver to the Company a written notice
(a “Demand Registration
Notice”) informing the Company that such Requesting
Members require the Company to register for resale some or all of
such Requesting Members’ Registrable Securities not otherwise
then registered for resale by the Initial Registration Statement (a
“Demand
Registration”); provided, however, that the Company
will not be required to effect more than two (2) Demand
Registrations in accordance with this Agreement. Upon receipt of
the Demand Registration Notice, the Company will use best efforts
to file with the SEC as promptly as practicable after receiving the
Demand Registration Notice, but in no event more than sixty (60)
days following receipt of the Demand Registration Notice, a
Registration Statement covering all requested Registrable
Securities (the “Demand
Registration Statement”), and agrees to use best
efforts to cause the Demand Registration Statement to be declared
effective by the SEC as soon as practicable following the filing
thereof, but in no event later than ninety (90) days after the
filing of such Demand Registration Statement. The Company agrees to
use best efforts to keep any Demand Registration Statement
continuously effective (including the preparation and filing of any
amendments and supplements necessary for that purpose) until such
time as all of the Registrable Securities covered thereby have been
sold or the date on which all Registrable Securities may be sold
without restriction and without the need for current public
information pursuant to Rule 144 unless such restriction is the
result of a Member being an Affiliate of the Company
(“Minimum Effective
Period”).
(ii) Notice
to Members. The Company shall give written notice of the
proposed filing of any Demand Registration Statement to all Members
(other than the Requesting Members) as soon as practicable, and
each such Member who wishes to participate in such Demand
Registration Statement shall notify the Company in writing within
five (5) Business Days after the receipt by such Member of the
notice from the Company, and shall specify in such notice the
number of Registrable Securities held by such Member to be included
in the Demand Registration Statement. Upon the written request of
any Member, delivered to the Company no later than five (5)
Business Days after the Company’s notice is delivered to such
Member (each such Member, a “Joining Member”), to register, on
the same terms and conditions as the Registrable Securities
otherwise being sold pursuant to such Demand Registration, any of
its Registrable Securities, the Company will use its best efforts
to cause such Registrable Securities to be included in the Demand
Registration Statement proposed to be filed by the Company on the
same terms and conditions as any Registrable Securities included
therein.
3. Company
Obligations. The Company will use best efforts to effect the
registration of the Registrable Securities in accordance with the
terms hereof, and pursuant thereto the Company will, as
expeditiously as possible:
(a) use
best efforts to cause the Initial Registration Statement to become
effective and to remain continuously effective for a period that
will terminate upon the earlier of (i) the date on which all
Registrable Securities covered by such Initial Registration
Statement as amended from time to time, have been sold, and (ii)
the date on which all Registrable Securities covered by such
Initial Registration Statement may be sold without restriction and
without the need for current public information pursuant to Rule
144 unless such restriction is the result of a Member being an
Affiliate of the Company (the “Effectiveness Period”) and advise
the Members in writing when the Effectiveness Period has
expired;
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(b) prepare
and file with the SEC such amendments and post-effective amendments
to any Registration Statement and Prospectus as may be necessary to
keep such Registration Statement effective for, with respect to the
Initial Registration Statement, the Effectiveness Period and with
respect to any Demand Registration Statement, the Minimum Effective
Period, and in any case to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the
Registrable Securities covered in any Registration
Statement;
(c) provide
copies to and permit counsel designated by the Members to review
each Registration Statement and all amendments and supplements
thereto no fewer than seven (7) days prior to their filing with the
SEC and not file any Registration Statement or other document to
which such counsel reasonably objects;
(d) furnish
to the Members and their legal counsel (i) promptly after the same
is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days
after the filing date, receipt date or sending date, as the case
may be) one (1) copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and
each amendment or supplement thereto, and 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 each
Member may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Member that
are covered by the related Registration Statement;
(e) use
best efforts to (i) prevent the issuance of any stop order or other
suspension of effectiveness and, (ii) if such order is issued,
obtain the withdrawal of any such order at the earliest possible
moment;
(f) prior
to any public offering of Registrable Securities, use best efforts
to register or qualify or cooperate with the Members and their
counsel in connection with the registration or qualification of
such Registrable Securities for offer and sale under the securities
or blue sky laws of such jurisdictions requested by the Members and
do any and all other acts or things necessary or advisable to
enable the distribution in such jurisdictions of the Registrable
Securities covered by any Registration Statement; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section
3(f), (ii) subject itself to general taxation in any jurisdiction
where it would not otherwise be so subject but for this Section
3(f), or (iii) file a general consent to service of process in any
such jurisdiction;
(g) use
best efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange,
interdealer quotation system or other market on which similar
securities issued by the Company are then listed or
quoted;
(h) immediately
notify the Members, at any time prior to the end of the
Effectiveness Period or the Minimum Effective Period, as
applicable, upon discovery that, or upon the happening of any event
as a result of which, any
Prospectus 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 light of
the circumstances then existing, and promptly prepare, file with
the SEC and furnish to such holder a supplement to or an amendment
of such Prospectus as may be necessary so that such Prospectus
shall not include 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 not misleading in light of the
circumstances then existing;
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(i) otherwise
use best efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act,
including, without limitation, Rule 172 under the 1933 Act, file
any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act,
promptly inform the Members in writing if, at any time during the
Effectiveness Period or Minimum Effective Period, as applicable,
the Company does not satisfy the conditions specified in Rule 172
and, as a result thereof, the Members are required to deliver a
Prospectus in connection with any disposition of Registrable
Securities and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable
Securities hereunder; and make available to its security holders,
as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement
covering a period of at least twelve (12) months, beginning after
the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933
Act, including Rule 158 promulgated thereunder (for the purpose of
this subsection 3(i), “Availability Date” means the 45th
day following the end of the fourth fiscal quarter that includes
the effective date of such Registration Statement, except that, if
such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th
day after the end of such fourth fiscal quarter);
(j) if
during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 100% of the number of shares of
Common Stock then registered in the Initial Registration Statement,
the Company shall file as soon as reasonably practicable an
additional Registration Statement covering the resale by the
Members of not less than the number of such Registrable Securities;
and
(k) with
a view to making available to the Members the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Members to sell shares of Common
Stock to the public without registration, the Company covenants and
agrees to: (i) make and keep public information available, as those
terms are understood and defined in Rule 144, until the earlier of
(A) six months after such date as all of the Registrable Securities
may be sold without restriction (including without volume or
manner-of-sale restrictions) and without the need for current
public information by the holders thereof pursuant to Rule 144 or
any other rule of similar effect and (B) such date as all of the
Registrable Securities shall have been resold; (ii) file with the
SEC in a timely manner all reports and other documents required of
the Company under the 1934 Act; and (iii) furnish to each Member
upon request, as long as such Member owns any Registrable
Securities,
(A) a
written statement by the Company that it has complied with the
reporting requirements of the 1934 Act, (B) a copy of the
Company’s most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail such Member of any rule or
regulation of the SEC that permits the selling of any such
Registrable Securities without registration. The parties agree that
nothing contained herein shall limit the Company’s
obligations under the Exchange Agreement.
4. Due
Diligence Review; Information. The Company shall make
available, upon reasonable advance written notice, during normal
business hours, for inspection and review by the Members, advisors
to and representatives of the Members (who may or may not be
affiliated with the Members and who are reasonably acceptable to
the Company), all financial and other records, all SEC Documents
(as defined in the Exchange Agreement) and other filings with the
SEC, and all other corporate documents and properties of the
Company as may be reasonably necessary for the purpose of such
review, and cause the Company’s officers, directors and
employees, within a reasonable time period, to supply all such
information reasonably requested by the Members or any such
representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response
to all questions and other inquiries reasonably made or submitted
by any of them), prior to and from
time to time after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Members and such
representatives, advisors and underwriters and their respective
accountants and attorneys to conduct initial and ongoing due
diligence with respect to the accuracy of such Registration
Statement.
The
Company shall not disclose material nonpublic information to the
Members, or to advisors to or representatives of the Members,
unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information
and provides the Members, such advisors and representatives with
the opportunity to accept or refuse to accept such material
nonpublic information for review and any Member wishing to obtain
such information enters into an appropriate confidentiality
agreement with the Company with respect thereto.
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5.
Obligations of the
Members.
(a) Each
Member shall furnish in writing to the Company such information
regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held
by it, as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request, including a completed questionnaire in the form attached
to this Agreement as Annex A (a “Selling Securityholder
Questionnaire”) or any update thereto not later than
three (3) Business Days following a request therefore from the
Company.
(b) Each
Member, by its 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 a Registration
Statement hereunder, unless such Member has notified the Company in
writing of its election to exclude all of its Registrable
Securities from such Registration Statement.
(c) Each
Member agrees that, upon receipt of any notice from the Company of
the happening of an event pursuant to Section 3(h) hereof, such
Member will immediately discontinue disposition of Registrable
Securities pursuant to the applicable Registration Statement
covering such Registrable Securities, until the Member is advised
by the Company that such dispositions may again be
made.
6.
Indemnification.
(a) Indemnification
by the Company. The Company will indemnify and hold harmless
each Member and its officers, directors, members, employees and
agents, successors and assigns, and each other person, if any, who
controls such Member within the meaning of the 1933 Act
(collectively, the “Member
Indemnitees”), against any losses, claims, damages or
liabilities, joint or several, to which such Member Indemnitee may
become subject under the 1933 Act 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 or omission or alleged omission of any
material fact contained in any Registration Statement, any
preliminary Prospectus or final Prospectus, or any amendment or
supplement thereof; (ii) 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 or all of the
Registrable Securities under the securities laws thereof (any such
application, document or information herein called a
“Blue Sky
Application”); (iii) the omission or alleged omission
to state in a Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not
misleading; (iv) any violation by the Company or its agents of any
rule or regulation promulgated under the 1933 Act or 1934 Act or
any state securities laws in connection with the performance of its
obligations under this Agreement; or (v) any failure to register or
qualify the Registrable Securities included in any such
Registration Statement in any state where the Company or its agents
has affirmatively undertaken or agreed in writing that the Company
will undertake such registration or qualification on an
Member’s behalf and will promptly reimburse such Member
Indemnitee for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are
incurred;
provided, however, that the
Company will not be liable in any such case if and to the extent
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by such Member or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus.
The indemnity provided in this Section 6(a) shall survive the
transfer of the Registrable Securities by any Member to any other
Person.
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(b) Indemnification
by the Members. Each Member agrees, severally but not
jointly, to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors, officers, employees,
stockholders and each person who controls the Company (within the
meaning of the 1933 Act) (collectively, the “Company Indemnitees”) against any
losses, claims, damages, liabilities and expense (including
reasonable attorney fees) resulting from any untrue statement of a
material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary
Prospectus or amendment or supplement thereto or necessary to make
the statements therein not misleading, to the extent, but only to
the extent that such untrue statement or omission is contained in
any information furnished in writing by such Member to the Company
specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto, including in the
Selling Securityholder Questionnaire attached hereto as Annex A. In
no event shall the liability of a Member be greater in amount than
the dollar amount of the proceeds (net of all underwriter’s
discounts and expenses paid by such Member in connection with any
claim relating to this Section 6 and the amount of any damages such
Member has otherwise been required to pay by reason of such untrue
statement or omission) received by such Member upon the sale of the
Registrable Securities included in the Registration Statement
giving rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings. Any person entitled to
indemnification under Section 6(a) or Section 6(b) (an
“Indemnitee”)
shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the Indemnitee; provided that any Indemnitee shall have
the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel
shall be at the expense of such Indemnitee unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b)
the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such
Indemnitee or (c) in the reasonable judgment of any such
Indemnitee, based upon written advice of its counsel, a conflict of
interest exists between such Indemnitee and the indemnifying party
with respect to such claims (in which case, if such Indemnitee
notifies the indemnifying party in writing that such Indemnitee
elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such Indemnitee);
and provided, further, that
the failure of any Indemnitee to give notice as provided herein
shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice
shall materially adversely affect the indemnifying party in the
defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in
the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys (together with appropriate local
counsel) at any time for all such Indemnitees. No indemnifying
party will, except with the consent of the Indemnitee, consent to
entry of any judgment or enter into any settlement that (i) does
not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of a release from all
liability in respect of such claim or litigation or (ii) includes a
statement as to, or an admission of, fault, culpability or a
failure to act, by or on behalf of the Indemnitee.
(d) Contribution.
If for any reason the indemnification provided for in the preceding
paragraphs (a) and (b) is unavailable to an Indemnitee or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount
paid or payable by the Indemnitee as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect
the relative fault of the Indemnitee and the indemnifying party, as
well as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not
guilty of such fraudulent misrepresentation. In no event shall the
contribution obligation of a holder of Registrable Securities be
greater in amount than the dollar amount of the proceeds (net of
all expenses paid by such holder in connection with any claim
relating to this Section 6 and the amount of any damages such
holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission)
received by it upon the sale of the Registrable Securities giving
rise to such contribution obligation.
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7.
Miscellaneous.
(a) Amendments
and Waivers. This Agreement may be amended only by a writing
signed by the Company and the Required Members. The Company may
take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall
have obtained the written consent to such amendment, action or
omission to act, of the Required Members.
(b) Notices.
All notices and other communications provided for or permitted
hereunder shall be made as set forth in the Exchange
Agreement.
(c) Assignments
and Transfers by Members. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Members and
their respective successors and assigns. A Member may transfer or
assign, in whole or from time to time in part, to one or more
persons its rights and obligations hereunder in connection with the
transfer of Registrable Securities by such Member to such person,
provided that such Member complies with all laws applicable thereto
and provides written notice of assignment to the Company promptly
after such assignment is effected (such transferee, a "permitted transferee").
(d) Assignments
and Transfers by the Company. This Agreement may not be
assigned by the Company (whether by operation of law or otherwise)
without the prior written consent of the Required Members,
provided, however, that in the event that the Company is a party to
a merger, consolidation, share exchange or similar business
combination transaction in which the Common Stock is converted into
the equity securities of another Person, from and after the
effective time of such transaction, such Person shall, by virtue of
such transaction, be deemed to have assumed the obligations of the
Company hereunder (and shall have acknowledged such assumption in
writing), the term “Company” shall be deemed to refer
to such Person and the term “Registrable Securities” shall be
deemed to include the securities received by the Members in
connection with such transaction unless such securities are
otherwise freely tradable by the Members after giving effect to
such transaction.
(e) Benefits
of the Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement and
except for any Indemnitee not a party hereto (solely with respect
to Section 6).
(f) Counterparts;
Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This
Agreement may also be executed via facsimile or other electronic
means, which shall be deemed an original.
(g) Titles
and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this
Agreement.
(h) Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the
maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any
provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions
as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(j) Entire
Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein.
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject
matter.
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(k) Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York without regard to the
choice of law principles thereof. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts of
the State of New York located in New York County and the United
States District Court for the Southern District of New York for the
purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and the transactions contemplated
hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of
notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any
such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in
such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in
an inconvenient forum. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.
(l) Injunctive
Relief. It is hereby agreed and acknowledged that it will be
impossible to measure in money the damages that would be suffered
if the parties to this Agreement fail to comply with any of the
obligations imposed on them by this Agreement and that in the event
of any such failure, a non-breaching party hereto will be
irreparably damaged and will not have an adequate remedy at law.
Any such Person shall, therefore, be entitled to injunctive relief,
specific performance or other equitable remedies to enforce such
obligations, this being in addition to any other remedy to which
such Person is entitled at law or in equity. Each of the parties
hereto hereby waives any defense that a remedy at law is adequate
and any requirement to post bond or other security in connection
with actions instituted for injunctive relief, specific performance
or other equitable remedies. Each of the parties hereto hereby
agrees not to assert that specific performance, injunctive relief
and other equitable remedies are unenforceable, violate public
policy, invalid, contrary to law or inequitable for any reason. The
right of specific performance, injunctive relief and other
equitable remedies is an integral part of the transactions
contemplated by this Agreement.
(m) Recapitalizations,
Exchanges, Etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the
Registrable Securities, to any and all shares of capital stock of
the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for or in substitution of, the
Registrable Securities and shall be appropriately adjusted for any
stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date
hereof
(n) Independent
Nature of Members’ Obligations and Rights. The
obligations of each Member hereunder are several and not joint with
the obligations of any other Member hereunder, and no Member shall
be responsible in any way for the performance of the obligations of
any other Member hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action
taken by any Member pursuant hereto or thereto,
shall be deemed to constitute the Members as a partnership, an
association, a joint venture or any other kind of group or entity,
or create a presumption that the Members are in any way acting in
concert or as a group or entity with respect to such obligations or
the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Members are not
acting in concert or as a group, and the Company shall not assert
any such claim, with respect to such obligations or transactions.
Without limiting the foregoing, no Member has agreed with any other
Member, and no term, provision, obligation or agreement of any
Member set forth herein shall be deemed to constitute an agreement
with any other Member, to act together for the purposes of
acquiring, holding, voting or disposing of equity securities of the
Company. Each Member shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Member to be
joined as an additional party in any proceeding for such purpose.
The use of a single agreement with respect to the obligations of
the Company contained herein was solely in the control of the
Company, not the action or decision of any Member, and was done
solely for the convenience of the Company and not because it was
required or requested to do so by any Member. It is expressly
understood and agreed that each provision contained in this
Agreement is between the Company and an Member, solely, and not
between the Company and the Members collectively and not between
and among Members.
-10-
(o) No
Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its Subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the
Members in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any of its Subsidiaries
has previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that
have not been satisfied in full.
(p) Prohibition
on Filing Other Registration Statements. The Company shall
not file any other registration statements until all Registrable
Securities are registered pursuant to the Initial Registration
Statement that is declared effective by the staff of the
Commission, provided that
this Section 7(p) shall not prohibit the Company from filing
amendments to registration statements filed prior to the date of
this Agreement.
(Signature
Pages Follow)
-11-
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the
date first above written.
The
Company:
By:
Name:
Xxxxxx XxxXxxxxx
Title:
Chief Executive Officer
[Member and Direct Investor Signature Page Attached]
-12-
The Members and
Direct Invesors:
By:
Name:
Title:
-13-
ANNEX
A
SELLING
SECURITYHOLDERS QUESTIONNAIRE
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