FORM OF REGISTRATION RIGHTS AGREEMENT
Exhibit
10.4
FORM
OF REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the _____
day of ________, 2006, by and among Pinpoint Advance Corp., a Delaware
corporation (the “Company”), and the undersigned parties listed under Investors
on the signature page hereto (each, an “Investor” and collectively, the
“Investors”).
WHEREAS,
the Investors currently hold all of the issued and outstanding securities of
the
Company;
WHEREAS,
the Investors and the Company desire to enter into this Agreement to provide
the
Investors with certain rights relating to the registration of shares of Common
Stock held by them;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
The
following capitalized terms used herein have the following
meanings:
“Agreement”
means
this Agreement, as amended, restated, supplemented, or otherwise modified from
time to time.
“Commission”
means
the Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.
“Common
Stock”
means
the common stock, par value $0.0001 per share, of the Company.
“Company”
is
defined in the preamble to this Agreement.
“Demand
Registration”
is
defined in Section 2.1.1.
“Demanding
Holder”
is
defined in Section 2.1.1.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect
at
the time.
“Form
S-3”
is
defined in Section 2.3.
“Indemnified
Party”
is
defined in Section 4.3.
“Indemnifying
Party”
is
defined in Section 4.3.
“Investor”
is
defined in the preamble to this Agreement.
“Investor
Indemnified Party”
is
defined in Section 4.1.
“Maximum
Number of Shares”
is
defined in Section 2.1.4.
“Notices”
is
defined in Section 6.3.
“Piggy-Back
Registration”
is
defined in Section 2.2.1.
“Register,”
“registered”
and
“registration”
mean
a
registration effected by preparing and filing a registration statement or
similar document in compliance with the requirements of the Securities Act,
and
the applicable rules and regulations promulgated thereunder, and such
registration statement becoming effective.
“Registrable
Securities”
mean
the [_______] shares of Common Stock owned or held by Investors prior to
the effective date of the Company’s initial public offering of securities.
Registrable Securities include any warrants, shares of capital stock or other
securities of the Company issued as a dividend or other distribution with
respect to or in exchange for or in replacement of such shares of Common Stock.
As to any particular Registrable Securities, such securities shall cease to
be
Registrable Securities when: (a) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act
and
such securities shall have been sold, transferred, disposed of or exchanged
in
accordance with such Registration Statement; (b) such securities shall have
been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration under
the
Securities Act; (c) such securities shall have ceased to be outstanding, or
(d)
the Securities and Exchange Commission makes a definitive determination to
the
Company that the Registrable Securities are saleable under Rule
144(k).
“Registration
Statement”
means
a
registration statement filed by the Company with the Commission in compliance
with the Securities Act and the rules and regulations promulgated thereunder
for
a public offering and sale of Common Stock (other than a registration statement
on Form S-4 or Form S-8, or their successors, or any registration statement
covering only securities proposed to be issued in exchange for securities or
assets of another entity).
“Release
Date”
means
the date on which shares of Common Stock are disbursed from escrow pursuant
to
Section 3 of that certain Stock Escrow Agreement dated as of ___________, 2006
by and among the parties hereto and American Stock Transfer & Trust
Company.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
“Underwriter”
means
a
securities dealer who purchases any Registrable Securities as principal in
an
underwritten offering and not as part of such dealer’s market-making
activities.
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2. REGISTRATION
RIGHTS.
2.1 Demand
Registration.
2.1.1. Request
for Registration.
At any
time and from time to time on or after the Release Date, the holders of a
majority-in-interest of the Registrable Securities held by the Investors or
the
transferees of the Investors, may make a written demand for registration under
the Securities Act of all or part of their Registrable Securities (a
“Demand
Registration”).
Any
demand for a Demand Registration shall specify the number of shares of
Registrable Securities proposed to be sold and the intended method(s) of
distribution thereof. The Company will notify all holders of Registrable
Securities of the demand, and each holder of Registrable Securities who wishes
to include all or a portion of such holder’s Registrable Securities in the
Demand Registration (each such holder including shares of Registrable Securities
in such registration, a “Demanding
Holder”)
shall
so notify the Company within fifteen (15) days after the receipt by the holder
of the notice from the Company. Upon any such request, the Demanding Holders
shall be entitled to have their Registrable Securities included in the Demand
Registration, subject to Section 2.1.4 and the provisos set forth in Section
3.1.1. The Company shall not be obligated to effect more than an aggregate
of
two (2) Demand Registrations under this Section 2.1.1 in respect of Registrable
Securities.
2.1.2. Effective
Registration.
A
registration will not count as a Demand Registration until the Registration
Statement filed with the Commission with respect to such Demand Registration
has
been declared effective and the Company has complied with all of its obligations
under this Agreement with respect thereto; provided
,
however
, that
if, after such Registration Statement has been declared effective, the offering
of Registrable Securities pursuant to a Demand Registration is interfered with
by any stop order or injunction of the Commission or any other governmental
agency or court, the Registration Statement with respect to such Demand
Registration will be deemed not to have been declared effective, unless and
until, (i) such stop order or injunction is removed, rescinded or otherwise
terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter
elect to continue the offering; provided
,
further
, that
the Company shall not be obligated to file a second Registration Statement
until
a Registration Statement that has been filed is counted as a Demand Registration
or is terminated.
2.1.3. Underwritten
Offering.
If a
majority-in-interest of the Demanding Holders so elect and such holders so
advise the Company as part of their written demand for a Demand Registration,
the offering of such Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering. In such event, the right
of
any holder to include its Registrable Securities in such registration shall
be
conditioned upon such holder’s participation in such underwriting and the
inclusion of such holder’s Registrable Securities in the underwriting to the
extent provided herein. All Demanding Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the Underwriter or Underwriters selected for such
underwriting by a majority-in-interest of the holders initiating the Demand
Registration.
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2.1.4. Reduction
of Offering.
If the
managing Underwriter or Underwriters for a Demand Registration that is to be
an
underwritten offering advises the Company and the Demanding Holders in writing
that the dollar amount or number of shares of Registrable Securities which
the
Demanding Holders desire to sell, taken together with all other shares of Common
Stock or other securities which the Company desires to sell and the shares
of
Common Stock, if any, as to which registration has been requested pursuant
to
written contractual piggy-back registration rights held by other shareholders
of
the Company who desire to sell, exceeds the maximum dollar amount or maximum
number of shares that can be sold in such offering without adversely affecting
the proposed offering price, the timing, the distribution method, or the
probability of success of such offering (such maximum dollar amount or maximum
number of shares, as applicable, the “Maximum
Number of Shares”),
then
the Company shall include in such registration: (i) first, the Registrable
Securities as to which Demand Registration has been requested by the Demanding
Holders ( pro
rata
in
accordance with the number of shares of Registrable Securities which such
Demanding Holder has requested be included in such registration, regardless
of
the number of shares of Registrable Securities held by each Demanding Holder)
that can be sold without exceeding the Maximum Number of Shares;
(ii) second, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clause (i), the shares of Common Stock or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number
of Shares has not been reached under the foregoing clauses (i) and (ii), the
shares of Common Stock for the account of other persons that the Company is
obligated to register pursuant to written contractual arrangements with such
persons and that can be sold without exceeding the Maximum Number of Shares;
and
(iv) fourth, to the extent that the Maximum Number of Shares have not been
reached under the foregoing clauses (i), (ii), and (iii), the shares of Common
Stock that other shareholders desire to sell that can be sold without exceeding
the Maximum Number of Shares.
2.1.5. Withdrawal.
If a
majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect
to
withdraw from such offering by giving written notice to the Company and the
Underwriter or Underwriters of their request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of the
Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand Registration
provided for in Section 2.1.1.
2.2 Piggy-Back
Registration.
2.2.1. Piggy-Back
Rights.
If at
any time on or after the Release Date the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering
of
equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into, equity securities, by the Company for
its
own account or for shareholders of the Company for their account (or by the
Company and by shareholders of the Company including, without limitation,
pursuant to Section 2.1), other than a Registration Statement (i) filed in
connection with any employee stock option or other benefit plan, (ii) for an
exchange offer or offering of securities solely to the Company’s existing
shareholders, (iii) for an offering of debt that is convertible into equity
securities of the Company or (iv) for a dividend reinvestment plan, then the
Company shall (x) give written notice of such proposed filing to the holders
of
Registrable Securities as soon as practicable but in no event less than ten
(10)
days before the anticipated filing date, which notice shall describe the amount
and type of securities to be included in such offering, the intended method(s)
of distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale
of
such number of shares of Registrable Securities as such holders may request
in
writing within five (5) days following receipt of such notice (a “Piggy-Back
Registration”).
The
Company shall cause such Registrable Securities to be included in such
registration and shall use its best efforts to cause the managing Underwriter
or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company and
to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method(s) of distribution thereof. All holders
of
Registrable Securities proposing to distribute their securities through a
Piggy-Back Registration that involves an Underwriter or Underwriters shall
enter
into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such Piggy-Back Registration.
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2.2.2. Reduction
of Offering.
If the
managing Underwriter or Underwriters for a Piggy-Back Registration that is
to be
an underwritten offering advises the Company and the holders of Registrable
Securities in writing that the dollar amount or number of shares of Common
Stock
which the Company desires to sell, taken together with shares of Common Stock,
if any, as to which registration has been demanded pursuant to written
contractual arrangements with persons other than the holders of Registrable
Securities hereunder, the Registrable Securities as to which registration has
been requested under this Section 2.2, and the shares of Common Stock, if any,
as to which registration has been requested pursuant to the written contractual
piggy-back registration rights of other shareholders of the Company, exceeds
the
Maximum Number of Shares, then the Company shall include in any such
registration:
(i) If
the
registration is undertaken for the Company’s account: (A) first, the shares
of Common Stock or other securities that the Company desires to sell that can
be
sold without exceeding the Maximum Number of Shares; (B) second, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clause (A), the shares of Common Stock, if any, including the Registrable
Securities, as to which registration has been requested pursuant to written
contractual piggy-back registration rights of security holders ( pro
rata
in
accordance with the number of shares of Common Stock which each such person
has
actually requested to be included in such registration, regardless of the number
of shares of Common Stock with respect to which such persons have the right
to
request such inclusion) that can be sold without exceeding the Maximum Number
of
Shares; and
(ii) If
the
registration is a “demand” registration undertaken at the demand of persons
other than the holders of Registrable Securities pursuant to written contractual
arrangements with such persons, (A) first, the shares of Common Stock for the
account of the demanding persons that can be sold without exceeding the Maximum
Number of Shares; (B) second, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clause (A), the shares of Common Stock
or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares; and (C) third, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (A)
and (B), the Registrable Securities as to which registration has been requested
under this Section 2.2 ( pro
rata
in
accordance with the number of shares of Registrable Securities held by each
such
holder); and (D) fourth, to the extent that the Maximum Number of Shares has
not
been reached under the foregoing clauses (A), (B) and (C), the shares of Common
Stock, if any, as to which registration has been requested pursuant to written
contractual piggy-back registration rights which other shareholders desire
to
sell that can be sold without exceeding the Maximum Number of
Shares.
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2.2.3. Withdrawal.
Any
holder of Registrable Securities may elect to withdraw such holder’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. The Company may also elect to
withdraw a registration statement at any time prior to the effectiveness of
the
Registration Statement. Notwithstanding any such withdrawal, the Company shall
pay all expenses incurred by the holders of Registrable Securities in connection
with such Piggy-Back Registration as provided in Section 3.3.
2.2.4. Registrations
on Form S-3.
The
holders of Registrable Securities may at any time and from time to time, request
in writing that the Company register the resale of any or all of such
Registrable Securities on Form S-3 or any similar short-form registration which
may be available at such time (“Form
S-3”);
provided
,
however
, that
the Company shall not be obligated to effect such request through an
underwritten offering. Upon receipt of such written request, the Company will
promptly give written notice of the proposed registration to all other holders
of Registrable Securities, and, as soon as practicable thereafter, effect the
registration of all or such portion of such holder’s or holders’ Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other holder or holders joining in such
request as are specified in a written request given within fifteen (15) days
after receipt of such written notice from the Company; provided
,
however
, that
the Company shall not be obligated to effect any such registration pursuant
to
this Section 2.3: (i) if Form S-3 is not available for such offering; or (ii)
if
the holders of the Registrable Securities, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at
any
aggregate price to the public of less than $500,000. Registrations effected
pursuant to this Section 2.3 shall not be counted as Demand Registrations
effected pursuant to Section 2.1.
3. REGISTRATION
PROCEDURES.
3.1 Filings;
Information.
Whenever the Company is required to effect the registration of any Registrable
Securities pursuant to Section 2, the Company shall use its best efforts to
effect the registration and sale of such Registrable Securities in accordance
with the intended method(s) of distribution thereof as expeditiously as
practicable, and in connection with any such request:
3.1.1. Filing
Registration Statement.
The
Company shall, as expeditiously as possible and in any event within sixty (60)
days after receipt of a request for a Demand Registration pursuant to Section
2.1, prepare and file with the Commission a Registration Statement on any form
for which the Company then qualifies or which counsel for the Company shall
deem
appropriate and which form shall be available for the sale of all Registrable
Securities to be registered thereunder in accordance with the intended method(s)
of distribution thereof, and shall use its best efforts to cause such
Registration Statement to become and remain effective for the period required
by
Section 3.1.3; provided
,
however
, that
the Company shall have the right to defer any Demand Registration for up to
thirty (30) days, and any Piggy-Back Registration for such period as may be
applicable to deferment of any demand registration to which such Piggy-Back
Registration relates, in each case if the Company shall furnish to the holders
a
certificate signed by the Chief Executive Officer of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would
be
materially detrimental to the Company and its shareholders for such Registration
Statement to be effected at such time; provided
further, however
, that
the Company shall not have the right to exercise the right set forth in the
immediately preceding proviso more than once in any 365-day period in respect
of
a Demand Registration hereunder.
6
3.1.2. Copies.
The
Company shall, prior to filing a Registration Statement or prospectus, or any
amendment or supplement thereto, furnish without charge to the holders of
Registrable Securities included in such registration, and such holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each
amendment and supplement to such Registration Statement (in each case including
all exhibits thereto and documents incorporated by reference therein), the
prospectus included in such Registration Statement (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities
included in such registration or legal counsel for any such holders may request
in order to facilitate the disposition of the Registrable Securities owned
by
such holders.
3.1.3. Amendments
and Supplements.
The
Company shall prepare and file with the Commission such amendments, including
post-effective amendments, and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and in compliance with the provisions of the
Securities Act until all Registrable Securities and other securities covered
by
such Registration Statement have been disposed of in accordance with the
intended method(s) of distribution set forth in such Registration Statement
(which period shall not exceed the sum of one hundred eighty (180) days plus
any
period during which any such disposition is interfered with by any stop order
or
injunction of the Commission or any governmental agency or court) or such
securities have been withdrawn.
3.1.4. Notification.
After
the filing of a Registration Statement, the Company shall promptly, and in
no
event more than two (2) business days after such filing, notify the holders
of
Registrable Securities included in such Registration Statement of such filing,
and shall further notify such holders promptly and confirm such advice in
writing in all events within two (2) business days of the occurrence of any
of
the following: (i) when such Registration Statement becomes effective; (ii)
when
any post-effective amendment to such Registration Statement becomes effective;
(iii) the issuance or threatened issuance by the Commission of any stop order
(and the Company shall take all actions required to prevent the entry of such
stop order or to remove it if entered); and (iv) any request by the Commission
for any amendment or supplement to such Registration Statement or any prospectus
relating thereto or for additional information or of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the securities covered by
such Registration Statement, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary to make the statements therein not misleading,
and
promptly make available to the holders of Registrable Securities included in
such Registration Statement any such supplement or amendment; except that before
filing with the Commission a Registration Statement or prospectus or any
amendment or supplement thereto, including documents incorporated by reference,
the Company shall furnish to the holders of Registrable Securities included
in
such Registration Statement and to the legal counsel for any such holders,
copies of all such documents proposed to be filed sufficiently in advance of
filing to provide such holders and legal counsel with a reasonable opportunity
to review such documents and comment thereon, and the Company shall not file
any
Registration Statement or prospectus or amendment or supplement thereto,
including documents incorporated by reference, to which such holders or their
legal counsel shall object.
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3.1.5. State
Securities Laws Compliance.
The
Company shall use its best efforts to (i) register or qualify the Registrable
Securities covered by the Registration Statement under such securities or “blue
sky” laws of such jurisdictions in the United States as the holders of
Registrable Securities included in such Registration Statement (in light of
their intended plan of distribution) may request and (ii) take such action
necessary to cause such Registrable Securities covered by the Registration
Statement to be registered with or approved by such other Governmental
Authorities as may be necessary by virtue of the business and operations of
the
Company and do any and all other acts and things that may be necessary or
advisable to enable the holders of Registrable Securities included in such
Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions; provided
,
however
, that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph 3.1.5 or subject itself to taxation in any such
jurisdiction.
3.1.6. Agreements
for Disposition.
The
Company shall enter into customary agreements (including, if applicable, an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities. The representations, warranties and covenants of the
Company in any underwriting agreement which are made to or for the benefit
of
any Underwriters, to the extent applicable, shall also be made to and for the
benefit of the holders of Registrable Securities included in such registration
statement. No holder of Registrable Securities included in such registration
statement shall be required to make any representations or warranties in the
underwriting agreement except, if applicable, with respect to such holder’s
organization, good standing, authority, title to Registrable Securities, lack
of
conflict of such sale with such holder’s material agreements and organizational
documents, and with respect to written information relating to such holder
that
such holder has furnished in writing expressly for inclusion in such
Registration Statement.
3.1.7. Cooperation.
The
principal executive officer of the Company, the principal financial officer
of
the Company, the principal accounting officer of the Company and all other
officers and members of the management of the Company shall cooperate fully
in
any offering of Registrable Securities hereunder, which cooperation shall
include, without limitation, the preparation of the Registration Statement
with
respect to such offering and all other offering materials and related documents,
and participation in meetings with Underwriters, attorneys, accountants and
potential investors.
8
3.1.8. Records.
The
Company shall make available for inspection by the holders of Registrable
Securities included in such Registration Statement, any Underwriter
participating in any disposition pursuant to such registration statement and
any
attorney, accountant or other professional retained by any holder of Registrable
Securities included in such Registration Statement or any Underwriter, all
financial and other records, pertinent corporate documents and properties of
the
Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any of them in connection with such
Registration Statement.
3.1.9. Opinions
and Comfort Letters.
The
Company shall furnish to each holder of Registrable Securities included in
any
Registration Statement a signed counterpart, addressed to such holder, of (i)
any opinion of counsel to the Company delivered to any Underwriter and (ii)
any
comfort letter from the Company’s independent public accountants delivered to
any Underwriter. In the event no legal opinion is delivered to any Underwriter,
the Company shall furnish to each holder of Registrable Securities included
in
such Registration Statement, at any time that such holder elects to use a
prospectus, an opinion of counsel to the Company to the effect that the
Registration Statement containing such prospectus has been declared effective
and that no stop order is in effect.
3.1.10. Earnings
Statement.
The
Company shall comply with all applicable rules and regulations of the Commission
and the Securities Act, and make available to its shareholders, as soon as
practicable, an earnings statement covering a period of twelve (12) months,
beginning within three (3) months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder.
3.1.11. Listing.
The
Company shall use its best efforts to cause all Registrable Securities included
in any registration to be listed on such exchanges or otherwise designated
for
trading in the same manner as similar securities issued by the Company are
then
listed or designated or, if no such similar securities are then listed or
designated, in a manner satisfactory to the holders of a majority of the
Registrable Securities included in such registration.
3.2 Obligation
to Suspend Distribution.
Upon
receipt of any notice from the Company of the happening of any event of the
kind
described in Section 3.1.4(iv), or, in the case of a resale registration on
Form
S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant
to a written xxxxxxx xxxxxxx compliance program adopted by the Company’s Board
of Directors, of the ability of all “insiders” covered by such program to
transact in the Company’s securities because of the existence of material
non-public information, each holder of Registrable Securities included in any
registration shall immediately discontinue disposition of such Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such holder receives the supplemented or amended prospectus
contemplated by Section 3.1.4(iv) or the restriction on the ability of
“insiders” to transact in the Company’s securities is removed, as applicable,
and, if so directed by the Company, each such holder will deliver to the Company
all copies, other than permanent file copies then in such holder’s possession,
of the most recent prospectus covering such Registrable Securities at the time
of receipt of such notice.
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3.3 Registration
Expenses.
The
Company shall bear all costs and expenses incurred in connection with any Demand
Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant
to
Section 2.2, and any registration on Form S-3 effected pursuant to Section
2.3,
and all expenses incurred in performing or complying with its other obligations
under this Agreement, whether or not the Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees;
(ii) fees and expenses of compliance with securities or “blue sky” laws
(including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv)
the
Company’s internal expenses (including, without limitation, all salaries and
expenses of its officers and employees); (v) the fees and expenses incurred
in
connection with the listing of the Registrable Securities as required by Section
3.1.11; (vi) National Association of Securities Dealers, Inc. fees; (vii) fees
and disbursements of counsel for the Company and fees and expenses for
independent certified public accountants retained by the Company (including
the
expenses or costs associated with the delivery of any opinions or comfort
letters requested pursuant to Section 3.1.9); (viii) the fees and expenses
of
any special experts retained by the Company in connection with such registration
and (ix) the fees and expenses of one legal counsel selected by the holders
of a
majority-in-interest of the Registrable Securities included in such
registration. The Company shall have no obligation to pay any underwriting
discounts or selling commissions attributable to the Registrable Securities
being sold by the holders thereof, which underwriting discounts or selling
commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling shareholders and the Company shall bear the expenses
of
the underwriter pro
rata
in
proportion to the respective amount of shares each is selling in such
offering.
3.4 Information.
The
holders of Registrable Securities shall provide such information as may
reasonably be requested by the Company, or the managing Underwriter, if any,
in
connection with the preparation of any Registration Statement, including
amendments and supplements thereto, in order to effect the registration of
any
Registrable Securities under the Securities Act pursuant to Section 2 and in
connection with the Company’s obligation to comply with federal and applicable
state securities laws.
4. INDEMNIFICATION
AND CONTRIBUTION.
4.1 Indemnification
by the Company.
The
Company agrees to indemnify and hold harmless each Investor and each other
holder of Registrable Securities, and each of their respective officers,
employees, affiliates, directors, partners, members, attorneys and agents,
and
each person, if any, who controls an Investor and each other holder of
Registrable Securities (within the meaning of Section 15 of the Securities
Act
or Section 20 of the Exchange Act) (each, an “Investor
Indemnified Party”),
from
and against any expenses, losses, judgments, claims, damages or liabilities,
whether joint or several, arising out of or based upon any untrue statement
(or
allegedly untrue statement) of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment
or
supplement to such Registration Statement, or arising out of or based upon
any
omission (or alleged omission) to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration;
and
the Company shall promptly reimburse the Investor Indemnified Party for any
legal and any other expenses reasonably incurred by such Investor Indemnified
Party in connection with investigating and defending any such expense, loss,
judgment, claim, damage, liability or action; provided
,
however
, that
the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus,
or summary prospectus, or any such amendment or supplement, in reliance upon
and
in conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall indemnify
any
Underwriter of the Registrable Securities, their officers, affiliates,
directors, partners, members and agents and each person who controls such
Underwriter on substantially the same basis as that of the indemnification
provided above in this Section 4.1.
10
4.2 Indemnification
by Holders of Registrable Securities.
Each
selling holder of Registrable Securities will, in the event that any
registration is being effected under the Securities Act pursuant to this
Agreement of any Registrable Securities held by such selling holder, indemnify
and hold harmless the Company, each of its directors and officers and each
underwriter (if any), and each other person, if any, who controls the company
or
any such underwriter within the meaning of the Securities Act, against any
losses, claims, judgments, damages or liabilities, whether joint or several,
insofar as such losses, claims, judgments, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or
allegedly untrue statement of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment
or
supplement to the Registration Statement, or arise out of or are based upon
any
omission or the alleged omission to state a material fact required to be stated
therein or necessary to make the statement therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by such selling holder expressly
for use therein, and shall reimburse the Company, its directors and officers,
and each such controlling person for any legal or other expenses reasonably
incurred by any of them in connection with investigation or defending any such
loss, claim, damage, liability or action. Each selling holder’s indemnification
obligations hereunder shall be several and not joint and shall be limited to
the
amount of any net proceeds actually received by such selling
holder.
4.3 Conduct
of Indemnification Proceedings.
Promptly after receipt by any person of any notice of any loss, claim, damage
or
liability or any action in respect of which indemnity may be sought pursuant
to
Section 4.1 or 4.2, such person (the “Indemnified
Party”)
shall,
if a claim in respect thereof is to be made against any other person for
indemnification hereunder, notify such other person (the “Indemnifying
Party”)
in
writing of the loss, claim, judgment, damage, liability or action; provided,
however, that the failure by the Indemnified Party to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability which the
Indemnifying Party may have to such Indemnified Party hereunder, except and
solely to the extent the Indemnifying Party is actually prejudiced by such
failure. If the Indemnified Party is seeking indemnification with respect to
any
claim or action brought against the Indemnified Party, then the Indemnifying
Party shall be entitled to participate in such claim or action, and, to the
extent that it wishes, jointly with all other Indemnifying Parties, to assume
control of the defense thereof with counsel satisfactory to the Indemnified
Party. After notice from the Indemnifying Party to the Indemnified Party of
its
election to assume control of the defense of such claim or action, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
or
other expenses subsequently incurred by the Indemnified Party in connection
with
the defense thereof other than reasonable costs of investigation; provided,
however, that in any action in which both the Indemnified Party and the
Indemnifying Party are named as defendants, the Indemnified Party shall have
the
right to employ separate counsel (but no more than one such separate counsel)
to
represent the Indemnified Party and its controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, with the fees
and expenses of such counsel to be paid by such Indemnifying Party if, based
upon the written opinion of counsel of such Indemnified Party, representation
of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, consent to entry of judgment
or effect any settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such judgment or settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such claim or
proceeding.
11
4.4 Contribution.
4.4.1. If
the
indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is
unavailable to any Indemnified Party in respect of any loss, claim, damage,
liability or action referred to herein, then each such Indemnifying Party,
in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid
or payable by such Indemnified Party as a result of such loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the Indemnified Parties and the Indemnifying Parties in connection
with
the actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable considerations. The relative
fault of any Indemnified Party and any Indemnifying Party shall be determined
by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material
fact
relates to information supplied by such Indemnified Party or such Indemnifying
Party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
4.4.2. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro
rata
allocation or by any other method of allocation which does not take account
of
the equitable considerations referred to in the immediately preceding Section
4.4.1. The amount paid or payable by an Indemnified Party as a result of any
loss, claim, damage, liability or action referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set
forth above, any legal or other expenses incurred by such Indemnified Party
in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no holder of Registrable
Securities shall be required to contribute any amount in excess of the dollar
amount of the net proceeds (after payment of any underwriting fees, discounts,
commissions or taxes) actually received by such holder from the sale of
Registrable Securities which gave rise to such contribution obligation. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
12
5. UNDERWRITING
AND DISTRIBUTION.
5.1 Rule
144.
The
Company covenants that it shall file any reports required to be filed by it
under the Securities Act and the Exchange Act and shall take such further action
as the holders of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holders to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities Act, as such Rules
may be amended from time to time, or any similar Rule or regulation hereafter
adopted by the Commission.
6. MISCELLANEOUS.
6.1 Other
Registration Rights.
The
Company represents and warrants that no person, other than (i) a holder of
the
Registrable Securities, (ii) a subscriber for units of the Company’s Common
Stock and warrants pursuant to that certain Subscription Agreement dated as
of
[________] by and among the Company and the investors signatory thereto, and
(iii) [__________] and [________], the holders of certain options to purchase
an
aggregate of [________] shares of the Company’s Common Stock, has any right to
require the Company to register any shares of the Company’s capital stock for
sale or to include shares of the Company’s capital stock in any registration
filed by the Company for the sale of shares of capital stock for its own account
or for the account of any other person.
6.2 Assignment;
No Third Party Beneficiaries.
This
Agreement and the rights, duties and obligations of the Company hereunder may
not be assigned or delegated by the Company in whole or in part. This Agreement
and the rights, duties and obligations of the holders of Registrable Securities
hereunder may be freely assigned or delegated by such holder of Registrable
Securities in conjunction with and to the extent of any transfer of Registrable
Securities by any such holder. This Agreement and the provisions hereof shall
be
binding upon and shall inure to the benefit of each of the parties and their
respective successors and the permitted assigns of the Investor or holder of
Registrable Securities or of any assignee of the Investor or holder of
Registrable Securities. This Agreement is not intended to confer any rights
or
benefits on any persons that are not party hereto other than as expressly set
forth in Article 4 and this Section 6.2.
6.3 Notices.
All
notices, demands, requests, consents, approvals or other communications
(collectively, “Notices”)
required or permitted to be given hereunder or which are given with respect
to
this Agreement shall be in writing and shall be personally served, delivered
by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to
such
other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission
if
personally served or transmitted by telegram, telex or facsimile; provided,
that
if such service or transmission is not on a business day or is after normal
business hours, then such notice shall be deemed given on the next business
day.
Notice otherwise sent as provided herein shall be deemed given on the next
business day following timely delivery of such notice to a reputable air courier
service with an order for next-day delivery.
13
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To
the Company:
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0
Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxx 00000
Attn:
Adiv Baruch
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;
or
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||
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with
a copy to:
|
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
|
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;
or
|
||
|
To
an Investor, to:
|
[____________]
x/x
Xxxxxxx Xxxxxxx Xxxx.
0
Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxx 46700
Attn:
Adiv Baruch
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;
or
|
|
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;
or
|
|
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;
or
|
6.4 Severability.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provision hereof. Furthermore, in lieu
of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar
in
terms to such invalid or unenforceable provision as may be possible and be
valid
and enforceable.
6.5 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and
the
same instrument.
6.6 Entire
Agreement.
This
Agreement (including all agreements entered into pursuant hereto and all
certificates and instruments delivered pursuant hereto and thereto) constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written.
6.7 Modifications
and Amendments.
No
amendment, modification or termination of this Agreement shall be binding upon
any party unless executed in writing by such party.
6.8 Titles
and Headings.
Titles
and headings of sections of this Agreement are for convenience only and shall
not affect the construction of any provision of this Agreement.
14
6.9 Waivers
and Extensions.
Any
party to this Agreement may waive any right, breach or default which such party
has the right to waive, provided that such waiver will not be effective against
the waiving party unless it is in writing, is signed by such party, and
specifically refers to this Agreement. Waivers may be made in advance or after
the right waived has arisen or the breach or default waived has occurred. Any
waiver may be conditional. No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof nor of any other agreement or provision herein contained. No waiver
or
extension of time for performance of any obligations or acts shall be deemed
a
waiver or extension of the time for performance of any other obligations or
acts.
6.10 Remedies
Cumulative.
In the
event that the Company fails to observe or perform any covenant or agreement
to
be observed or performed under this Agreement, the Investor or any other holder
of Registrable Securities may proceed to protect and enforce its rights by
suit
in equity or action at law, whether for specific performance of any term
contained in this Agreement or for an injunction against the breach of any
such
term or in aid of the exercise of any power granted in this Agreement or to
enforce any other legal or equitable right, or to take any one or more of such
actions, without being required to post a bond. None of the rights, powers
or
remedies conferred under this Agreement shall be mutually exclusive, and each
such right, power or remedy shall be cumulative and in addition to any other
right, power or remedy, whether conferred by this Agreement or now or hereafter
available at law, in equity, by statute or otherwise.
6.11 Governing
Law.
This
Agreement shall be governed by, interpreted under, and construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed within the State of New York, without giving effect to
any
choice-of-law provisions thereof that would compel the application of the
substantive laws of any other jurisdiction.
6.12 Waiver
of Trial by Jury.
Each
party hereby irrevocably and unconditionally waives the right to a trial by
jury
in any action, suit, counterclaim or other proceeding (whether based on
contract, tort or otherwise) arising out of, connected with or relating to
this
Agreement, the transactions contemplated hereby, or the actions of the Investor
in the negotiation, administration, performance or enforcement
hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
15
IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to
be executed and delivered by their duly authorized representatives as of the
date first written above.
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| By: | ||
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Name:
Adiv Baruch
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Title:
Chief Executive Officer and President
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INVESTORS
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16
