Exhibit 99.5
Exhibit B
Registration Rights Provisions
These Registration Rights Provisions constitute an integral part of the
Agreement dated February 24, 2006, by and among the Stockholders named therein,
who are the members of Ranor Acquisition, LLC, and Xxxxxxxxxx Holdings II, Inc.
and a subscription agreement dated February 24, 2006, by and among Xxxxxxxxxx
Holdings II, Inc. and Stanoff Corporation. The term "Agreement" shall refer to
both of the aforementioned agreements.
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the following meanings:
"Affiliate" of a Person means any Person that controls, is under
common control with, or is controlled by, such Person. For purposes of this
definition, "control" means the ability of one Person to direct the management
and policies of another Person.
"Agreement" shall have the meaning set forth in the introduction to
these Registration Rights Provisions.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
be closed.
"Commission" means the Securities and Exchange Commission.
"Common Stock" shall mean the common stock, par value $.0001 of the
Company.
"Company" shall mean Xxxxxxxxxx Holdings II, Inc., a Delaware
corporation.
"Exchange" means the principal stock exchange or market on which the
Company's Common Stock is traded, if any.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, or any similar or successor
statute.
"Excusable Reason" means the occurrence of negotiations with respect
to a material agreement prior to either the announcement of the execution of the
agreement or the termination of the negotiations with respect to such proposed
agreement and other similar material corporate events to which the Company is a
party or expects to be a party if, in the reasonable judgment of the Company,
disclosure of the negotiations or other event would be adverse to the best
interests of the Company provided that the Company is continuing to treat such
negotiations as confidential and provided further that the period during which
the Company is precluded from filing the registration statement (or suspended
the use of an effective registration statement) as a result thereof has not
exceeded ninety (90) days and provided further that the Company shall not be
permitted to avoid filing a registration statement (or to suspend the use of an
effective registration statement) for an Excusable Reason more than twice in any
one-year period.
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"Expenses" means all expenses incident to the Company's performance
of or compliance with its obligations under these Registration Rights
Provisions, including, without limitation, all registration, filing, listing,
stock exchange and NASD fees, all fees and expenses of complying with state
securities or blue sky laws (including fees, disbursements and other charges of
counsel for the underwriters only in connection with blue sky filings), all word
processing, duplicating and printing expenses, messenger and delivery expenses,
the fees, disbursements and other charges of counsel for the Company and of its
independent public accountants, including the expenses incurred in connection
with "cold comfort" letters required by or incident to such performance and
compliance, any fees and disbursements of underwriters customarily paid by the
issuer of securities, but excluding from the definition of Expenses underwriting
discounts and commissions and applicable transfer taxes, if any, or legal and
other expenses incurred by any sellers, which discounts, commissions, transfer
taxes and legal and other expenses shall be borne by the seller or sellers of
Registrable Common Stock in all cases.
"Holder" shall mean any of the Stockholders and any Transferee who
has rights of a Holder pursuant to Section 12 of these Registration Rights
Provisions.
"NASD" means the National Association of Securities Dealers, Inc.
and NASD Regulation, Inc.
"Nasdaq" means the Nasdaq Stock Market and includes The Nasdaq
National Market and The Nasdaq SmallCap Market.
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental or regulatory body or subdivision
thereof or other entity.
"Public Offering" means a public offering and sale of Registrable
Common Stock pursuant to an effective registration statement under the
Securities Act.
"Registrable Common Stock" means the shares of Common Stock issued
pursuant to the Agreement, but only for so long as registration pursuant to the
Securities Act is required for public sale without regard to volume limitations
pursuant to Rule 144(k), and as adjusted to reflect any merger, consolidation,
recapitalization, reclassification, split-up, stock dividend, rights offering or
reverse stock split made, declared or effected with respect to the Registrable
Common Stock.
"Requesting Holders" has the meaning set forth in Section 3 of these
Registration Rights Provisions.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar or successor statute.
"Selling Holders" means the Holders of Registrable Common Stock
requested to be registered pursuant to Section 2(a) of these Registration Rights
Provisions.
"Shelf Registration" means a shelf registration statement pursuant
to Rule 415 promulgated under the Securities Act.
"Transfer" means any transfer, sale, assignment, pledge,
hypothecation or other disposition of any interest. "Transferor" and
"Transferee" have correlative meanings.
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Any terms which are defined in the Agreement and not separately defined in
these Registration Rights Provisions shall have the same meanings in these
Registration Rights Provisions as in the Agreement.
All references to laws, rules and forms shall relate to the laws, rules
and forms as in effect on the date of the Agreement and shall include any
amendments thereto and any subsequent successor laws, rules and forms.
2. Securities Act Registration on Request.
(a) If the Company shall not have provided the holders of
Registrable Common Stock with the right to have their Registrable Common Stock
included in a registration statement prior to January 31, 2007, at any time
after January 31, 2007, any Holder or Holders holding at least thirty five
percent (35%) of the Registrable Common Stock which is then outstanding or are
otherwise included in the Holder's request, may make a written request (the
"Initiating Request") to the Company for the registration with the Commission
under the Securities Act of all or part of such Holder's Registrable Common
Stock; provided, however, that if such Initiating Request is not for all of the
total number of Registrable Common Stock which could be registered by the
Initiating Holder, then the Initiating Request shall cover not less than thirty
five percent (35%) of the total number of the then-outstanding shares of
Registrable Common Stock. Upon the receipt of any Initiating Request for
registration pursuant to this Section 2(a), the Company promptly shall notify in
writing all other Holders of the Registrable Common Stock of the receipt of such
request and will use its commercially reasonable efforts to effect, at the
earliest possible date, such registration under the Securities Act, including a
Shelf Registration (if then eligible), of
(i) the Registrable Common Stock which the Company has been so
requested to register by such Initiating Holder, and
(ii) all other Registrable Common Stock which the Company has
been requested to register by any other Holders by written request given to the
Company within 30 days after the giving of written notice by the Company to such
other Holders of the Initiating Request,
all to the extent necessary to permit the disposition (in accordance with
Section 2(b) of these Registration Rights Provisions) of the Registrable Common
Stock so to be registered; provided, that any Holder whose Registrable Common
Stock was to be included in any such registration, by written notice to the
Company, may withdraw such request, and the Company shall not be required to
effect any registration pursuant to this Section 2(a) if either (x) the
Initiating Holder or (y) the Holders of more than 40% of the shares of
Registrable Common Stock withdraw the request for inclusion. The sale of
Registrable Common Stock pursuant to this Section 2(a) shall not be pursuant to
an underwritten public offering without the prior written consent of the
Company. The Holders shall have one registration right pursuant to this Section
2, and the Company shall not be required to file a registration statement
pursuant to these Registration Rights Provisions prior to February 1, 2007.
(b) Registration under Section 2(a) of these Registration Rights
Provisions shall be on such appropriate registration form prescribed by the
Commission under the Securities Act as shall be selected by the Company and as
shall permit the disposition of the Registrable Common Stock pursuant to the
method of disposition determined by the Selling Holders; provided, however, that
if the Company is eligible to use a registration statement on Form S-3, the
Company shall use such form.
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(c) The Holders of Registrable Common Stock to be included in a
registration statement may, at any time on written notice to the Company,
terminate a request for registration made pursuant to this Section 2.
(d) The Company shall use its commercially reasonable efforts to
keep any Shelf Registration effective for nine (9) months from the effective
date of the registration statement or until such earlier date as all of the
Registrable Common Stock covered by the registration statement shall have been
sold.
(e) No registration effected under this Section 2 shall relieve the
Company of its obligation to permit the registration of Registrable Common Stock
pursuant to Section 3 of these Registration Rights Provisions.
(f) As a condition to the inclusion of a Holder's Registrable Common
Stock in a registration statement pursuant to Sections 2(a) and 3 of these
Registration Rights Provisions, each Holder shall:
(i) furnish the information and indemnification as set forth in
these Registration Rights Provisions and update such information immediately
upon the occurrence of any events or condition which make the information
concerning the Holder inaccurate in any material respect;
(ii) not sell any Registrable Common Stock pursuant to the
registration statement except in the manner set forth in the registration
statement;
(iii) comply with the prospectus delivery requirements and the
provisions of Regulation M of the Commission pursuant to the Securities Act;
(iv) not sell or otherwise transfer or distribute any Registrable
Common Stock shares if the Holder possesses any material nonpublic information
concerning the Company; and
(v) not sell or otherwise transfer any Registrable Common Stock
pursuant to a registration statement upon receipt of advice from the Company
that the registration statement is no longer current until the Holder is advised
that the Registrable Common Stock may be sold pursuant to the registration
statement; and
(vi) provide any other information requested by the Commission,
the NASD, any stock exchange or market on which the Common Stock is traded and
any state securities commission.
3. Piggyback Registration.
(a) If at any time after January 31, 2007, the Company proposes to
register any of its securities under the Securities Act by registration on any
forms other than Form S-4 or S-8, whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for its
own account, it shall give prompt written notice to all of the Holders of its
intention to do so and of such Holders' rights (if any) under this Section 3,
which notice, in any event, shall be given at least fifteen (15) days prior to
such proposed registration. Upon the written request of any Holder receiving
notice of such proposed registration that is a Holder of Registrable Common
Stock (a "Requesting Holder") made within ten (10) days after the receipt of any
such notice, the Company shall, subject to Section 6(b) of these Registration
Rights Provisions, effect the registration under the Securities Act of all
Registrable Common Stock which the Company has been so requested to register by
the Requesting Holders thereof; provided, however, that this Section 3(a) shall
not apply to Registrable Common Stock which has been registered pursuant to
Section 2(a) of these Registration Rights Provisions and is subject to a current
and effective registration statement.
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(b) If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Requesting Holder and (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Common Stock in connection with such registration (but not from any obligation
of the Company to pay the Expenses in connection therewith), without prejudice,
however, to the rights of any Holder to include Registrable Common Stock in any
future registration (or registrations) pursuant to this Section 3 or to cause
such registration to be effected as a registration under Section 2(a) of these
Registration Rights Provisions, as the case may be, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Common Stock, for the same period as the delay in registering such
other securities.
(c) If such registration involves an underwritten offering, the
provision of Section 6 of these Registration Rights Provisions shall apply.
4. Expenses. the Company shall pay all Expenses in connection with any
registration initiated pursuant to Section 2(a) or 3 of these Registration
Rights Provisions, whether or not such registration shall become effective and
whether or not all or any portion of the Registrable Common Stock originally
requested to be included in such registration is ultimately included in such
registration. Each Holder shall pay any underwriting discounts and commissions
and applicable transfer taxes, if any, legal fees and other expenses incurred by
such Holder.
5. Registration Procedures.
(a) If and whenever the Company is required to effect any
registration under the Securities Act as provided in Sections 2(a) and 3 of
these Registration Rights Provisions, the Company shall, as expeditiously as
possible:
(i) Subject to Section 5(b) of these Registration Rights
Provisions, prepare and file with the Commission (promptly and, in the case of
any registration pursuant to Section 2(a), in any event within one hundred
twenty (120) days unless the Initiating Request is made subsequent to first day
of the eleventh month of any fiscal year and prior to the fifteenth day of the
second month of the following year, in which event the registration statement
shall be filed within thirty (30) days after the earlier of the date a Form 10-K
or 10-KSB is required to be filed or the date of such filing) the requisite
registration statement to effect such registration and thereafter use its
commercially reasonable efforts to cause such registration statement to become
effective; provided, however, that the Company may discontinue any registration
of its securities that are not shares of Registrable Common Stock (and, under
the circumstances specified in Section 3 of these Registration Rights
Provisions, its securities that are shares of Registrable Common Stock) at any
time prior to the effective date of the registration statement relating thereto.
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(ii) Notify each seller of Registrable Common Stock and other
securities covered by such registration statement at any time after an
Initiating Request when an Excusable Reason shall have occurred.
(iii) Notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and
subject to Section 5(a)(iv) of these Registration Rights Provisions and except
during the time the Company may delay a registration for an Excusable Reason,
prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Common Stock covered by such registration
statement until such time as all of such Registrable Common Stock has been
disposed of in accordance with the method of disposition set forth in such
registration statement, subject to Section 2(e) of these Registration Rights
Provisions.
(iv) If requested by the holders of a majority of the Registrable
Common Stock included or to be included in the registration statement being
filed pursuant to Section 2(a) or 3 of these Registration Rights Provisions,
before filing any registration statement or prospectus or any amendments or
supplements thereto, furnish to and afford the Holders of the Registrable Common
Stock, one firm of counsel for the Holders designated by the Holders of a
majority of the Registrable Common Stock included or to be included in the
registration statement (the "Holders Counsel"), and provides Holders Counsel a
reasonable opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (at least ten (10) Business Days prior to such
filing). The Company shall not file any registration statement or prospectus or
any amendments or supplements thereto in respect of which the Holders must be
afforded an opportunity to review prior to the filing of such document, if the
Holders of a majority of the shares of Registrable Common Stock covered by such
registration statement, the Holders Counsel, or the managing underwriters, if
any, shall reasonably object. Any registration statement, when declared
effective by the Commission or when subsequently amended (by an amendment which
is declared effective by the Commission) or any prospectus in the form included
in the registration statement as declared effective by the Commission or when
subsequently supplemented will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(v) Use its commercially reasonable efforts to obtain the prompt
withdrawal of any order suspending the effectiveness of a registration
statement, and in any event shall, within thirty (30) days of such cessation of
effectiveness, use its commercially reasonable efforts to amend the registration
statement in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof,
(vi) Furnish to each seller of Registrable Common Stock covered
by such registration statement such reasonable number of copies of such drafts
and final conformed versions of such registration statement and of each such
amendment and supplement thereto (in each case including, if requested, one copy
of all exhibits and any documents incorporated by reference), such number of
copies of such drafts and final versions of the prospectus contained in such
registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in writing.
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(vii) Use its commercially reasonable efforts to register or
qualify all Registrable Common Stock under such other securities or blue sky
laws of such states or other jurisdictions of the United States of America as
the sellers of Registrable Common Stock covered by such registration statement
shall reasonably request in writing, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements of
this Section 5(a)(vii) be obligated to be so qualified, to subject itself to
taxation in such jurisdiction or to consent to general service of process in any
such jurisdiction.
(viii) Make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and furnish to each seller
of Registrable Common Stock at least ten days prior to the filing thereof a copy
of any amendment or supplement to such registration statement or prospectus.
(ix) Cause all such Registrable Common Stock covered by such
registration statement to be listed on the Exchange, if any.
(b) Each seller of Registrable Common Stock as to which any
registration is being effected shall furnish the Company and the underwriters,
if any, such information regarding such seller and the distribution of the
securities covered by such registration statement as the Company may from time
to time reasonably request in writing and as is required by applicable laws and
regulations.
(c) Each Holder agrees that as of the date that a final prospectus
is made available to it for distribution to prospective purchasers of
Registrable Common Stock it shall cease to distribute copies of any preliminary
prospectus prepared in connection with the offer and sale of such Registrable
Common Stock. Each Holder further agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Sections
5(a)(ii) and (iii) of these Registration Rights Provisions, such Holder shall
forthwith discontinue such Holder's disposition of Registrable Common Stock
pursuant to the registration statement relating to such Registrable Common Stock
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by said Sections 5(a)(ii) and (iii), and, if so directed
by the Company, shall deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the prospectus relating to such Registrable Common Stock current at the time of
receipt of such notice.
6. Underwritten Offerings.
(a) If the Company proposes to register any of its securities under
the Securities Act as contemplated by Section 3 of these Registration Rights
Provisions and such securities are to be distributed by or through one or more
underwriters, the Company shall, if requested by any Requesting Holders, request
that such underwriters include all of the Registrable Common Stock to be offered
and sold by such Requesting Holders among the securities of the Company to be
distributed by such underwriters; provided, that, if the managing underwriter of
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such underwritten offering shall advise the Company in writing (with a copy to
the Requesting Holders) that if all the Registrable Common Stock requested to be
included in such registration (together with all other shares of Common Stock of
other stockholders of the Company requested to be so included pursuant to
"piggyback" rights granted to such stockholders) were so included, in its
opinion, the number and type of securities proposed to be included in such
registration would exceed the number and type of securities which could be sold
in such offering within a price range acceptable to the Company, then the
Company shall include in such registration, to the extent of the number and type
of securities which the Company is advised by the managing underwriter can be
sold in such offering, (i) first, securities that the Company proposes to issue
and sell for its own account and (ii) second, securities held by any person
exercising demand registration rights, and (iii) third, Registrable Common Stock
requested to be registered by Requesting Holders pursuant to Section 3 of these
Registration Rights Provisions and Common Stock of any other stockholders of the
Company having such registration rights who request registration as aforesaid
(other than stockholders referred to in clause (ii) of this Section 6(a)), pro
rata, among such holders on the basis of the number of shares of Common Stock
requested to be registered by all such holders.
(b) Any Requesting Holder may withdraw its request to have all or
any portion of its Registrable Common Stock included in any such offering by
notice to the Company within ten (10) Business Days after receipt of a copy of a
notice from the managing underwriter pursuant to Section 6(a) of these
Registration Rights Provisions.
(c) The Holders of Registrable Common Stock to be distributed by
underwriters in an underwritten offering contemplated by Section 6(a) of these
Registration Rights Provisions, shall be parties to the underwriting agreement
between the Company and such underwriters and any such Holder, at its option,
may require that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions precedent to
the obligations of such Holders. No such Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters except that each such Holder shall be required to make
representations, warranties and agreements regarding such Holder, such Holder's
Registrable Common Stock and such Holder's intended method of distribution. The
Holders whose Registrable Common Stock is being sold to the underwriters shall
appoint an attorney-in-fact who shall be authorized to negotiate with the
underwriter on behalf of such Holders and to execute the underwriting agreement
and related documentation on their behalf.
(d) In connection with any underwritten public offering, regardless
of whether the Holder is selling Registrable Common Stock pursuant to the
registration statement, the Holder shall agree to such lock-up as may be
requested by the managing underwriter provided that such lock-up is not for a
period longer than the lock-up required of the Company's principal stockholders,
officers and directors.
7. Preparation; Reasonable Investigation.
(a) In connection with the preparation and filing of each
registration statement under the Securities Act pursuant to these Registration
Rights Provisions, the Company shall give each Holder of Registrable Common
Stock registered under such registration statement, the underwriter, if any, and
its respective counsel and accountants the reasonable opportunity to participate
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and shall give each of them such reasonable access to its books and
records and such reasonable opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the reasonable opinion of any
such Holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
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(b) Each Holder of Registrable Common Stock shall maintain the
confidentiality of any confidential information received from or otherwise made
available by the Company to such Holder of Registrable Common Stock and
identified in writing by the Company as confidential and shall not make any
sales or purchases of the Company's securities while in possession of material
confidential information; provided, however, that any information relating to an
Excusable Reason shall be deemed to be material confidential information
regardless of whether it is expressly marked as confidential. Information that
(i) is or becomes available to a Holder of Registrable Common Stock from a
public source, (ii) is disclosed to a Holder of Registrable Common Stock by a
third-party source who has the right to disclose such information shall not be
deemed to be confidential information for purposes of these Registration Rights
Provisions. Each Holder shall indemnify and hold harmless the Company, its
officer, directors and counsel from and against any loss, liability, damage or
expense which they may incur as a result of any breach of the provisions of this
Section 7(b).
8. Indemnification.
(a) In connection with any registration statement filed by the
Company pursuant to Section 2(a) or 3 of these Registration Rights Provisions,
the Company shall, and hereby agrees to, indemnify and hold harmless, each
Holder and seller of any Registrable Common Stock covered by such registration
statement and each other Person, if any, who controls such Holder or seller, and
their respective directors, officers, partners, agents and Affiliates from and
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act, or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), which are collectively referred to as "Losses,"
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact made by the Company contained in the Registration
Statement, or any amendment thereof, or in any Preliminary Prospectus or the
Prospectus, or any amendment thereof or supplement thereto, or in any blue sky
application or other document executed by the Company specifically for that
purpose (or based upon written information furnished by the Company) filed in
any state or other jurisdiction in order to qualify any of the Securities or
other Securities under the securities laws thereof (any such application,
document or information being referred to as a "Blue Sky Application"); or (ii)
the omission or alleged omission to state in any such Registration Statement,
Preliminary Prospectus or Prospectus, or amendment thereof or supplement
thereto, or Blue Sky Application a material fact required to be stated therein
or necessary to make the statements made therein not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein or omitted
therefrom in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Holder specifically for use in connection
with the preparation thereof, and further provided, however, that the foregoing
indemnity with respect to any untrue statement, alleged untrue statement,
omission, or alleged omission contained in any Preliminary Prospectus shall not
inure to the benefit of any Holder from whom the person asserting any such loss,
claims any of, damage, or liability purchased any of the securities that are the
subject thereof (or to the benefit of any person who controls such Holder or
other Person), if a copy of the prospectus was not delivered to such person with
or prior to the written confirmation of the sale of such security to such
person. The indemnify provided for in this Section 8(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party and shall survive any transfer of the Registrable Shares by
the indemnified party. This indemnity agreement will be in addition to any
liability that the Company may otherwise have.
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(b) In connection with any registration statement filed by the
Company pursuant to Section 2(a) or 3 of these Registration Rights Provisions in
which a Holder has registered for sale Registrable Common Stock, each Holder or
seller of Registrable Common Stock shall, and hereby agrees to, indemnify and
hold harmless the Company and each of its directors, officers, employees and
agents, each other Person, if any, who controls the Company and each other
seller and such seller's directors, officers, stockholders, partners, employees,
agents and affiliates from and against any and all Losses to which they or any
of them may become subject under the Securities Act, the Exchange Act, or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any amendment thereof, or in any Preliminary Prospectus or the Prospectus, or
any amendment thereof or supplement thereto, or in a Blue Sky Application, or
(ii) the omission or the alleged omission to state in any such Registration
Statement, Preliminary Prospectus or Prospectus, amendment thereof or supplement
thereto, or Blue Sky Application a material fact required to be stated therein
or necessary to make the statements made therein not misleading, in each case to
the extent, but only to the extent, that the same was made therein or omitted
therefrom in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Holder specifically for use in the
preparation thereof, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending against any such loss, claim, damage, liability or
action. The indemnify provided for in this Section 8(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party and shall survive any transfer of the Registrable Shares by
the indemnified party. This indemnity agreement will be in addition to any
liability that the Company may otherwise have.
(c) Within five (5) business days after receipt by an indemnified
party under Section 8(a) or (b) of these Registration Rights Provisions of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; the failure so to notify the indemnifying party shall relieve the
indemnifying party from any liability under this Section 8 as to the particular
item for which indemnification is then being sought, unless such indemnifying
party has otherwise received actual notice of the action at least thirty (30)
days before any answer or response is required by the indemnifying party in its
defense of such action, but will not relieve it from any liability that it may
have to any indemnified party otherwise than under this Section 8. If any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof; provided, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and either (i) the indemnifying party or parties agree, or
(ii) in the opinion of counsel for the indemnifying parties, representation of
both the indemnifying party or parties and the indemnified party or parties by
the same counsel is inappropriate under applicable standards of professional
conduct because of actual or potential conflicting interests between them, then
the indemnified party or parties shall have the right to select separate counsel
to assume such legal defense and to otherwise participate in the defense of such
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action. The indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (x) the
indemnified party shall have employed counsel in connection with the assumption
of legal defenses in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel in each jurisdiction
which counsel is approved by indemnified parties (whether pursuant to this
Agreement or other agreements if the claim relates to the same or similar
allegations) holding a majority of the shares as to which indemnification is
claimed), (ii) the indemnifying party shall not have employed counsel to
represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. In no event shall an indemnifying party be liable under this
Section 8 for any settlement, effected without its written consent, which
consent shall not be unreasonably withheld, of any claim or action against an
indemnified party.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to an indemnified party under Section 8(a) and (b) of
these Registration Rights Provisions in respect of any Losses, then, in lieu of
the amount paid or payable under said Section 8(a) or (b), the indemnified party
and the indemnifying party under said Section 8(a) or (b) shall contribute to
the aggregate Losses (including legal or other expenses reasonably incurred in
connection with investigating the same) (i) in such proportion as is appropriate
to reflect the relative fault of the Company and the prospective sellers of
Registrable Common Stock covered by the registration statement which resulted in
such Loss or action in respect thereof, with respect to the statements,
omissions or action which resulted in such Loss or action in respect thereof, as
well as any other relevant equitable considerations, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company, on the one hand, and such prospective sellers, on the other hand,
from their sale of Registrable Common Stock; provided, that, for purposes of
this clause (ii), the relative benefits received by any prospective sellers
shall be deemed not to exceed (and the amount to be contributed by any
prospective seller shall not exceed) the amount received by such seller. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. The obligations, if
any, of the Selling Holders of Registrable Common Stock to contribute as
provided in this Section 8(d) are several in proportion to the relative value of
their respective Registrable Common Stock covered by such registration statement
and not joint. In addition, no Person shall be obligated to contribute hereunder
any amounts in payment for any settlement of any action or Losses effected
without such Person's consent.
9. Registration Rights to Others. Nothing in these registration rights
provisions shall restrict the Company from granting registration rights to
others.
10. Restrictions on Sale. Each Stockholder agrees that he will not
publicly transfer any of the shares of Registrable Common Stock during the
eighteen (18) months following the Effective Date, as defined in the Agreement.
Any person who acquired Common Stock or Warrants from a Stockholder (other than
pursuant to a registration statement or Rule 144) shall be subject to the
provisions of this Section 10.
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11. Amendments and Waivers. Any provision of these Registration Rights
Provisions may be amended, modified or waived if, but only if, the written
consent to such amendment, modification or waiver has been obtained from (i)
except as provided in clause (ii) below, the Holder or Holders of at least 66
2/3% of the shares of Registrable Common Stock affected by such amendment,
modification or waiver and (ii) in the case of any amendment, modification or
waiver of any provision of Section 4 of these Registration Rights Provisions or
this Section 11, or as to the percentages of Holders required for any amendment,
modification or waiver, or any amendment, modification or waiver which adversely
affects any right and/or obligation under these Registration Rights Provisions
of any Holder, the written consent of each Holder so affected.
12. Assignment. The provisions of these Registration Rights Provisions
shall be binding upon and inure to the benefit of the parties hereto, and, in
the event of the death or incompetence of any Holder to their legal
representatives, heirs, distributees or legatees, provided that the such
Transferee shall agree in writing with the parties hereto prior to the
assignment to be bound by these Registration Rights Provisions as if he or she
were an original party hereto, whereupon such Transferee shall for all purposes
be deemed to be a Holder under these Registration Rights Provisions. Except as
provided above or otherwise permitted by these Registration Rights Provisions,
neither these Registration Rights Provisions nor any right, remedy, obligation
or liability arising hereunder or by reason hereof shall be assignable by any
Holder without the prior written consent of the Company.
13. Miscellaneous.
(a) Each of the parties hereto shall execute such documents and
other papers and perform such further acts as may be reasonably required or
desirable to carry out the provisions of these Registration Rights Provisions
and the transactions contemplated hereby.
(b) The headings in these Registration Rights Provisions are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions of these Registration Rights Provisions.
(c) Notwithstanding any provision of these Registration Rights
Provisions, neither the Company nor any other party hereto shall be required to
take any action which would be in violation of any applicable federal or state
securities law. The invalidity or unenforceability of any provision of these
Registration Rights Provisions in any jurisdiction shall not affect the
validity, legality or enforceability of any other provision of these
Registration Rights Provisions in such jurisdiction or the validity, legality or
enforceability of these Registration Rights Provisions, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
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