EXHIBIT 4.11
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 4th day of June, 1998,
between the entities listed on Schedule A (the "Holder" or "Holders") issued
pursuant to a Securities Purchase Agreement of even date herewith, and STORM
TECHNOLOGY, INC., a Delaware corporation, having its principal place of business
at 0000 Xxxxxxxxxx Xxxx, Xxxxxxxx Xxxx, XX 00000 (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company, pursuant to a Securities
Purchase Agreement dated the date hereof (the "Securities Purchase Agreement"),
upon conversion thereof, an aggregate of up to Two Million ($2,000,000) Dollars
face value of non-voting Series B Convertible Preferred Stock (the "Preferred
Stock") and an aggregate of up to Twelve Million ($12,000,000) Dollars principal
amount of shares of Common Stock of the Company (the Common Stock and Preferred
Stock are referred to as the "Securities"). Capitalized terms defined in the
Securities Purchase Agreement and not otherwise defined herein shall have the
meanings specified in the Securities Purchase Agreement; and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the Securities.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
----------------------
"Registrable Security" means shares of Common Stock underlying the Preferred
Stock, and the shares of Common Stock issuable pursuant to the Company's right
to call (as set forth in the Securities Purchase Agreement); provided, however,
that with respect to any particular Registrable Security, such security shall
cease to be a Registrable Security when, as of the date of determination, (i) it
has been effectively registered under the Securities Act of 1933, as amended
(the "Securities Act") and disposed of pursuant thereto, (ii) registration under
the Securities Act is no longer required for the immediate public distribution
(without volume limitation) of such security as a result of the provisions of
Rule 144 or Regulation D, or (iii) it has ceased to be outstanding. The term
"Registrable Securities" means any and/or all of the securities falling within
the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Section 1.
Section 2. Restrictions on Transfer. The Holders acknowledge and
------------------------
understand that prior to the registration of the Securities as provided herein,
the Securities are "restricted securities" as defined in Rule 144 promulgated
under the Securities Act. The Holders understand that no disposition or
transfer of the Securities may be made by Holders in the absence of (i) an
opinion of counsel reasonably satisfactory to the Company that such transfer may
be made without registration under the Securities Act, or (ii) a registration
statement under the Securities Act is then in effect with respect thereto.
Section 3. Registration Rights.
-------------------
(a) The Company shall prepare and file with the Securities and
Exchange Commission ("SEC"), within thirty (30) days after the Closing Date for
the Preferred Stock, a registration statement (on Form S-3, or other appropriate
registration statement) under the Securities Act (the "Registration Statement"),
on one occasion, at the sole expense of the Company (except as provided in
Section 3(c) hereof), in respect of all holders of Registrable Securities, so as
to permit a non-underwritten public offering and sale of the Registrable
Securities under the Securities Act. The Company shall use its best efforts to
cause the Registration Statement to become effective within ninety (90) days
from the Closing Date of the Preferred Stock. The number of shares of Common
Stock to be registered shall be four million (4,000,000).
(b) The Company will maintain any Registration Statement or post-
effective amendment filed under this Section 3 hereof current under the
Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the holders thereof receive an opinion of counsel that the Registrable
Securities may be sold (without any volume limitations) under the provisions of
Rule 144, or (iii) the second anniversary of the effective date of the
Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of any
Registration Statement under subparagraph 3(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees) shall be borne by the Company. In addition, the Company shall bear the
cost of underwriting discounts and commissions, if any, applicable to the
Registrable Securities being registered and the fees and expenses of its
counsel. The Company shall use its best efforts to qualify any of the
securities for sale in such states as such Holder reasonably designates and
shall furnish indemnification in the manner provided in Section 8 hereof.
However, the Company shall not be required to qualify in any state which will
require an escrow or other restriction relating to the Company and/or the
sellers. The Company at its expense will supply the Holders with copies of such
Registration Statement and the prospectus or offering circular included therein
and other related documents in such quantities as may be reasonably requested by
the Holders.
(d) The Company shall not be required by this Section 3 to include a
Holder's Registrable Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Holders and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or
2
transferees obtaining securities which are not "restricted securities", as
defined in Rule 144 under the Securities Act.
(e) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not filed by the Company with the SEC
within thirty (30) days after the Closing Date for the Preferred Stock, and/or
is not declared effective by the SEC within ninety (90) days from the Closing
Date (the "Proposed Effective Date"), then the Company will pay Holders by wire
transfer, as liquidated damages for such failure and not as a penalty, two (2%)
percent of the outstanding principal amount of the Preferred Stock per month
thereafter, which amount will be increased to three (3%) percent of the
outstanding principal amount of the Preferred Stock in the event the
Registration Statement is not declared effective within thirty (30) days after
the Proposed Effective Date. In the event the registration statement is not
declared effective by the SEC within sixty (60) days after the Proposed
Effective Date, the Company will pay the Holders, in addition to the
aforementioned liquidated damages, additional liquidated damages in the amount
of one (1%) percent of the outstanding principal balance of the Preferred Stock
for each full thirty (30) day period thereafter during which the registration
statement is not declared effective. Payments as set forth in this Section shall
be made in cash or stock at the Company's option (the first month shall be pro
rated on a weekly basis) until the Company procures registration of the
Registrable Securities. If the Company does not remit the damages to the Holders
as set forth above, the Company will pay the Holders reasonable costs of
collection, including attorneys fees, in addition to the liquidated damages.
Such payment shall be made to the Holders in cash immediately if the
registration of the Securities are not effected; provided, however, that the
payment of such liquidated damages shall not relieve the Company from its
obligations to register the Registrable Securities pursuant to this Section. The
registration of the securities pursuant to this provision shall not effect or
limit Holders other rights or remedies as set forth in this Agreement. In
addition to the aforementioned, in the event the Registration Statement is not
declared effective within ninety (90) days after the Closing Date for the
Preferred Stock, each Holder shall have the right to permanently terminate the
Company's right to exercise any Call rights (as set forth in the Securities
Purchase Agreement).
(f) No provision contained herein shall preclude the Company from
selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Section 3.
(g) If at any time or from time to time after the effective date of
the Registration Statement, the Company notifies the Holders in writing of the
existence of a Potential Material Event, as defined in this Section 3(g) herein,
the Holder shall not offer or sell any Registrable Securities or engage in any
other transaction involving or relating to Registrable Securities, from the time
of the giving of notice with respect to a Potential Material Event under such
Holders receive written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer constitutes a
Potential Material Event; provided, however, that the Company may not so suspend
the right to such holders of shares of Common Stock issuable upon conversion of
the Series B Preferred Stock (the "Conversion Shares") for more than ten (10)
days during any 12-month period with at least a ten (10) business days advance
notice during which time such holder shall continue to have the right to convert
the
3
shares of Preferred Stock. If a Potential Material Event shall occur prior to
the date the Registration Statement is filed, then the Company's obligation to
file the Registration Statement shall be delayed without penalty for not more
than ten (10) days. The Company shall not be allowed to exercise its Call rights
under the Securities Purchase Agreement within days following the occurrence of
a Potential Material Event.
In the event there are any blackout periods in effect for any reason
which extend beyond the time period allotted above, the Company shall pay to the
Holders on a pro rata basis by wire transfer, as liquidated damages for such
blackout periods, three (3%) percent of the principal amount of the Securities
for each month thereafter (or part thereof) until the blackout period is no
longer in effect. The Company must give Holder notice in writing at least two
(2) business days prior to the first day of the period and the Holder shall
continue to have the right to convert Shares during this blackout notice period.
A "Potential Material Event" shall mean any of the following: (a) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Chief Executive Officer or the Board of Directors of the Company that
disclosure of such information in the Registration Statement covering the resale
of the Conversion Shares would be detrimental to the business and affairs of the
Company; or (b) any material engagement or activity by the Company which would,
in the good faith determination of the Chief Executive Officer or the Board of
Directors of the Company, be adversely affected by disclosure in a registration
statement at such time, which determination shall be accompanied by a good faith
determination by the Chief Executive Officer or the Board of Directors of the
Company that the Registration Statement would be materially misleading absent
the inclusion of such information.
Section 4. Cooperation with Company. Holders will cooperate with the
------------------------
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 5. Registration Procedures. If and whenever the Company is
-----------------------
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Securities Act, the Company shall
(except as otherwise provided in this Agreement), as expeditiously as possible:
(a) 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 for
two (2) years and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such
registration statement when the Holder or Holders of such securities shall
desire to sell or otherwise dispose of the same (including prospectus
supplements with respect to the sales of securities from time to time in
connection with a registration statement pursuant to Rule 415 under the
Securities Act);
4
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Securities Act, and such other documents, as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
securities owned by such Holder;
(c) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holder, shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable each
Holder to consummate the public sale or other disposition in such jurisdiction
of the securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign corporation
in any
5
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(d) use its best efforts to list such securities on the NASDAQ
National Market System or any securities exchange on which any securities of the
Company is then listed, if the listing of such securities is then permitted
under the rules of such exchange or NASDAQ National Market System;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(f) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge 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 a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
Section 6. Assignment. The rights granted to the Holders under this
----------
Agreement shall not be assigned without the written consent of the Company,
which consent shall not be unreasonably withheld. In the event of a transfer of
the rights granted under this Agreement, the Holders agree that the Company may
require that the transferee comply with reasonable conditions as determined in
the discretion of the Company. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
Section 7. Termination of Registration Rights. The rights granted
----------------------------------
to this Agreement shall terminate as to each Investor (and permitted transferees
or assignees) upon the occurrence of any of the following:
(a) all such Holder's securities subject to this Agreement have been
registered;
(b) such Holder's securities subject to this Agreement may be sold
without such registration pursuant to Rule 144 or Regulation D promulgated by
the SEC pursuant to the Securities Act; or
(c) such Holder's securities subject to this Agreement can be sold
pursuant to Rule 144(k).
6
Section 8. Indemnification.
---------------
(a) In the event of the filing of any Registration Statement with
respect to Registrable Securities pursuant to this Agreement hereof, the Company
agrees to indemnify and hold harmless the Holder and each person, if any, who
controls the Holder within the meaning of the Securities Act ("Distributing
Holders") against any losses, claims, damages or liabilities, joint or several
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), to which
the Distributing Holders may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such Registration
Statement, or any related preliminary prospectus, final prospectus, offering
circular, notification or amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; 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 an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by the Distributing Holders, specifically for use in the
preparation thereof. This Section shall not inure to the benefit of any
Distributing Holder with respect to any person asserting such loss, claim,
damage or liability who purchased the Registrable Securities which are the
subject thereof if the Distributing Holder failed to send or give (in violation
of the Securities Act or the rules and regulations promulgated thereunder) a
copy of the prospectus contained in such Registration Statement to such person
at or prior to the written confirmation to such person of the sale of such
Registrable Securities, where the Distributing Holder was obligated to do so
under the Securities Act or the rules and regulations promulgated hereunder.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and hold
harmless the Company, and each officer, director of the Company or person, if
any, who controls the Company within the meaning of the Securities Act, against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions in
respect thereof); arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a Registration Statement
requested by such Distributing Holder, or any related preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by such Distributing
7
Holder, specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the distributing Holders
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case 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 in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 10. Contribution. In order to provide for just and equitable
------------
contribution under the Securities Act in any case in which (i) the Distributing
Holder makes a claim for indemnification, but is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Agreement provide for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of any Distributing Holder, then the Company and the applicable
Distributing Holder shall contribute to the aggregate losses,
8
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault 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 the Company on the one hand or the applicable
Distributing Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section 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 this
Section. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. 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.
Section 11. Notices. Any notice pursuant to this Agreement by the
-------
Company or by the Holder shall be in writing and shall be deemed to have been
duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery, or (iii) if mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Holders, to its, his or her address set forth on
Schedule A, with a copy to the person designated in the Securities Purchase
Agreement.
(b) If to the Company, at the address set forth herein, or to such
other address as any such party may designate by notice to the other party.
Notices shall be deemed given at the time they are delivered personally or five
(5) days after they are mailed in the manner set forth above. If notice is
delivered by facsimile to the Company and followed by mail, delivery shall be
deemed given two (2) days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for reference
--------
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 14. Governing Law, Venue. This Agreement will be construed
--------------------
and enforced in accordance with and governed by the laws of the State of
Delaware, except for matters arising under the Securities Act, without reference
to principles of conflicts of law. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
State of Delaware or the state courts of the State of Delaware in connection
with any
9
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
---------
conveniens, to the bringing of any such proceeding in such jurisdictions. Each
----------
party hereby agrees that if another party to this Agreement obtains a judgment
against it in such a proceeding, the party which obtained such judgment may
enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
Section 15. Severability/Defined Terms. If any provision of this
--------------------------
Agreement shall for any reason be held invalid or unenforceable, such invalidity
or unenforceablity shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein. Terms not otherwise defined herein shall be defined
in accordance with the Securities Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
10
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed, on the day and year first above written.
"COMPANY"
Attest: STORM TECHNOLOGY, INC.
By:______________________________ By: ______________________________
Title:___________________________ Title:______________________________
Name:____________________________ Name:_______________________________
"PURCHASERS"
LIBERTYVIEW FUND, LLC
By:_________________________________
Title:______________________________
Name:_______________________________
LIBERTYVIEW PLUS FUND
By:_________________________________
Title:______________________________
Name:_______________________________
CPR (USA), INC.
By:_________________________________
Title:______________________________
Name:_______________________________
11
