Form of] REGISTRATION RIGHTS AGREEMENT
Exhibit
10.5
[Form
of]
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is made as of the [__] day of [___________],
2005 by and among Millennium Cell Inc., a Delaware corporation (the
“Company”),
and The Dow Chemical Company, a Delaware corporation (“TDCC”).
RECITALS
WHEREAS,
the Company and TDCC are parties to that certain Stock Purchase Agreement dated
February 27, 2005 (the “Purchase
Agreement”),
pursuant to which, among other things, at the First Closing (as defined in the
Purchase Agreement) the parties hereto are to enter into this Agreement;
and
WHEREAS,
the First Closing has occurred and, simultaneously therewith, the parties hereto
are entering into this Agreement pursuant to the Purchase
Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. Defined
Terms Used in this Agreement. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Purchase Agreement. In addition to the terms specifically defined throughout
this Agreement, the following terms used in this Agreement shall be construed to
have the meanings set forth or referenced below.
“Affiliate”
means with respect to any individual, corporation, partnership, association,
trust, or any other entity (in each case, a “Person”),
any Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person, including, without limitation any general
partner, officer or director of such Person; provided,
however,
that TDCC shall not be deemed an Affiliate of the Company.
“Board”
means the Board of Directors of the Company.
“Common
Stock”
means the Company’s common stock, par value $0.001 per share.
“Effective
Date”
means, with respect to any Registration Statement, the date on which the SEC
first declares effective such Registration Statement.
“Effectiveness
Period”
means, with respect to any Registration Statement, the period of time such
Registration Statement remains effective (beginning on the Effective Date
applicable thereto), but in no event less than six (6) months.
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Form
S-3”
means
such form under the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by the SEC which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
“Holder”
means any Person owning or having the right to acquire Registrable Securities or
any assignee thereof in accordance with Section 4.1
hereof.
“Initiating
Holders”
means, collectively, any Holders who properly initiate a registration request
under this Agreement.
“Joint
Development Agreement”
means that Joint Development Agreement between the Company and TDCC dated as of
the date hereof.
“New
Securities”
means equity securities of the Company, whether now authorized or not, or
rights, options, or warrants to purchase such equity securities, or securities
of any type whatsoever that are, or may become, convertible or exchangeable
into, or exercisable for, such equity securities.
“Preferred
Stock”
means the Series A Preferred Stock and Series B Preferred Stock.
“Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened in writing.
“Qualified
Public Offering”
means an underwritten public offering of Common Stock pursuant to the Securities
Act in which the gross proceeds to the Company equal or exceed
$3,000,000.
“register,”
“registered,”
and “registration”
means a registration effected by preparing and filing a Registration Statement
in compliance with the Securities Act, and the declaration or ordering of
effectiveness of such Registration Statement by the SEC.
“Registrable
Securities”
means the Common Stock issued or issuable upon (i) conversion of any shares of
Preferred Stock or exercise of any Warrant, or (ii) the exercise of any other
right or security which is issued as a dividend or other distribution with
respect to, or in exchange for, or in replacement of the shares referenced in
clause (i) above, excluding in all cases, however, any Registrable Securities
sold by a Person in a transaction where the registration rights under
Section 2
hereof are not assigned or any shares for which registration rights have
terminated pursuant to Section
4.4
of this Agreement.
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“Registration
Statement”
means, collectively, any registration statement contemplated by Section
2.1,
Section
2.2,
or Section
2.3
to be filed with the SEC in connection with the registration of Registrable
Securities pursuant to this Agreement, including in each case the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post- effective amendments, all exhibits thereto, and all
material documents incorporated by reference or deemed to be incorporated by
reference in such registration statement.
“SEC”
means the Securities and Exchange Commission.
“SEC
Rule 144”
means Rule 144 promulgated by the SEC under the Securities Act.
“SEC
Rule 144(k)”
means Rule 144(k) promulgated by the SEC under the Securities Act.
“SEC
Rule 145”
means Rule 145 promulgated by the SEC under the Securities Act.
“SEC
Rule 424”
means Rule 424 promulgated by the SEC under the Securities Act.
“Securities
Act”
means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Series
A Preferred Stock”
means the Company’s Series A Convertible Preferred Stock, with the powers,
preferences and special rights set forth in the Series A Certificate of
Designation.
“Series
B Preferred Stock”
means the Company’s Series B Convertible Preferred Stock,
with the powers, preferences and special rights set forth in the Series B
Certificate of Designation.
“Special
Counsel”
means King & Spalding LLP.
“Violation”
means losses, claims, damages or liabilities (joint or several) to which a party
hereto may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations: (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) 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, or (iii) any
violation or alleged violation by any other party hereto, of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities
law.
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“Warrant”
means any and all warrants convertible into shares of Common Stock issued
by the Company to TDCC under the Purchase Agreement.
2. Registration
Rights.
The
Company covenants and agrees as follows:
2.1. Request
for Registration.
(a) TDCC,
or a transferee of the Registrable Securities, may request in writing at any
time prior to the fifth anniversary of the date hereof that the Company file a
Registration Statement under the Securities Act covering the registration of all
or a portion of the Registrable Securities then outstanding (a “Demand
Request”).
Upon receiving such Demand Request, the Company shall:
(i) within
ten (10) days of the receipt thereof, give written notice of such request to all
Holders (the “Demand
Notice”);
(ii) as
soon as practicable, file a Registration Statement under the Securities Act and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all the Registrable Securities
which the Initiating Holders request to be registered, together with such
portion of the Registrable Securities of any Holder joining in such request as
is specified in a written request given within twenty (20) days after receipt of
the Demand Notice, subject to the limitations of Sections 2.1(c)
and 2.1(d)
(provided however that the Company shall not be obligated to file a
qualification in any jurisdiction described in the proviso to Section
2.4(g));
and
(iii) use
its best efforts, to cause such Registration Statement to be declared effective
by the SEC as soon as practicable and remain effective for the Effectiveness
Period with respect to the Registrable Securities registered.
(b) If
the Initiating Holders intend
to distribute the Registrable Securities covered by their Demand Request by
means of an underwriting, they shall so advise the Company as a part of their
Demand Request made pursuant to Section 2.1(a)
and the Company shall include such information in the Demand Notice. The
underwriter shall be of nationally recognized standing and shall be selected and
engaged by the Company and reasonably acceptable to a majority in interest of
the Initiating Holders. In such event, the right of any Holder to include such
Holder’s 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 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. Notwithstanding
any other provision of this Section
2.1,
if the representative of the underwriters advises the Initiating Holders in
writing that market factors require a limitation on the number of shares to be
underwritten, the number of shares that may be included shall be allocated pro
rata among the Holders in proportion to the respective amounts of Registrable
Securities that such Holders have requested to be included in the registration.
The Company shall advise all Holders of securities requesting registration as to
the number of shares of securities that may be included in the registration and
underwriting as allocated in the foregoing manner. To facilitate the allocation
of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder
to the nearest 100 shares.
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(c) The
Company shall not be obligated to effect, or to take any action to effect, any
registration pursuant to this Section 2.1
after the Company has effected two (2) registrations pursuant to this
Section 2.1
and such registrations have been declared or ordered effective. A
Registration Statement shall be deemed effective at the Effective Date and only
if (i) all Registrable Securities requested to be registered are registered
thereunder or (ii) the registration is closed, or withdrawn, at the request of
the Initiating Holder (other than as a result of information concerning the
business or financial condition of the Company which is made known to the
Initiating Holders after the date on which such registration was requested and
constitutes a material adverse change in the Company).
(d) The
Company shall not be obligated to effect any registrations pursuant to this
Section 2.1
within ninety (90) days after the effective date of a previous registration;
provided,
however,
that the Company shall be obligated to effect, during such period, the
registration of an aggregate of four percent (4%) or less of the then current
Ownership Interest (as defined in the Stock Purchase Agreement) of TDCC and its
transferees meeting the requirements described in Section 4.1. The Company
shall not be obligated to effect any registrations pursuant to this Section 2.1
prior to one hundred eighty (180) days after the date of this Agreement.
(e) The
Company may delay the filing or effectiveness of any registration statement for
a period not to exceed ninety ( 90) days after the date of a request for
registration pursuant to this Section 2.1
if (i) at the time of such request the Company is engaged, or has fixed
plans to engage within ninety (90) days after the time of such request (which
ninety (90) day period shall not in any event extend the ninety (90) period
previously specified in this Section
2.1(e)),
in a firm commitment underwritten public offering of shares of Common Stock, or
(ii) the Company shall furnish to the Holders requesting registration
pursuant to this Section 2.1 a
certificate signed by the Chairman of the Board stating that, in the good faith
judgment of the Board, it would be materially detrimental to the Company and its
stockholders for such registration statement to be filed.
(f) Registrations
under this Section 2.1 shall be on such appropriate form of Registration
Statement of the SEC as shall be selected by the Company and available to it
under the Securities Act. The Company agrees to include in any such Registration
Statement all information which, in the opinion of counsel to the Company, is
required to be included therein under the Securities Act.
2.2. Piggy-Back
Registration.
(a) Piggy-Back
Rights.
If the Company proposes to register (including for the purposes of this
Agreement a registration effected by the Company for stockholders other than the
Holders) its Common Stock under the Securities Act in connection
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with
the public offering of such securities solely for cash (other than a
registration statement on Form S-4 or S-8 (or any successor or similar forms
under the Securities Act), or otherwise relating either to the sale of
securities to employees, directors, officers, consultants or advisors of the
Company pursuant to a stock option, stock purchase or similar plan or a SEC Rule
145 transaction), the Company shall, at such time, promptly give each Holder
written notice of such registration (the “Piggyback
Notice”).
Upon the written request of each Holder given within twenty (20) days after
receipt of the Piggyback Notice (each, a “Piggyback
Request”),
the Company shall, subject to the provisions of Section 2.2(b)
below, use best efforts to cause to be registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
registered. The Company shall have the right to delay (but in no event longer
than one hundred twenty (120) days), terminate or withdraw any registration
initiated by it under this Section 2.2
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The expenses of such
withdrawn registration shall be borne by the Company in accordance with
Section 2.6
hereof.
(b) Underwriting
Requirements.
In connection with any offering involving an underwriting of shares of the
Company’s Common Stock pursuant to this Section
2.2,
the Company shall not be required to include any of the Holders’ Registrable
Securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and its underwriters, and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company in view of market
conditions. If the total number of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds the amount of
securities to be sold other than by the Company that the underwriters determine
in their reasonable discretion is compatible with the success of the offering in
view of market conditions, then (i) the Company shall be required to
include in the offering only that number of such securities, including
Registrable Securities, which the underwriters and the Company determine in
their sole discretion will not jeopardize the success of the offering, and
(ii) the securities, including Registrable Securities, requested to be
included in such offering by the holders thereof pursuant to a piggyback
registration right granted by the Company to such holders shall be reduced
pro
rata
among all such holders based on the number of registrable securities of each
such holder that are subject to such piggyback registration rights;
provided,
that the Company shall cause its underwriters to consult with TDCC and explore
underwriting alternatives prior to reducing the number of shares requested to be
included by TDCC in any Registration Statement under this Section
2.2
to less than 30% of the number of shares requested by TDCC to be registered in
such Registration Statement under this Section
2.2.
2.3. Form
S-3.
(a) The
Company shall use its best efforts to remain qualified to register securities on
Form S-3 under the Securities Act. So long as the Company shall be so qualified,
the Holders shall have the right to request registrations on Form S-3. Upon the
written request of each Holder (including a statement as to the number of shares
of Registrable Securities to be disposed of and the intended method of
disposition of such shares by such Holder or Holders), to register all or a
portion of its Registrable Securities on Form S-3 (the “Form
S-3 Request”)
the Company shall, as soon as practicable upon receipt of the Form S-3 Request,
subject to the provisions of Section 2.3(b)
below, use its best efforts to cause to be registered under the Securities Act
on Form S-3 all of the Registrable Securities that each such Holder has
requested to be registered.
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(b) Notwithstanding
the foregoing, if the Company shall furnish to Holders requesting a Form S-3
Registration Statement pursuant to this Section 2.3 a
certificate signed by the Chairman of the Board, stating that in the good faith
judgment of the Board it would be materially detrimental to the Company and its
stockholders for such Registration Statement to become effective, the Company
shall have the right to defer taking action with respect to such filing to the
extent of any such circumstances; provided,
however,
that under no circumstances shall the Company defer registration for more than
ninety (90) days.
2.4. Registration
Xxxxxxxxxx.Xx
connection with the Company's registration obligations hereunder, the Company
shall as expeditiously as possible:
(a) Not
less than four
(4) Business Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto (except for any
reports filed under the Exchange Act), the Company shall furnish to the Holders
and the Special Counsel copies of the “Selling
Stockholders Section” and “Plan of Distribution” and any risk factor disclosure
specifically pertaining to the offering to which such Registration Statement
relates. Such documents will be subject to the review of such Holders and the
Special Counsel but not to the extent any such information would contain
material non-public information concerning the Company. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders shall reasonably object.
(b) (i)
Prepare and file with the SEC, subject to Section
2.4(a) a
Registration Statement with respect to such Registrable Securities, and
thereafter prepare and file such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary and use its best efforts to keep the Registration
Statement continuously effective as to the applicable Registrable Securities for
the Effectiveness Period and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to SEC Rule 424; (iii) respond as
promptly as reasonably possible, and in any event within ten (10) Business Days,
to any comments received from the SEC with respect to the Registration Statement
or any amendment thereto and, as promptly as reasonably possible provide the
Holders true and complete copies of all correspondence from and to the SEC
relating to the Registration Statement to the extent that such disclosure would
not contain material and non-public information concerning the Company; and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in accordance
with the intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented.
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(c) Notify
the Holders of Registrable Securities to be sold and the Special Counsel as
promptly as reasonably possible and (if requested by any such Person) confirm
such notice in writing no later than one (1) Business Day following the
day:
(i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed; (B) when the SEC notifies
the Company whether there will be a "review" of the Registration Statement and
whenever the SEC comments in writing on such Registration Statement (the Company
shall provide true and complete copies thereof and all written responses thereto
to each of the Holders, each to the extent such materials do not contain
material non-public information concerning the Company); and (C) with respect to
the Registration Statement or any post-effective amendment, the Effective Date;
(ii)
of any request by the SEC or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information;
(iii)
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose;
(iv)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and
(v)
of the occurrence of any event or passage of time that makes the financial
statements included in the Registration Statement ineligible for inclusion
therein or any statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact (other in respect of the selling
stockholders or the plan of distribution) or omit to state any material fact
required to be stated therein or necessary to make the statements therein (other
than in respect of the selling stockholders or the plan of distribution), in
light of the circumstances under which they were made, not
misleading.
(d) Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order suspending the effectiveness of the Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(e) Furnish
to each Holder and the Special Counsel, without charge, at least one conformed
copy of the Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the SEC.
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(f) Promptly
deliver to each Holder and the Special Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request. The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(g) Prior
to any public offering of Registrable Securities, use its best efforts to
register or qualify or cooperate with the selling Holders and the Special
Counsel in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder requests in writing, to keep each such registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, that, with the exception of
Michigan, the Company shall not be required to qualify to do business in any
jurisdiction where it is not then so qualified or subject the Company to any tax
in any such jurisdiction where it is not then so subject or to consent to
general service of process in any jurisdiction.
(h) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may request.
(i) Upon
the occurrence of any event contemplated by Section
2.4(c)(v),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither a Registration Statement nor such Prospectus will
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.
(j) Comply
with all applicable rules and regulations of the SEC.
2.5. Furnish Information. It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Section 2
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
such Holder’s Registrable Securities.
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2.6. Expenses
of Registration.
The Company shall bear (i) all expenses, other than underwriting discounts,
commissions and attorneys’ fees and expenses in excess of those described in
clause (ii) below, incurred in connection with any registrations, filings or
qualifications pursuant to this Section 2,
including (without limitation) all registration, filing and qualification fees,
printer’s and accounting fees, and (ii) up to $50,000.00 of fees and expenses of
one external counsel for the selling Holders selected by them for each
registration or filing, in each case, whether or not any Registrable Securities
are sold pursuant to a Registration Statement.
3. Indemnification.
In the event any Registrable Securities are included in a Registration Statement
under Section 2:
3.1. Indemnification
by the Company.
The Company shall, notwithstanding any termination of this Agreement, indemnify
and hold harmless each Holder, its Affiliates, the officers, directors, agents
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and reasonable ' fees of external
counsel) and expenses (collectively, "Losses"),
as incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto, or (ii) in the case of an
occurrence of an event of the type specified in Sections
2.4(c)(ii)
through 2.4(c)(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in
Section
4.3
or Section
2.4.
With respect to the prospectus delivery requirements under the Securities Act,
this indemnity shall not inure to the benefit of such Holder on account of any
Loss arising from the sale of Registrable Securities to any Person if a copy of
the Prospectus was not sent or given by or on behalf of such Holder to such
Person with or prior to the written confirmation of the sale involved and the
alleged omission or alleged untrue statement was corrected in the Prospectus at
the time of such confirmation, unless the failure to send or deliver the
Prospectus resulted from the Company's failure to comply with Section
2.4(j)
hereof. The Company shall notify the Holders promptly of the institution,
written threat or written assertion of any Proceeding of which the Company has
received written notification in connection with the transactions contemplated
by this Agreement.
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3.2. Indemnification
by Holders.
Each Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its Affiliates, directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising solely out of
or based solely upon: (i) such Holder's failure to comply with the prospectus
delivery and other requirements of the Securities Act in reselling Registrable
Securities; or (ii) any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading to the extent, but only to the
extent, that: (A) such untrue statement or omission is based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates
to such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement such Prospectus or such form of
Prospectus or in any amendment or supplement thereto; or (B) in the case of an
occurrence of an event of the type specified in Section
2.4(c)(ii)
through 2.4(c)(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in
Section
4.3.
In no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the aggregate
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
3.3. Indemnification
Procedures.
(a) If
any of the
Holders or any of their Affiliates, directors, officers, employees and agents,
seek indemnification pursuant to Section
3.1,
or the Company or any of its Affiliates, directors, officers, employees and
agents, seek indemnification pursuant to Section
3.2,
the Person seeking indemnification (the “Indemnified
Party”)
shall give written notice to the party from whom such indemnification is sought
(the “Indemnifying
Party”)
promptly (and in any event within thirty (30) days) after the Indemnified Party
becomes aware of the facts giving rise to such claim for indemnification (an
“Indemnified
Claim”)
specifying in reasonable detail the factual basis of the Indemnified Claim,
stating the amount of the Losses, if known, the method of computation thereof,
containing a reference to the provision of this Agreement in respect of which
such Indemnified Claim arises and demanding indemnification therefor. The
failure of an Indemnified Party to provide notice in accordance with this
Section
3.3
shall not constitute a waiver of that party’s claims to indemnification pursuant
to Section
3.1
or Section 3.2,
as applicable, except to the extent that any such failure or delay in giving
notice causes the amounts paid by the Indemnifying Party to be greater than they
otherwise would have been or otherwise results in prejudice to the Indemnifying
Party. If the Indemnified Claim arises from the assertion of any claim, or the
commencement of any suit, action or proceeding brought by a Person that is not a
party hereto (a “Third
Party Claim”),
any such notice to the Indemnifying Party shall be accompanied by a copy of any
papers theretofore served on or delivered to the Indemnified Party in connection
with such Third Party Claim.
11
(b)
Upon receipt of notice of a Third Party Claim from an Indemnified Party pursuant
to Section
3.3(a),
the Indemnifying Party will be entitled to assume the defense and control of
such Third Party Claim subject to the provisions of this Section
3.3.
After written notice by the Indemnifying Party to the Indemnified Party of its
election to assume the defense and control of a Third Party Claim, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
fees or expenses subsequently incurred by such Indemnified Party in connection
therewith. Notwithstanding anything in this Section
3.3
to the contrary, if the Indemnifying Party does not assume defense and control
of a Third Party Claim as provided in this Section
3.3,
the Indemnified Party shall have the right to defend such Third Party Claim,
subject to the limitations set forth in this Section
3.3,
in such manner as it may deem appropriate. Whether the Indemnifying Party or the
Indemnified Party is defending and controlling any such Third Party Claim, they
shall select counsel, contractors, experts and consultants of recognized
standing and competence, shall take all steps necessary in the investigation,
defense or settlement thereof, and shall at all times diligently and promptly
pursue the resolution thereof. The party conducting the defense thereof shall at
all times act as if all Losses relating to the Third Party Claim were for its
own account and shall act in good faith and with reasonable prudence to minimize
Damages therefrom. The Indemnified Party shall, and shall cause each of its
directors, officers, employees, and agents to, cooperate fully with the
Indemnifying Party in connection with any Third Party Claim.
(c) The
Indemnifying Party shall be authorized to consent to a settlement of, or the
entry of any judgment arising from, any Third Party Claims, and the Indemnified
Party shall consent to a settlement of, or the entry of any judgment arising
from, such Third Party Claims; provided, that the Indemnifying Party shall: (i)
pay or cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; (ii) shall not encumber any of the
assets of any Indemnified Party or agree to any restriction or condition that
would apply to such Indemnified Party or to the conduct of that party’s
business; and (iii) shall obtain, as a condition of any settlement or other
resolution, a complete and irrevocable release of each Indemnified Party and
such settlement or judgment (A) shall not require any admission of liability,
fault or wrongdoing by any Indemnified Party or impose any non-monetary
obligation on an Indemnified Party (such as, by way of example, and not in
limitation, injunctive relief), and (B) shall not require any admission or
statement that could reasonably be expected to materially impair, disparage or
otherwise adversely affect, the business reputation of the Indemnified Party.
Except to the extent of the foregoing, no settlement or entry of judgment in
respect of any Third Party Claim shall be consented to by any Indemnifying Party
or Indemnified Party without the express written consent of the other
party.
(d) If
an Indemnifying Party makes any payment in respect of an Indemnified Claim, the
Indemnifying Party shall be subrogated, to the extent of such payment, to all
rights and remedies of the Indemnified Party to any insurance benefits or other
claims or benefits of the Indemnified Party with respect to such
claim.
3.4. Contribution.
(a) If
a claim for indemnification under Section
3.1
or Section
3.2
is unavailable to an Indemnified Party (by reason of applicable law, public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to
12
the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Agreement was available to such party in
accordance with its terms. 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.
(b) The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section
3.4
were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section
3.4,
no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Holder from
the sale of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
(c) The
indemnity and contribution agreements contained in this Section
3.4
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
4. Additional
Agreements of the Parties.
4.1. Transfer
of Registration Rights.
The rights to cause the Company to register Registrable Securities pursuant to
Section 2
may be assigned (but only with all related obligations) by a Holder to a
transferee or assignee of such securities that
(i) is an Affiliate of the Holder, or (ii) after
such transfer or assignment, holds at least 25% of the Registrable Securities
held by the transferring Holder immediately prior to such transfer or assignment
(subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations), provided:
(A) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned; (B) such transferee
or assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement, including without limitation the provisions of
Section 4.2
below; and (C) such transfer or assignment shall be effective only if
immediately following such transfer or assignment, other than to an Affiliate of
the Holder, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act.
13
4.2. “Lock-Up”
Agreement.
In connection with a Qualified Public Offering (whether such offering was
initiated by the Company or the Initiating Holders), so long as TDCC holds 5% of
the issued and outstanding capital stock of the Company (determined on a Fully
Diluted Basis), TDCC will promptly, upon the request of the Company’s
underwriters, enter in to a lock-up agreement in form and substance reasonably
satisfactory to the Company or its underwriters and TDCC, provided
that each director, officer and 5% shareholder of the Company enters into a
lock-up agreement on the same terms. Such agreement shall be in writing in a
form reasonably satisfactory to the underwriter and the Holders.
4.3. Discontinued
Disposition.
Each Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section
2.4(c)(ii)
through 2.4(c)(v),
such Holder will forthwith immediately discontinue disposition of such
Registrable Securities under a Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this Section
4.3.
4.4. Termination
of Registration Rights.
The rights set forth in Sections
2.1,
2.2,
and 2.3
shall terminate as to any Holder when the Registrable Securities held by such
Holder (together with any Affiliate of such Holder with whom such Holder must
aggregate its sales under SEC Rule 144) could be sold without restriction under
SEC Rule 144(k) within a ninety (90) day period.
4.5. Limitations
on Subsequent Registration Rights.
From and after the date of this Agreement, the Company shall not, without the
prior written consent of the holders of a majority of the shares of Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (i) to include such securities in any registration of the Company
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of such securities will be pari
passu
with all other securities included in such registration by way of a piggyback
registration right granted by the Company, including Registrable Securities of
TDCC, or (ii) to demand registration of any securities held by such holder
or prospective holder on terms more favorable in the aggregate than the rights
granted to TDCC pursuant to Section 2.1.
5. Miscellaneous.
5.1. Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to its principles of conflicts of
laws.
5.2. Counterparts. This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. This Agreement may also be executed and delivered by facsimile
signature and in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
14
5.3. Construction
of Certain Terms. The
titles of the articles, sections, and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement. Wherever the words “including,” “include” or “includes” are used in
this Agreement, they shall be deemed followed by the words “without limitation.”
References to any gender shall be deemed to mean any gender. The parties hereto
have participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
5.4. Notices. All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified; (ii) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient, and if not so
confirmed, then on the next business day; (iii) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid;
or (iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to the address or facsimile number set forth below
or to such other address or facsimile number as delivered by notice to the other
in accordance with this Section
5.4:
If
to the Company:
0
Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx,
Xxx Xxxxxx 00000
Attention:
President
Facsimile:
732.542.4010
With
a copy to:
Dickstein,
Shapiro, Xxxxx & Xxxxxxxx LLP
0000
X Xxxxxx, X.X.
Xxxxxxxxxx,
X.X. 00000-0000
Attention:
Xxxx Xxxxxxxxx
Facsimile:
202.887.0689
If
to TDCC:
The
Dow Chemical Company
0000
Xxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Business Counsel, Dow Ventures
Facsimile:
989.636.7594
15
With
a copy to:
King
& Spalding LLP
0000
Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx,
X.X. 00000
Attention:
Xxxxx Xxxxxxx
Facsimile:
202.626.3737
5.5. Amendments
and Waivers. Neither
this Agreement nor any term of this Agreement may be amended, terminated or
waived without the written consent of the Company and the holders of at least a
majority of the then-outstanding Registrable Securities. Any amendment or waiver
effected in accordance with this Section 5.5
shall be binding upon TDCC and each transferee of the Registrable Securities,
and the Company.
5.6. Severability. The
invalidity of unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
5.7. Delays
or Omissions. No
delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power or remedy of such non-breaching or
non-defaulting party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
5.8. Entire
Agreement. This
Agreement (including the Exhibits hereto) and the other Transaction Agreements
constitute the full and entire understanding and agreement between the parties
with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the parties are
expressly canceled.
5.9. Dispute
Resolution. Any
unresolved controversy or claim arising out of or relating to this Agreement,
except as otherwise provided in this Agreement, shall be submitted to
arbitration by one (1) arbitrator mutually agreed upon by the parties, and if no
agreement can be reached within thirty (30) days after names of potential
arbitrators have been proposed by the American Arbitration Association (the
“AAA”),
then by one (1) arbitrator having reasonable experience in the type of
transactions provided for in this Agreement and who is chosen by the
16
AAA.
The arbitration shall take place in the District of Columbia, in accordance with
the AAA rules then in effect, and judgment upon any award rendered in such
arbitration will be binding and may be entered in any court having jurisdiction
thereof. There shall be limited discovery prior to the arbitration hearing as
follows: (i) exchange of witness lists and copies of documentary evidence and
documents relating to or arising out of the issues to be arbitrated;
(ii) depositions of all party witnesses; and (iii) such other depositions
as may be allowed by the arbitrators upon a showing of good cause. Depositions
shall be conducted in accordance with the Federal Rules of Civil Procedure, the
arbitrator shall be required to provide in writing to the parties the basis for
the award or order of such arbitrator, and a court reporter shall record all
hearings, with such record constituting the official transcript of such
proceedings. The arbitrator shall award reasonable attorney’s fees, costs, and
necessary disbursements in addition to any other relief to which the arbitrator
determines a party to be entitled. Each of the parties to this Agreement
consents to personal jurisdiction for any equitable action sought in the U.S.
District Court for the District of Columbia or any court of the District of
Columbia having subject matter jurisdiction.
[Remainder
of Page Intentionally Left Blank]
17
By:
Name:
Title:
THE
DOW CHEMICAL COMPANY:
By:
Name:
Title:
18
