STANDSTILL AND REGISTRATION AGREEMENT
THIS STANDSTILL AND REGISTRATION AGREEMENT (this "Agreement") is made and
entered into as of January 9, 2004, by and between INTERACTIVE GROUP, INC., a
Delaware corporation (the "Company"), and TPR GROUP, INC., a Delaware
corporation and principal stockholder of the Company ("Stockholder").
A. The Company has entered into that certain Stock Purchase and Exchange
Agreement dated December 10, 2003 (the "Exchange Agreement"), by and between
the Company and Arrowhead Research Corporation, a California corporation
("Arrowhead Research"), which provides, among other things, for the acquisition
by the Company of all of the outstanding securities of Arrowhead Research in
exchange for the issuance by the Company of a control block of the Company's
Common Stock. If the transactions contemplated by the Exchange Agreement are
consummated, the former shareholders of Arrowhead Research would own
approximately 88.9% of the shares of the Company's Common Stock then
outstanding, and the current stockholders of the Company, including Stockholder,
would retain approximately 11.1% of its then outstanding shares of Common Stock.
B. Arrowhead Research was incorporated under the laws of the State of
California on May 7, 2003, issuing to the founders thereof 3,000,000 shares of
common stock and warrants to purchase an additional 3,000,000 shares of common
stock at the price of $1.50 per share. In October 2003, Arrowhead Research
completed a private placement in which it issued and sold, for an aggregate
purchase price of $2,645,000, Units each consisting of one share of common stock
and a warrant to purchase an additional share of common stock for the price of
$1.50. Accordingly, a total of 5,645,000 shares of common stock and warrants to
purchase a total of 5,645,000 shares of common stock, at $1.50 per share, are
currently outstanding. Since its incorporation in May 2003, the business and
activities of Arrowhead Research have been limited to organizational matters,
preparation and completion of the private placement, and the development of an
initial plan of proposed operations. Pursuant to its initial plan of proposed
operations, Arrowhead Research has entered into arrangements with the California
Institute of Technology, Pasadena, California ("CalTech"), and three individual
professors on the faculty of CalTech, with respect to the financing of research
projects in various aspects of nano technology development.
C. As the holder of a large number of shares of the Company's Common
Stock currently outstanding and to be issued in connection with certain
transactions contemplated by the Exchange Agreement (collectively, the
"Shares"), Stockholder will own a significant portion of the shares of the
Company's Common Stock to be retained by the current stockholders of the Company
immediately following the Closing under the Exchange Agreement. Among other
conditions to the Closing thereunder, the Exchange Agreement specifies that
Shareholder must have executed and delivered this Agreement, effective as of the
Closing, pursuant to which Shareholder will agree to limit the number of shares
of Common Stock which Stockholder will publicly sell or otherwise publicly
dispose of following the Closing Date (as defined in the Exchange Agreement), in
consideration of the grant to each by the Company of certain rights with respect
to the registration by the Company of Shares held by Shareholder for resale
under the Securities Act of 1933, as amended (the "Securities Act").
D. In consideration of the execution and delivery of this Agreement by
Stockholder, certain current shareholders of Arrowhead, or other one or more
other designees of Arrowhead, have agreed to purchase from Stockholder,
effective as of the date of the Closing under the Exchange Agreement, an
aggregate of 100,000 of the shares of the Company's Common Stock owned by
Stockholder immediately following such Closing, at the price of $1.00 per share.
E. The Company and Stockholder deem it necessary and advisable and in the
best interests of each and of the other current stockholders of the Company to
enter into this Agreement, as a material inducement and consideration to
Arrowhead to enter into and perform its obligations under the Exchange
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements of the parties contained herein, the parties hereto
agree as follows:
1. During the period commencing on the date of the Closing under the
Exchange Agreement and ending one full year thereafter (the "One-Year Period"),
Stockholder hereby agrees that, except as provided in Recital D above or with
the prior written consent of the Company:
(i) For the first 90 days of the One-Year Period, Stockholder will
not publicly sell or otherwise publicly dispose of, directly or indirectly, any
of the Shares owned by Stockholder, beneficially or of record; and
(ii) During the remainder of the One-Year Period, Stockholder will not
publicly sell or otherwise publicly dispose of, directly or indirectly, any of
the Shares owned by Stockholder, beneficially or of record, in excess of 25,000
Shares in any given ninety day (90-day) period, whether pursuant to Rule 144
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act, the Registration Statement specified in Paragraph 3 below,
or otherwise (the "Registration Statement").
(iii) Notwithstanding anything to the contrary in subparagraph (ii)
immediately above, in the event that the Registration Statement has not been
filed by the Company with the Commission by the date specified in paragraph 1(a)
of the Registration Rights Agreement referred to in Paragraph 3(a) hereof, or if
the Registration Statement has not become effective under the Securities Act by
the date specified in paragraph 1(c) of the Registration Rights Agreement, then,
in either such event, the limitation of the number of Shares that can be
publicly sold by Stockholder during any 90-day period for the remainder of the
One-Year Period shall increase from 25,000 to 50,000 shares.
2. In addition, Stockholder agrees that Stockholder will not sell or
otherwise dispose of any Shares owned by him, beneficially or of record, in any
private transaction unless the proposed transferee has provided to the Company
an agreement, in form and substance reasonably satisfactory to the Company,
pursuant to which such transferee agrees to be bound by the same terms and
conditions on subsequent sale or other disposition of the Shares to be acquired
as are applicable to the Stockholder under Paragraph 2 above.
3. The Company hereby grants to Stockholder certain rights with respect
to the registration of the Shares for resale under the Securities Act on the
following terms and subject to the following conditions:
(a) As a further condition to the Closing thereunder, the Exchange
Agreement provides that the Company shall execute and deliver a Registration
Rights Agreement (in the form attached as Exhibit __ to the Exchange Agreement)
pursuant to which the Company shall agree to prepare and file with the
Commission, within 60 days following the date of the Closing under the Exchange
Agreement, a registration statement for the purpose of registering for resale
under the Securities Act shares of the Company's Common Stock and warrants
issued in connection with the transactions contemplated by the Exchange
Agreement. Each Shareholder shall be a party to the Registration Rights
Agreement, and shall therefore be entitled to include among the shares covered
by the registration statement filed by the Company pursuant to the Registration
Rights Agreement such portion of the Shares as shall be specified in a written
request given to the Company by one or more of the Shareholders within 30 days
after the date of the Closing under the Exchange Agreement.
(b) The Company shall bear all costs and expenses relating to or
incurred by it in connection with any registration ("Registration Expenses") in
which Stockholder participates pursuant hereto, including without limitation all
registration and filing fees, printing expense, fees and disbursements of
counsel and independent accountants for the Company and fees and expenses
incident to compliance with state securities or "blue sky" laws, but
specifically excluding any fees and disbursements of counsel, accountants or
other professionals engaged by Stockholder. Stockholder shall be responsible
for and bear any underwriters' discounts and commissions properly allocable to
the Shares included in a registration statement at the request of Stockholder
hereunder. Notwithstanding the foregoing, if the registration statement to be
used in connection with any such registration is to include financial statements
as of a date or period ending other than as of the end of a fiscal year of the
Company, and such financial statements are audited either at the request of
Stockholder, Stockholder shall bear and pay such portion of the fees of the
Company's accountants that would not have been incurred if such audit request
had not been made.
(c) (i) The Company shall indemnify and hold Stockholder harmless,
to the extent permitted by law, against any actions, losses, claims, damages,
liabilities and expenses (including legal fees and other expenses reasonably
incurred in the investigation and defense thereof) resulting from any untrue or
alleged untrue statement of a material fact or any omission or alleged omission
of a material fact in any registration statement, prospectus, offering circular
or other document filed in connection with any such registration, and against
any violation by the Company of the Securities Act or any state securities or
"blue sky" law, or any rule or regulation under any of them, applicable to the
Company is connection with such registration, unless and to the extent that any
such actions, claims, losses, damages, liabilities or expenses arise out of or
are based upon any of the written information specifically provided by the
Shareholder for use in such registration statement, prospectus, offering
circular or other document pursuant to subparagraph (ii) immediately below.
(ii) Stockholder shall furnish to the Company such information in
writing regarding Stockholder as the Company reasonably requests for inclusion
in the registration statement, prospectus, offering circular and other documents
filed in connection therewith, and shall state that such information is provided
specifically for use in the registration statement, prospectus, offering
circular or other documents. Stockholder shall also furnish to the Company an
undertaking satisfactory to the Company and each underwriter of the offering, if
any, agreeing to indemnify and hold harmless, to the extent permitted by law,
the Company, and its directors and officers, and each such underwriter, and each
person who controls the Company or each such underwriter (within the meaning of
the Securities Act), against any actions, losses, claims, damages, liabilities,
and expenses (including legal and other expenses reasonably incurred in the
investigation and defense thereof) resulting from any untrue or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in any such documents or any supplement or amendment
thereto, and against any violation by the Company of the Securities Act or any
state securities or "blue sky" law, or any rule or regulation under any of them,
applicable to the Company is connection with such registration, or necessary to
make the statements therein not misleading, but only to the extent that such
untrue statement or omission is made in reliance on and in conformity with the
written information furnished to the Company by Stockholder specifically for use
in any such documents.
4. (a) Each of the parties hereto shall execute and deliver such
other and further documents and instruments, and take such other and further
actions, as may be reasonably requested of them for the implementation and
consummation of this Agreement and the transactions herein contemplated.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and the heirs, personal representatives,
successors and assigns of all of them, but shall not confer, expressly or by
implication, any rights or remedies upon any other party.
(c) This Agreement is made and shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of California. Should any provision of this Agreement be rendered void,
invalid or unenforceable by any court for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
provisions of this Agreement.
(d) All notices, requests or demands and other communications
hereunder must be in writing and shall be deemed to have been duly made if
personally delivered or mailed, postage prepaid, to the parties as follows:
If to the Company, to: InterActive Group, Inc.
0000 Xxxxx xxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
If to Stockholder, to: TPR Group, Inc.
0000 Xxxxx xxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Any party hereto may change its address by written notice to the other party
given in accordance with this subparagraph 4(d).
(e) This Agreement, together with the Exchange Agreement, the
Registration Rights Agreement, and the other exhibits attached thereto, contain
the entire agreement between the parties and supersede all prior agreements,
understandings and writings between the parties with respect to the subject
matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting with authority on behalf of any party,
which are not embodied herein or in an exhibit hereto, and that no other
agreement, statement or promise may be relied upon or shall be valid or binding.
Neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally. This Agreement may be amended or any term hereof may be
changed, waived, discharged or terminated by an agreement in writing signed by
all parties hereto.
(f) The captions and headings used herein are for convenience
only and shall not be construed as a part of this Agreement.
(g) In the event of any litigation between the parties hereto,
the non-prevailing party(s) shall pay the reasonable expenses, including the
attorneys' fees, of the prevailing party(s) in connection therewith.
(h) This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
INTERACTIVE GROUP, INC. TPR GROUP, INC.
By: By:
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, President , President
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The "Company" "Stockholder"
