EX-4.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of January 27, 2006 (this
"Agreement") by and between RMD Technologies, Inc., a California
corporation, with principal executive offices located at 000 Xxxx 0xx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and La Jolla Cove
Investors, Inc. (the "Holder").
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement dated as of even date herewith, by and
between the Holder and the Company (the "Securities Purchase
Agreement"), the Company has agreed to issue and sell to the Holder a
Convertible Debenture (the "Debenture") of the Company in the
aggregate principal amount of $100,000 which, upon the terms of and
subject to the conditions contained therein, is convertible into
shares of the Company's Common Stock (the "Common Stock") and a
Warrant to purchase shares (the "Warrants") of the Company's Common
Stock (the "Warrant Shares") ; and
WHEREAS, to induce the Holder to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide with
respect to the Common Stock issued upon conversion of the Debenture
and the Warrant Shares certain registration rights under the
Securities Act;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Definitions
(A) As used in this Agreement, the following terms shall have
the meanings:
(1) "Affiliate" of any specified Person means any other
Person who directly, or indirectly through one or more intermediaries,
is in control of, is controlled by, or is under common control with,
such specified Person. For purposes of this definition, control of a
Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether by
contract, securities ownership or otherwise; and the terms
"controlling" and "controlled" have the respective meanings
correlative to the foregoing.
(2) "Closing Date" means the date of this Agreement.
(3) "Commission" means the Securities and Exchange Commission.
(4) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
thereunder, or any similar successor statute.
(5) "Investor" means each of the Holder and any transferee
or assignee of Registrable Securities which agrees to become bound by
all of the terms and provisions of this Agreement in accordance with
Section 8 hereof.
(6) "Person" means any individual, partnership,
corporation, limited liability company, joint stock company,
association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
(7) "Prospectus" means the prospectus (including, without
limitation, any preliminary prospectus and any final prospectus filed
pursuant to Rule 424(b) under the Securities Act, including any
prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in
reliance on Rule 430A under the Securities Act) included in the
Registration Statement, 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
by all other amendments and supplements to such prospectus, including
all material incorporated by reference in such prospectus and all
documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.
(8) "Public Offering" means an offer registered with the
Commission and the appropriate state securities commissions by the
Company of its Common Stock and made pursuant to the Securities Act.
(9) "Registrable Securities" means the Common Stock issued
or issuable (i) upon conversion or redemption of the Debenture, (ii)
exercise of the Warrants (iii) pursuant to the terms and provisions of
the Debenture or the Securities Purchase Agreement, (iv) in connection
with any distribution, recapitalization, stock-split, stock adjustment
or reorganization of the Company; provided, however, a share of Common
Stock shall cease to be a Registrable Security for purposes of this
Agreement when it no longer is a Restricted Security.
(10) "Registration Statement" means a registration statement
of the Company filed on an appropriate form under the Securities Act
providing for the registration of, and the sale on a continuous or
delayed basis by the holders of, all of the Registrable Securities
pursuant to Rule 415 under the Securities Act, including the
Prospectus contained therein and forming a part thereof, any
amendments to such registration statement and supplements to such
Prospectus, and all exhibits to and other material incorporated by
reference in such registration statement and Prospectus.
(11) "Restricted Security" means any share of Common Stock
issued upon conversion or redemption of the Debenture or Warrant
except any such share that (i) has been registered pursuant to an
effective registration statement under the Securities Act and sold in
a manner contemplated by the prospectus included in such registration
statement, (ii) has been transferred in compliance with the resale
provisions of Rule 144 under the Securities Act (or any successor
provision thereto) or is transferable pursuant to paragraph (k) of
Rule 144 under the Securities Act (or any successor provision thereto)
or (iii) otherwise has been transferred and a new share of Common
Stock not subject to transfer restrictions under the Securities Act
has been delivered by or on behalf of the Company.
(12) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder,
or any similar successor statute.
(B) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Securities Purchase
Agreement or the Debenture.
2. Registration
(A) Filing and Effectiveness of Registration Statement. The
Company shall prepare and file with the Commission as soon as
practicable a Registration Statement relating to the offer and sale of
the Registrable Securities and shall use its best efforts to cause the
Commission to declare such Registration Statement effective under the
Securities Act as promptly as practicable but in no event later than
the Deadline (as defined in the Debenture). The Company shall
promptly (and, in any event, no more than 24 hours after it receives
comments from the Commission), notify the Buyer when and if it
receives any comments from the Commission on the Registration
Statement and promptly forward a copy of such comments, if they are in
writing, to the Buyer. At such time after the filing of the
Registration Statement pursuant to this Section 2(A) as the Commission
indicates, either orally or in writing, that it has no further
comments with respect to such Registration Statement or that it is
willing to entertain appropriate requests for acceleration of
effectiveness of such Registration Statement, the Company shall
promptly, and in no event later than two (2) business days after
receipt of such indication from the Commission, request that the
effectiveness of such Registration Statement be accelerated within
forty-eight (48) hours of the Commission's receipt of such request.
The Company shall notify the Holder by written notice that such
Registration Statement has been declared effective by the Commission
within 24 hours of such declaration by the Commission.
(B) Eligibility for Use of Form S-3 or an SB-2. The Company
agrees that at such time as it meets all the requirements for the use
of a Securities Act Registration Statement on Form S-3 or SB-2, it
shall file all reports and information required to be filed by it with
the Commission in a timely manner and take all such other action so as
to maintain such eligibility for the use of such form.
(C) Additional Registration Statement. In the event the Current
Market Price declines to a price per share the result of which is that
the Company cannot satisfy its conversion obligations to Holder
hereunder, the Company shall, to the extent required by the Securities
Act (because the additional shares were not covered by the
Registration Statement filed pursuant to Section 2(a)), as reasonably
determined by the Holder, file an additional Registration Statement
with the Commission for such additional number of Registrable
Securities as would be issuable upon conversion of the Debenture (the
"Additional Registrable Securities") in addition to those previously
registered. The Company shall use its best efforts to cause the
Commission to declare such Registration Statement effective under the
Securities Act as promptly as practicable but not later than the
Deadline. The Company shall not include any other securities in the
Registration Statement relating to the offer and sale of such
Additional Registrable Securities.
(D) Piggyback Registration Rights.
(i) If the Company proposes to register any of its
warrants, Common Stock or any other shares of common stock of the
Company under the Securities Act (other than a registration (A) on
Form S-8 or S-4 or any successor or similar forms, (B) relating to
Common Stock or any other shares of common stock of the Company
issuable upon exercise of employee share options or in connection with
any employee benefit or similar plan of the Company or (C) in
connection with a direct or indirect acquisition by the Company of
another Person or any transaction with respect to which Rule 145 (or
any successor provision) under the Securities Act applies), whether or
not for sale for its own account, it will each such time, give prompt
written notice at least 20 days prior to the anticipated filing date
of the registration statement relating to such registration to each
Investor, which notice shall set forth such Investor's rights under
this Section 2(D) and shall offer such Investor the opportunity to
include in such registration statement such number of Registrable
Securities as such Investor may request. Upon the written request of
any Investor made within 10 days after the receipt of notice from the
Company (which request shall specify the number of Registrable
Securities intended to be disposed of by such Investor), the Company
will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities that the Company has been
so requested to register by each Investor, to the extent requisite to
permit the disposition of the Registrable Securities so to be
registered; provided, however, that (A) if such registration involves
a Public Offering, each Investor must sell its Registrable Securities
to any underwriters selected by the Company with the consent of such
Investor on the same terms and conditions as apply to the Company and
(B) if, at any time after giving written notice of its intention to
register any Registrable Securities pursuant to this Section 2 and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register such Registrable Securities, the Company shall
give written notice to each Investor and, thereupon, shall be relieved
of its obligation to register any Registrable Securities in connection
with such registration. The Company's obligations under this Section
2(D) shall terminate on the date that the registration statement to be
filed in accordance with Section 2(A) is declared effective by the Commission.
(ii) If a registration pursuant to this Section 2(D)
involves a Public Offering and the managing underwriter thereof
advises the Company that, in its view, the number of shares of Common
Stock that the Company and the Investors intend to include in such
registration exceeds the largest number of shares of Common Stock that
can be sold without having an adverse effect on such Public Offering
(the "Maximum Offering Size"), the Company will include in such
registration only such number of shares of Common Stock as does not
exceed the Maximum Offering Size, and the number of shares in the
Maximum Offering Size shall be allocated among the Company, the
Investors and any other sellers of Common Stock in such Public
Offering ("Third-Party Sellers"), first, pro rata among the Investors
until all the shares of Common Stock originally proposed to be offered
for sale by the Investors have been allocated, and second, pro rata
among the Company and any Third-Party Sellers, in each case on the
basis of the relative number of shares of Common Stock originally
proposed to be offered for sale under such registration by each of the
Investors, the Company and the Third-Party Sellers, as the case may
be. If as a result of the proration provisions of this Section
2(D)(ii), any Investor is not entitled to include all such Registrable
Securities in such registration, such Investor may elect to withdraw
its request to include any Registrable Securities in such
registration. With respect to registrations pursuant to this Section
2(D), the number of securities required to satisfy any underwriters'
over-allotment option shall be allocated among the Company, the
Investors and any Third Party Seller pro rata on the basis of the
relative number of securities offered for sale under such registration
by each of the Investors, the Company and any such Third Party Sellers
before the exercise of such over-allotment option.
3. Obligations of the Company
In connection with the registration of the Registrable
Securities, the Company shall:
(A) Promptly (i) prepare and file with the Commission such
amendments (including post-effective amendments) to the Registration
Statement and supplements to the Prospectus as may be necessary to
keep the Registration Statement continuously effective and in
compliance with the provisions of the Securities Act applicable
thereto so as to permit the Prospectus forming part thereof to be
current and useable by Investors for resales of the Registrable
Securities for a period of five (5) years from the date on which the
Registration Statement is first declared effective by the Commission
(the "Effective Time") or such shorter period that will terminate when
all the Registrable Securities covered by the Registration Statement
have been sold pursuant thereto in accordance with the plan of
distribution provided in the Prospectus, transferred pursuant to Rule
144 under the Securities Act or otherwise transferred in a manner that
results in the delivery of new securities not subject to transfer
restrictions under the Securities Act (the "Registration Period") and
(ii) take all lawful action such that each of (A) the Registration
Statement and any amendment thereto does not, when it becomes
effective, 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, not misleading and (B) the Prospectus
forming part of the Registration Statement, and any amendment or
supplement thereto, does not at any time during the Registration
Period include 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;
(B) During the Registration Period, comply with the provisions
of the Securities Act with respect to the Registrable Securities of
the Company covered by the Registration Statement until such time as
all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the Investors as set forth
in the Prospectus forming part of the Registration Statement;
(C) (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the
distribution or delivery of any Prospectus (including any supplements
thereto), provide (A) draft copies thereof to the Investors and
reflect in such documents all such comments as the Investors (and
their counsel) reasonably may propose and (B) to the Investors a copy
of the accountant's consent letter to be included in the filing and
(ii) furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel
identified to the Company, (A) promptly after the same is prepared and
publicly distributed, filed with the Commission, or received by the
Company, one copy of the Registration Statement, each Prospectus, and
each amendment or supplement thereto and (B) such number of copies of
the Prospectus and all amendments and supplements thereto and such
other documents, as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(D) (i) Register or qualify the Registrable Securities covered
by the Registration Statement under such securities or "blue sky" laws
of such jurisdictions as the Investors who hold a majority-in-interest
of the Registrable Securities being offered reasonably request,
(ii) prepare and file in such jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness
thereof at all times during the Registration Period, (iii) take all
such other lawful actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period and (iv) take all such other lawful actions
reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the
Company shall not be required in connection therewith or as a
condition thereto to (A) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
Section 3(D), (B) subject itself to general taxation in any such
jurisdiction or (C) file a general consent to service of process in
any such jurisdiction;
(E) As promptly as practicable after becoming aware of such
event, notify each Investor of the occurrence of any event, as a
result of which the Prospectus included in the 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, in light of the
circumstances under which they were made, not misleading, and promptly
prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and
deliver a number of copies of such supplement and amendment to each
Investor as such Investor may reasonably request;
(F) As promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the Commission of any stop order or
other suspension of the effectiveness of the Registration Statement at
the earliest possible time and take all lawful action to effect the
withdrawal, rescission or removal of such stop order or other
suspension;
(G) Cause all the Registrable Securities covered by the
Registration Statement to be listed on the principal national
securities exchange, and included in an inter-dealer quotation system
of a registered national securities association, on or in which
securities of the same class or series issued by the Company are then
listed or included;
(H) Maintain a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the
effective date of the Registration Statement;
(I) Cooperate with the Investors who hold Registrable Securities
being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to
the registration statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the
case may be, as the Investors reasonably may request and registered in
such names as the Investor may request; and, within three (3) business
days after a registration statement which includes Registrable
Securities is declared effective by the Commission, deliver and cause
legal counsel selected by the Company to deliver to the transfer agent
for the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such registration statement) an
appropriate instruction and, to the extent necessary, an opinion of
such counsel;
(J) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their
Registrable Securities in accordance with the intended methods
therefor provided in the Prospectus which are customary under the
circumstances;
(K) Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months after
(i) the effective date (as defined in Rule 158(c) under the Securities
Act) of the Registration Statement and (ii) the effective date of each
post-effective amendment to the Registration Statement, as the case
may be, an earnings statement of the Company and its subsidiaries
complying with Section 11 (a) of the Securities Act and the rules and
regulations of the Commission thereunder (including, at the option of
the Company, Rule 158);
(L) In the event of an underwritten offering, promptly include
or incorporate in a Prospectus supplement or post-effective amendment
to the Registration Statement such information as the managers
reasonably agree should be included therein and to which the Company
does not reasonably object and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective
amendment;
(M) (i) Make reasonably available for inspection by Investors,
any underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other agent
retained by such Investors or any such underwriter all relevant
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and (ii) cause the
Company's officers, directors and employees to supply all information
reasonably requested by such Investors or any such underwriter,
attorney, accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence
examinations; provided, however, that all records, information and
documents that are designated in writing by the Company, in good
faith, as confidential, proprietary or containing any material
nonpublic information shall be kept confidential by such Investors and
any such underwriter, attorney, accountant or agent (pursuant to an
appropriate confidentiality agreement in the case of any such holder
or agent), unless such disclosure is made pursuant to judicial process
in a court proceeding (after first giving the Company an opportunity
promptly to seek a protective order or otherwise limit the scope of
the information sought to be disclosed) or is required by law, or such
records, information or documents become available to the public
generally or through a third party not in violation of an accompanying
obligation of confidentiality; and provided, further, that, if the
foregoing inspection and information gathering would otherwise disrupt
the Company's conduct of its business, such inspection and information
gathering shall, to the maximum extent possible, be coordinated on
behalf of the Investors and the other parties entitled thereto by one
firm of counsel designated by and on behalf of the majority in
interest of Investors and other parties;
(N) In connection with any underwritten offering, make such
representations and warranties to the Investors participating in such
underwritten offering and to the managers, in form, substance and
scope as are customarily made by the Company to underwriters in
secondary underwritten offerings;
(O) In connection with any underwritten offering, obtain
opinions of counsel to the Company (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the
managers) addressed to the underwriters, covering such matters as are
customarily covered in opinions requested in secondary underwritten
offerings (it being agreed that the matters to be covered by such
opinions shall include, without limitation, as of the date of the
opinion and as of the Effective Time of the Registration Statement or
most recent post-effective amendment thereto, as the case may be, the
absence from the Registration Statement and the Prospectus, including
any documents incorporated by reference therein, of an untrue
statement of a material fact or the omission of a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading, subject to customary
limitations);
(P) In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public
accountants of the Company (and, if necessary, from the independent
public accountants of any subsidiary of the Company or of any business
acquired by the Company, in each case for which financial statements
and financial data are, or are required to be, included in the
Registration Statement), addressed to each underwriter participating
in such underwritten offering (if such underwriter has provided such
letter, representations or documentation, if any, required for such
cold comfort letter to be so addressed), in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with secondary underwritten offerings;
(Q) In connection with any underwritten offering, deliver such
documents and certificates as may be reasonably required by the
managers, if any, and
(R) In the event that any broker-dealer registered under the
Exchange Act shall be an "Affiliate" (as defined in Rule 2729(b)(1) of
the rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD Rules") (or any successor provision thereto))
of the Company or has a "conflict of interest" (as defined in Rule
2720(b)(7) of the NASD Rules (or any successor provision thereto)) and
such broker-dealer shall underwrite, participate as a member of an
underwriting syndicate or selling group or assist in the distribution
of any Registrable Securities covered by the Registration Statement,
whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, the Company shall assist such broker-
dealer in complying with the requirements of the NASD Rules,
including, without limitation, by (A) engaging a "qualified
independent underwriter" (as defined in Rule 2720(b)(15) of the NASD
Rules (or any successor provision thereto)) to participate in the
preparation of the Registration Statement relating to such Registrable
Securities, to exercise usual standards of due diligence in respect
thereof and to recommend the public offering price of such Registrable
Securities, (B) indemnifying such qualified independent underwriter to
the extent of the indemnification of underwriters provided in Section
6 hereof and (C) providing such information to such broker-dealer as
may be required in order for such broker-dealer to comply with the
requirements of the NASD Rules.
4. Obligations of the Investors
In connection with the registration of the Registrable
Securities, the Investors shall have the following obligations:
(A) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that
such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request;
(B) Each Investor by its acceptance of the Registrable
Securities agrees to cooperate with the Company in connection with the
preparation and filing of the Registration Statement hereunder, unless
such Investor has notified the Company in writing of its election to
exclude all of its Registrable Securities from the Registration
Statement; and
(C) Each Investor agrees that, upon receipt of any notice from
the Company of the occurrence of any event of the kind described in
Section 3(E) or 3(F), it shall immediately discontinue its disposition
of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Investor's receipt of
the copies of the supplemented or amended Prospectus contemplated by
Section 3(E) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in
such Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
5. Expenses of Registration
All expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications
pursuant to Section 3, but including, without limitation, all
registration, listing, and qualifications fees, printing and engraving
fees, accounting fees, and the fees and disbursements of counsel for
the Company shall be borne by the Company.
6. Indemnification and Contribution
(A) Indemnification by the Company. The Company shall indemnify
and hold harmless each Investor (each such person being sometimes
hereinafter referred to as an "Indemnified Person") from and against
any losses, claims, damages or liabilities, joint or several, to which
such Indemnified 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 an untrue
statement of a material fact contained in any Registration Statement
or an 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 arise out of or are based upon an untrue
statement of a material fact contained in any Prospectus or an
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and the Company hereby agrees to reimburse such
Indemnified Person for all reasonable legal and other expenses
incurred by them in connection with investigating or defending any
such action or claim as and when such expenses are incurred; provided,
however, that the Company shall not be liable to any such Indemnified
Person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon (i) an untrue
statement or alleged untrue statement made in, or an omission or
alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to
the Company by such Indemnified Person expressly for use therein or
(ii) in the case of the occurrence of an event of the type specified
in Section 3(E), the use by the Indemnified Person of an outdated or
defective Prospectus after the Company has provided to such
Indemnified Person an updated Prospectus correcting the untrue
statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage or liability.
(B) Notice of Claims, etc. Promptly after receipt by a party
seeking indemnification pursuant to this Section 6 (an "Indemnified
Party") of written notice of any investigation, claim, proceeding or
other action in respect of which indemnification is being sought
(each, a "Claim"), the Indemnified Party promptly shall notify the
party against whom indemnification pursuant to this Section 6 is being
sought (the "Indemnifying Party") of the commencement thereof; but the
omission to so notify the Indemnifying Party shall not relieve it from
any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is materially
prejudiced and forfeits substantive rights and defenses by reason of
such failure. In connection with any Claim as to which both the
Indemnifying Party and the Indemnified Party are parties, the
Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the
Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of
such Claim, and the Indemnifying Party shall bear the reasonable fees,
out-of-pocket costs and expenses of such separate legal counsel to the
Indemnified Party if (and only if): (x) the Indemnifying Party shall
have agreed to pay such fees, costs and expenses, (y) the Indemnified
Party and the Indemnifying Party shall reasonably have concluded that
representation of the Indemnified Party by the Indemnifying Party by
the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of
the defense of such Claim, or if there may be legal defenses available
to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party or (z) the Indemnifying
Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances
other than as described in clauses (x), (y) or (z) above, the fees,
costs and expenses of such legal counsel shall be borne exclusively by
the Indemnified Party. Except as provided above, the Indemnifying
Party shall not, in connection with any Claim in the same
jurisdiction, be liable for the fees and expenses of more than one
firm of counsel for the Indemnified Party (together with appropriate
local counsel). The Indemnified Party shall not, without the prior
written consent of the Indemnifying Party (which consent shall not
unreasonably be withheld), settle or compromise any Claim or consent
to the entry of any judgment that does not include an unconditional
release of the Indemnifying Party from all liabilities with respect to
such Claim or judgment.
(C) Contribution. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an
Indemnified Person under subsection (A) above in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of
such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and the Indemnified Party in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), 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 the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
such Indemnifying Party or by such Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant
to this Section 6(D) were determined by pro rata allocation (even if
the Investors or any underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section
6(D). 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 shall be deemed to include any legal or
other fees or 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. The obligations of the Investors and any
underwriters in this Section 6(D) to contribute shall be several in
proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(D) Notwithstanding any other provision of this Section 6, in no
event shall any (i) Investor be required to undertake liability to any
person under this Section 6 for any amounts in excess of the dollar
amount of the proceeds to be received by such Investor from the sale
of such Investor's Registrable Securities (after deducting any fees,
discounts and commissions applicable thereto) pursuant to any
Registration Statement under which such Registrable Securities are to
be registered under the Securities Act and (ii) underwriter be
required to undertake liability to any Person hereunder for any
amounts in excess of the aggregate discount, commission or other
compensation payable to such underwriter with respect to the
Registrable Securities underwritten by it and distributed pursuant to
the Registration Statement.
(E) The obligations of the Company under this Section 6 shall be
in addition to any liability which the Company may otherwise have to
any Indemnified Person and the obligations of any Indemnified Person
under this Section 6 shall be in addition to any liability which such
Indemnified Person may otherwise have to the Company. The remedies
provided in this Section 6 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to an indemnified
party at law or in equity.
7. Rule 144
With a view to making available to the Investors the benefits of
Rule 144 under the Securities Act or any other similar rule or
regulation of the Commission that may at any time permit the Investors
to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its best efforts to:
(A) comply with the provisions of paragraph (c) (1) of Rule 144
and
(B) file with the Commission in a timely manner all reports and
other documents required to be filed by the Company pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is
not required to file such reports but in the past had been required to
or did file such reports, it will, upon the request of any Investor,
make available other information as required by, and so long as
necessary to permit sales of, its Registrable Securities pursuant to
Rule 144.
8. Assignment
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the
Investors to any permitted transferee of all or any portion of such
Registrable Securities (or all or any portion of the Debenture or
Warrant of the Company which is convertible into such securities) only
if (a) the Investor agrees in writing with the transferee or assignee
to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the
Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address
of such transferee or assignee and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so
transferred or assigned to the transferee or assignee constitute
Restricted Securities and (d) at or before the time the Company
received the written notice contemplated by clause (b) of this
sentence the transferee or assignee agrees in writing with the Company
to be bound by all of the provisions contained herein.
9. Amendment and Waiver
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written
consent of the Company and Investors who hold a majority-in-interest
of the Registrable Securities. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon each Investor and
the Company.
10. Changes in Common Stock
If, and as often as, there are any changes in the Common Stock by
way of stock split, stock dividend, reverse split, combination or
reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall
be made in the provisions hereof, as may be required, so that the
rights and privileges granted hereby shall continue with respect to
the Common Stock as so changed.
11. Miscellaneous
(A) A person or entity shall be deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(B) If, after the date hereof and prior to the Commission
declaring the Registration Statement to be filed pursuant to Section
2(a) effective under the Securities Act, the Company grants to any
Person any registration rights with respect to any Company securities
which are more favorable to such other Person than those provided in
this Agreement, then the Company forthwith shall grant (by means of an
amendment to this Agreement or otherwise) identical registration
rights to all Investors hereunder.
(C) Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall
be in writing and shall be delivered personally, or sent by telecopier
machine or by a nationally recognized overnight courier service, and
shall be deemed given when so delivered personally, or by telecopier
machine or overnight courier service as follows:
(1) if to the Company, to:
RMD Technologies, Inc.
000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(2) if to the Investor, to:
La Jolla Cove Investors, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(3) if to any other Investor, at such address as such
Investor shall have provided in writing to the Company.
The Company, the Holder or any Investor may change the foregoing
address by notice given pursuant to this Section 11(C).
(D) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
(E) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California. Each of the
parties consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of San Diego or the state
courts of the State of California sitting in the City of San Diego in
connection with any 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.
(F) Should any party hereto employ an attorney for the purpose
of enforcing or construing this Agreement, or any judgment based on
this Agreement, in any legal proceeding whatsoever, including
insolvency, bankruptcy, arbitration, declaratory relief or other
litigation, the prevailing party shall be entitled to receive from the
other party or parties thereto reimbursement for all reasonable
attorneys' fees and all reasonable costs, including but not limited to
service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees, and the cost of any bonds,
whether taxable or not, and that such reimbursement shall be included
in any judgment or final order issued in that proceeding. The
"prevailing party" means the party determined by the court to most
nearly prevail and not necessarily the one in whose favor a judgment
is rendered.
(G) The remedies provided in this Agreement are cumulative and
not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(H) The Company shall not enter into any agreement with respect
to its securities that is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The Company is not currently a
party to any agreement granting any registration rights with respect
to any of its securities to any person which conflicts with the
Company's obligations hereunder or gives any other party the right to
include any securities in any Registration Statement filed pursuant
hereto, except for such rights and conflicts as have been irrevocably
waived. Without limiting the generality of the foregoing, without the
written consent of the holders of a majority in interest of the
Registrable Securities, the Company shall not grant to any person the
right to request it to register any of its securities under the
Securities Act unless the rights so granted are subject in all respect
to the prior rights of the holders of Registrable Securities set forth
herein, and are not otherwise in conflict or inconsistent with the
provisions of this Agreement. The restrictions on the Company's
rights to grant registration rights under this paragraph shall
terminate on the date the Registration Statement to be filed pursuant
to Section 2(A) is declared effective by the Commission.
(I) This Agreement, the Securities Purchase Agreement, the
Debenture and the Conversion Warrants Agreement, of even date herewith
among the Company and the Holder constitute the entire agreement among
the parties hereto with respect to the subject matter hereof. There
are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. These Agreements supersede all
prior agreements and undertakings among the parties hereto with
respect to the subject matter hereof.
(J) Subject to the requirements of Section 8 hereof, this
Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
(K) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may
require.
(L) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
thereof.
(M) The Company acknowledges that any failure by the Company to
perform its obligations under Section 3, or any delay in such
performance, could result in direct damages to the Investors and the
Company agrees that, in addition to any other liability the Company
may have by reason of any such failure or delay, the Company shall be
liable for all direct damages caused by such failure or delay.
(N) This Agreement may be executed in counterparts, each of
which shall be deemed an original but both of which shall constitute
one and the same agreement. A facsimile transmission of this signed
Agreement shall be legal and binding on the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed and delivered on the date first above written.
RMD Technologies, Inc. La Jolla Cove Investors, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxx
Title: President Title: Portfolio Manager
APPENDIX 1
WARRANT NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase _____ shares of
the Common Stock of RMD Technologies, Inc. pursuant to the terms of
the Warrant to Purchase Common Stock issued by RMD Technologies, Inc.
on January ___, 2006.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is
specified below:
_____________________
_____________________
_____________________
(Name and Address)
3. The undersigned makes the representations and covenants set
forth in Article 5 of the Warrant to Purchase Common Stock.
________________________________
(Signature)
___________________________
(Date)
