Exhibit 10.20
Form of Registration Rights Agreement dated March 31, 2004
ENOVA SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated
effective as of March 30, 2004 (the "Effective Date") by and among (i) the
holders of certain common stock of the Company listed on Exhibit A attached
hereto who are parties along with the Company to certain Stock Purchase
Agreements (or counterparts thereto) (the "Original Holders") dated as of the
Effective Date (collectively, the "Stock Purchase Agreement"), and each other
Person (defined below) who subsequently becomes a party to this Agreement
pursuant to Section 8(a) hereof (each such Original Holder and other Person, a
"Holder" and, collectively, the "Holders") and (ii) Enova Systems, Inc., a
California corporation (the "Company").
RECITALS
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WHEREAS, each of the Holders have purchased shares of the Company's
common stock pursuant to the Stock Purchase Agreement which provides for the
granting of certain registration rights;
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the Holders and the
Company hereby agree as follows:
1. Definitions.
"Commission" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"Common Stock" means any and all (i) common stock of the
Company held by the Holders and issued pursuant to the Stock Purchase Agreement
(the "Stock"); (ii) common stock of the Company issued as a dividend or other
distribution with respect to or in replacement of the Stock, and (iii) any
common stock issued in any combination or subdivision of the Stock. In
determining the amount of Common Stock held by any Person, the sum of (i), (ii)
and (iii) shall be used and a Person shall be deemed to "hold" all Common Stock
then held by such Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statue and the rules and regulations of the
Commission thereunder all as the same shall be in effect at the time.
"Person" means any individual, corporation, trust,
partnership, association, or other entity.
"Registrable Shares" means the Common Stock.
Exhibits - 9
"Registration Statement" means the registration statement and
any additional registration statements filed with the Commission as contemplated
by Section 2, including (in each case) any prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post- effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement or statements.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
2. Registration Procedures and Expenses. The Company shall
(a) use its reasonable efforts, subject to receipt of
necessary information from the Original Holders, to cause to become effective no
later than one hundred eighty (180) days following the Effective Date a
Registration Statement on Form S-1in order to register with the Commission under
the Securities Act sales by the Original Holders under the Securities Act of all
of the Registrable Shares held by the Original Holders;
(b) use its reasonable efforts, subject to receipt of
necessary information from such other Persons who become parties to this
Agreement after the Effective Date, within one hundred eighty (180) days
following the closing date of the sale of the Company's common stock to each
such other Person(s) who become a party to this Agreement pursuant to Section
8(a) hereof, to cause an amendment to the Registration Statement to become
effective in order to register with the Commission under the Securities Act a
sale by such other Person(s) all of the Registrable Shares held by such other
Person;
(c) promptly prepare and file with the Commission, and deliver
to each Holder, such amendments and supplements to such Registration Statement
and the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Registrable
Shares until termination of such obligation as provided in Section 6 below;
(d) furnish to each Holder such number of copies of
prospectuses, including preliminary prospectuses, in conformity with the
requirements of the Securities Act, in order to facilitate the public sale or
other disposition of all or any of the Registrable Shares by the Holders;
(e) use its reasonable efforts to cause all Registrable Shares
to be listed on each securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which equity securities by the
Company are then listed or traded;
(f) bear all expenses in connection with this Agreement,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), printing expenses, fees and
disbursements of counsel for company, expenses of any special audits incident to
Exhibits - 10
or required by any such registration and expenses of complying with the
securities or blue sky laws of any jurisdiction, other than (i) fees and
expenses, if any, of counsel or other advisors to the Holders and (ii) brokers
commissions, discounts or fees and transfer taxes; and
Notwithstanding anything to the contrary expressed or implied
herein, if a registration statement on Form S-3, or any substitute form, becomes
available for registration of the Registrable Shares, the Company may instead
prepare and file with the Commission a registration statement on Form S-3 at any
time in order to register the Registrable Shares under the Securities Act and
such registration statement will be a "Registration Statement" for the purposes
of this Agreement.
3. Indemnification
(a) The Company agrees to indemnify and hold harmless each
Holder, such Holder's directors, officers, partners, agents, each underwriter of
Registered Shares, and each Person who controls any of the foregoing (within the
meaning of Section 15 of the Securities Act) (each an "Indemnified Party") from
and against any losses, claims, damages or liabilities to which such Indemnified
Party may become subject (under the Securities Act or otherwise) insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement in the
Registration Statement, or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement or arise under the
Securities Act or any other statute or at common law and the Company will
reimburse such Indemnified Party for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that the Company shall not be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Indemnified Party specifically for use in
preparation of the Registration Statement or the failure of such Holder to
comply with the covenants and agreements contained in Section 4 hereof
respecting the sale of the Registrable Shares or any untrue statement in any
prospectus that is corrected in any subsequent prospectus that was delivered to
the Holder prior to the pertinent sale or sales by the Holder.
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless the Company (and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, each officer
of the Company who signs the Registration Statement and each director of the
Company) from and against any losses, claims, damages or liabilities to which
the Company (or any such officer, director or controlling person) may become
subject (under the Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
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of, or are based upon, any failure to comply with the covenants and agreements
contained in Section 5 hereof respecting sale of the Registrable Shares, or any
untrue statement contained in the Registration Statement if, but only if, such
untrue statement was made in reliance upon and in conformity with written
information furnished by or on behalf of such Holder specifically for use in
preparation of the Registration Statement and such Holder will reimburse the
Company (or such officer, director or controlling person), as the case may be,
for any legal or other expenses reasonably incurred in investigating, defending
or preparing to defend any such action, proceeding or claim; provided that in no
event shall any indemnity by a Holder under this Section 3 exceed the net
proceeds received by such Holder from the sale of the Registrable Shares covered
by such Registration Statement.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 3, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and such indemnifying person shall have been notified
thereof, such indemnifying person shall be entitled to participate therein, and,
to the extent it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified person. After notice from the
indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnified person. No
indemnifying party in the defense of any such claim or litigation shall, except
with the consent of each indemnified party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect of such claim or litigation, and no indemnified
party shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the indemnifying party.
(d) If the indemnification provided for in this Section 3 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
Exhibits - 12
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or the omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission. 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.
Notwithstanding anything to the contrary contained herein, any contribution by a
Holder hereunder shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Shares covered by the Registration Statement.
4. Transfer of Shares After Registration; Notice. Each Holder
hereby covenants with the Company not to make any sale of the Registrable Shares
after registration without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied. Each Holder acknowledges
that there may be times when the Company must suspend the use of the prospectus
forming a part of the Registration Statement until such time as an amendment to
the Registration Statement has been filed by the Company and declared effective
by the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. Each Holder hereby
covenants that it will not sell any Registrable Shares pursuant to said
prospectus during the period commencing at the time at which the Company gives
the Holder prior written notice of the suspension of the use of said prospectus
and ending at the time the Company gives the Holder prior written notice that
the Holder may thereafter effect sales pursuant to said prospectus; provided,
however, that no such postponements shall be permitted for more than one hundred
eighty (180) days in the aggregate during any 12 month period. The foregoing
provisions of this Section 4 shall in no manner diminish or otherwise impair the
Company's obligations under Section 2.
5. Reporting Requirements.
(a) The Company agrees during the term of this Agreement to
use its reasonable efforts to:
(i) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(ii) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and
Exhibits - 13
(iii) so long as any of the Holders own Registrable
Shares, to furnish to the Holders forthwith upon request (1) a written statement
by the Company as to whether it complies with the reporting requirements of said
Rule 144, the Securities Act and the Exchange Act, or whether it qualifies as a
registrant whose securities may be resold pursuant to Commission Form S-3, (2) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (3) such other information as
may be reasonably requested in availing the Holders of any rule or regulation of
the Commission that would permit the selling of the Registrable Shares without
registration.
6. Termination of Obligations. The obligations of the Company pursuant
to Sections 2 through 5 hereof with respect to any Holder shall cease and
terminate upon the earlier to occur of (i) such time as all of the Registrable
Shares have been resold by such Holder or (ii) such time as all of the
Registrable Shares held by such Holder may be sold during any 3 month period
pursuant to Rule 144, including Rule 144 (k) or (iii) upon the second
anniversary date of the Effective Date.
7. Assignability of Registration Rights. The Registration rights set
forth in Section 2 are assignable only to assignees acquiring all of a Holder's
Registrable Shares held at the time of assignment. Provided further that the
Company shall not be obligated to file any post-effective amendment to the
Registration Statement solely for the purpose of adding such assignee(s) to the
Registration Statement more than once during any consecutive six-month period.
8. Miscellaneous.
(a) Additional Parties/Consent to Amendments. Each Person who
enters into a Stock Purchase Agreement on, or before, July 31, 2004, shall be
deemed a Holder under this Agreement accorded the registration rights afforded
to all Holders as contemplated herein. In addition, except as otherwise
expressly provided herein, the provisions of this Agreement may be amended
and/or the provisions hereof waived, only with the written consent of the
Company and of Holders holding fifty-one percent (51%) or more of the
Registrable Shares at the time held by all Holders. Notwithstanding the
foregoing, no amendment or waiver may affect any Holder in any manner
differently from any other Holder without the written consent of such first
mentioned Holder. No course of dealing between the Company and any Holder or any
delay in exercising any rights hereunder or under the Company's Articles of
Incorporation will operate as a waiver of any rights of any such Holder.
Exhibits - 14
(b) Successors and Assigns. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.
(c) Severability. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts when taken together shall constitute one
and the same Agreement.
(e) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(f) Notices. All notices, demands, consents or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been given (i) when personally delivered, (ii) three (3) business
days following mailing thereof, if sent by first class certified mail, return
receipt requested, or (iii) the next business day following transmission or
mailing, if sent by facsimile (receipt confirmed and followed up by one of the
other delivery methods discussed herein as well), Express Mail, Federal Express
or similar service, addressed as follows:
If to any Holder: To the applicable addresses set forth in the
Stock Purchase Agreement
If to the Company: Enova Systems, Inc.
00000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Any party may change its address for purposes hereof by notice given in
accordance with this Section 3.f to each of the other parties hereto.
(g) Governing Law. The validity, meaning and effect of this
Agreement, and all amendments and supplements hereto and all waivers and
consents hereunder, shall be determined in accordance with the laws of
California, applicable to contracts made and to be performed entirely within the
State of California. Each of the parties hereby submits to personal jurisdiction
in Los Angeles County, State of California solely for purposes of this Agreement
and waives any objection as to venue in such jurisdiction.
(h) Schedules and Exhibits. All schedules and exhibits are an
integral part of this Agreement.
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(i) Litigation Costs. Subject to Section 3, if any legal
action or any arbitration or other proceeding is brought for the enforcement of
this Agreement, or because of a dispute, breach, default, or misrepresentation
in connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled, if and only to the extent that
the applicable arbitrator or court shall so direct and such direction is final
and not subject to appeal or review.
(j) Integration. This Agreenment and the Sock Purchase
Agreement constitute the entire agreement of the parties hereto respecting the
registration of the Registrable Shares by the Holders and correctly sets forth
the rights, duties, and obligations of each party hereto to the others in
relation thereto as of its date and supercedes any prior agreements, promises,
negotiations or representations concerning its subject matter which are not
expressly set forth in this Agreement.
(l) No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities that is inconsistent
with or violates the rights granted to the holders of Registrable Shares in this
Agreement.
(SIGNATURES FOLLOWING)
Exhibits - 16
SIGNATURE PAGE TO 2004 ENOVA REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement effective as of the Effective Date.
Investor Enova Systems, Inc.
By:_______________________________ By:______________________________________
Xxxx X. Xxxxx, Chief Executive Officer
Exhibits - 17
