REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement")
is entered into as of the Closing Date (as defined herein) by and
among Sunrise Technologies International, Inc., a Delaware
corporation, Pennsylvania Merchant Group Ltd, a Delaware
Corporation (the "Placement Agent") and the person whose
signatures appear on the execution pages of this Agreement.
This Agreement is made pursuant to the U.S. Note and
Warrant Purchase Agreement and the Offshore Note and Warrant
Purchase Agreement between the Company and each of the Purchasers
listed (the "Purchase Agreements"). In order to induce the
Purchasers to enter into the Purchase Agreement and in order to
induce the Placement Agent to accept the Placement Agent Warrant,
the Company has agreed to provide the registration rights set
forth in this Agreement. The execution of this Agreement by the
Company is a condition to the closing under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall
have the following meanings:
Closing Date: The date assigned thereto in the
Purchase Agreement.
Common Stock: The common stock, $.001 par value per
share, of the Company.
Company: Sunrise Technologies International, Inc., a
Delaware corporation.
Conversion Share: Shares issuable upon the conversion
of the Notes.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
Losses: See Section 7 hereof.
Notes: The Notes issued to investors pursuant to the
Purchase Agreements.
Placement Agent: Pennsylvania Merchant Group Ltd
Placement Agent Warrant: The Warrant issued to the
Placement Agent as described in Section 6 of the Purchase
Agreements.
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Prospectus: The prospectus included in any
Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement
in reliance upon Securities Act Rule 430A), 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 such Registration Statement and all other
amendments and supplements to the prospectus, including post-
effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such prospectus.
Purchase Agreement: The U.S. Note and Warrant Purchase
Agreement and the Offshore Note and Warrant Purchase Agreement by
and among the Company and the Purchasers thereunder pursuant to
which the Note and Warrants were issued.
Purchasers: The purchasers listed on the signature
pages to the Purchase Agreements.
Registrable Securities: All Conversion Shares and
Warrant Shares which are Restricted Securities, and any Common
Stock issued or issuable in respect of the Conversion Shares and
the Warrant Shares, pursuant to any stock split, stock dividend,
recapitalization, or similar event. The Notes, Warrants and the
Placement Agent Warrant are not Registrable Securities hereunder.
Registration Expenses: All reasonable expenses
incurred by the Company in complying with Section 3 hereof,
including all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company, and blue sky
fees and expenses in all states in which there is an exemption
for issuances of stock traded on the Nasdaq National Market and
such other states listed in Schedule 1 attached hereto.
Registration Statement: Any registration statement of
the Company which covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be
incorporated reference in such registration statement.
Restricted Securities: The Conversion Shares, the
Placement Agent Warrant and the Warrant Shares upon original
issuance thereof, and at all times subsequent thereto, until, in
the case of any such security, it is no longer required to bear
the legend set forth on such security pursuant to the terms of
the security, the Purchase Agreement and applicable laws.
Rule 144: Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC (excluding Rule 144A).
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
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Shelf Registration: See Section 3(a) hereof.
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
Warrants: The warrants to purchase shares of Common
Stock issued to Purchasers pursuant to the Purchase Agreement.
Warrant Shares: The shares of Common Stock issued or
issuable to Purchasers pursuant to the exercise of the Warrants
and to the Placement Agent upon the exercise of the Placement
Agent Warrant.
2. Securities Subject to this Agreement
The securities entitled to the benefits of this
Agreement are the Registrable Securities.
3. Shelf Registration
(a) Shelf Registration. The Company shall, not later
than the later of the 60th day after the initial Closing Date or
the thirtieth (30th) day after the Final Closing Date of the
Offering (the "Filing Date"), prepare and file with the SEC a
Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 (or any appropriate similar rule that
may be adopted by the SEC) under the Securities Act covering the
Registrable Securities (the "Shelf Registration"). The Shelf
Registration shall be on a form permitting registration of such
Registrable Securities for resale by such holders in the manner
or manners reasonably designated by them (including. without
limitation, one or more underwritten offerings).
(b) Effectiveness. The Company shall use reasonable
efforts to cause the Shelf Registration to become effective under
the Securities Act as soon as practicable following the Filing
Date. Subject to the requirements of the Securities Act
including, without limitation, requirements relating to updating
prospectuses through post-effective amendments or otherwise, the
Company shall use reasonable efforts to keep the Shelf
Registration continuously effective until the Expiration Date (as
such term is defined in the Warrants); provided, that in the
event of a Suspension Period, as set forth in Section 5(d)
hereof, the Company shall extend the period of effectiveness of
such Shelf Registration by the number of days of each such
Suspension Period, and provided further that the Company shall
not be required to keep the Shelf Registration effective with
respect to any Registrable Securities that may be sold in
accordance with Rule 144 under the Securities Act.
(c) Priority on Shelf Registration. If any of the
Registrable Securities to be registered pursuant to Shelf
Registration are to be sold in a firm commitment underwritten
offering, and if the managing underwriters advise the Company and
the holders of such Registrable Securities that in their opinion
the amount of Registrable Securities proposed to be sold in such
offering exceeds the amount of Registrable Securities which can
be sold in such offering, there shall be included in such firm
commitment underwritten offering the amount of such Registrable
Securities requested to be included in such registration which in
the opinion of
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such underwriters can be sold, and such amount
shall be allocated pro rata among the holders of such Registrable
Securities requested to be included in such registration on the
basis of the number shares of Common Stock represented by
Registrable Securities requested to be included therein by such
holders.
4. Holdback Agreements.
(a) Restrictions on Public Sale by Holders of
Registrable Securities. Each holder of Registrable Securities
whose Registrable Securities are covered by a Registration
Statement filed pursuant to Section 3 hereof agrees, if requested
by the managing underwriters in an underwritten offering (to the
extent timely notified in writing by the Company or the managing
underwriters), not to effect any public sale or distribution of
securities of the Company of any class included in such
Registration Statement, including a sale pursuant to Rule 144
(except as part of such underwritten offering), during the l0-day
period prior to, and the 90-day period beginning on, the
effective date of any underwritten offering made pursuant to such
Registration Statement.
The foregoing provisions shall not apply to any holder
of Registrable Securities if such holder is prevented by
applicable statute or regulation from entering into any such
agreement; provided, however, that any such holder shall
undertake in its request to participate in any such underwritten
offering not to effect any public sale or distribution of the
class of Registrable Securities covered by such Registration
Statement (except as part of such underwritten offering) during
such period unless it has provided five (5) business days prior
written notice of such sale or distribution to the managing
underwriter or underwriters.
5. Expenses and Procedures.
(a) Expenses of Registration. All Registration
Expenses (exclusive of underwriting discounts and commissions)
shall be borne by the Company. Each holder shall bear all
underwriting discounts, selling commissions, sales concessions
and similar expenses applicable to the sale of securities
attributable to the Registrable Securities sold by such holder.
(b) Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company
pursuant to Section 3, the Company will keep the holders advised
as to the initiation of registration, qualification and
compliance and as to the completion thereof. At its expense, the
Company will furnish such number of Prospectuses and other
documents incident thereto as the holders from time to time may
reasonably request.
(c) Information. The Company may require each seller
of Registrable Securities as to which any registration is being
effected to furnish such information regarding the distribution
of such Registrable Securities as the Company may from time to
time reasonably request and the Company may exclude from such
registration the Registrable Securities of any seller who
unreasonably fails to furnish such information after receiving
such request.
(d) Delay or Suspension. Notwithstanding anything
herein to the contrary, the Company may, at any time, delay the
filing of the Shelf Registration for a period of up to 60 days
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following the Filing Date or suspend the effectiveness of any
Registration Statement for a period of up to 90 days in the
aggregate in any calendar year, as appropriate (a "Suspension
Period"), by giving notice to each holder of Registrable
Securities to be included in the Registration Statement, if the
Company shall have determined that the Company may be required to
disclose any material corporate development which disclosure may
have a material effect on the Company. Each holder of
Registrable Securities agrees by acquisition of such Registrable
Securities that, upon receipt of any notice from the Company of a
Suspension Period, such holder shall forthwith discontinue
disposition of such Registrable Securities covered by such
Registration Statement or Prospectus until such holder (i) is
advised in writing by the Company that the use of the applicable
Prospectus may be resumed, (ii) has received copies of a
supplemental or amended prospectus, if applicable, and (iii) has
received copies of any additional or supplemental filings which
are incorporated or deemed to be incorporated by reference in
such Prospectus. The Company shall prepare, file and furnish to
each holder of Registrable Securities immediately upon the
expiration of any Suspension Period, appropriate supplements or
amendments, if applicable, to the Prospectus and appropriate
documents, if applicable, incorporated by reference in the
Registration Statement.
6. Indemnification.
(a) Indemnification by Company. The Company shall,
without limitation as to time, indemnify and hold harmless, to
the full extent permitted by law, each holder of Registrable
Securities, its officers, directors, agents and employees, each
person who controls such holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act), and the
officers, directors, agents or employees of any such controlling
person, from and against all losses, claims, damages,
liabilities, costs (including, without limitation, all reasonable
attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus, or
arising out of or based upon any omission or alleged omission of
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 (in the case of any Prospectus) not
misleading, except insofar as the same are based solely upon
information furnished to the Company by such holder for use
therein; provided, however, that the Company shall not be liable
in any such case to the extent that any such Loss arises out of
or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any preliminary
prospectus or Prospectus if (i) such holder failed to send or
deliver a copy of the Prospectus or Prospectus supplement with or
prior to the delivery of written confirmation of the sale of
Registrable Securities and (ii) the Prospectus or Prospectus
supplement would have corrected such untrue statement or
omission. If requested, the Company shall also indemnify
underwriters, selling brokers, dealers managers and similar
securities industry professionals participating in the
distribution, their officers, directors, agents and employees and
each person who controls such persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) Indemnification by Holder of Registrable
Securities. In connection with any Registration Statement in
which a holder of Registrable Securities is participating, such
holder of Registrable Securities shall furnish to the Company in
writing such information as the Company
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may reasonably request
for use in connection with any Registration Statement or
Prospectus. Such holder hereby agrees to indemnify and hold
harmless, to the full extent permitted by law, the Company, and
its officers, directors, agents and employees, each person who
controls the Company (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents or employees of any such controlling
person, from and against all Losses arising out of or based upon
any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus, or
arising out of or based upon any omission of a material fact
required to be stated therein or necessary to make the statement
therein in light of the circumstances under which they were made
(in the case of any Prospectus) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such
holder to the Company for use in such Registration Statement,
Prospectus or preliminary prospectus. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any holder and any of
their respective directors, officers, agents, employees or
controlling persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and shall
survive the transfer of such securities by such holder. The
Company shall be entitled to receive indemnities from
accountants, underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the
distribution to the same extent as provided above with respect to
information so furnished by such persons specifically for
inclusion in any Registration Statement, Prospectus or
preliminary prospectus, provided, that the failure of the Company
to obtain any such indemnity shall not relieve the Company of any
of its obligations hereunder.
(c) Conduct of Indemnification Proceedings. If any
action or proceeding (including any governmental investigation or
inquiry) shall be brought or any claim shall be asserted against
any person entitled to indemnity hereunder (an "indemnified
party"), such indemnified party shall promptly notify the party
from which such indemnity is sought (the "indemnifying party") in
writing, and the indemnifying party shall assume the defense
thereof, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees
and expenses incurred in connection with the defense thereof.
All such fees and expenses (including any fees and expenses
incurred in connection with investigating or preparing to defend
such action or proceeding) shall be paid to the indemnified
party, as incurred, within 20 days of written notice thereof to
the indemnifying party; provided, however, that if, in accordance
with this Section 8, the indemnifying party is not liable to the
indemnified party, such fees and expenses shall be returned
promptly to the indemnifying party. Any such indemnified party
shall have the right to employ separate counsel in any such
action, claim or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be the
expense of such indemnified party unless (a) the indemnifying
party has agreed to pay such fees and expenses, (b) the
indemnifying party shall have failed promptly to assume the
defense of such action, claim or proceeding and to employ counsel
reasonably satisfactory to the indemnified party in any such
action, claim or proceeding, or (c) the named parties to any such
action, claim or proceeding (including any impleaded parties)
include both such indemnified party and the indemnifying party,
and such indemnified party shall have been advised by counsel
that there may be one or more legal defenses available to it
which are different from or additional to those available to the
indemnifying party (in which case, if such indemnified party
notifies the
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indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the
defense of such action, claim or proceeding on behalf of such
indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such
action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified
parties, unless in the opinion of counsel for such indemnified
party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to
such action, claim or proceeding, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party will
consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the
release of such indemnified party from all liability in respect
to such claim or litigation without the written consent (which
consent will not be unreasonably withheld) of the indemnified
party. No indemnified party shall consent to entry of any
judgment or enter into any settlement without the written consent
(which consent will not be unreasonably withheld) of the
indemnifying party from which indemnity or contribution is
sought.
(d) Contribution. If the indemnification provided for
in this Section 6 is unavailable to an indemnified party under
Section 6(a) or 6(b) hereof (other than by reason of exceptions
provided in those Sections) in respect of any Losses, then each
applicable indemnifying party in lieu of indemnifying such
indemnified party shall contribute to 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 which resulted in such Losses as
well as any other relevant equitable considerations. The relative
fault of such indemnifying party and the indemnified party shall
be determined by reference to, among other things, whether any
action in question, including any untrue statement 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,
subject to the limitations set forth in Section 6(c), any legal
or other fees or expenses reasonably incurred by such party in
connection with any action, suit, claim, investigation or
proceeding.
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 or by any other method of
allocation which does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. 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.
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7. Rule 144
The Company shall file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder, and will take such
further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of
the exemption provided by Rule 144 or Rule 144A. Upon the request
of any holder of Registrable Securities, the Company shall
deliver to such holder a written statement as to whether the
Company has complied with such information and requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities
under any section of the Exchange Act.
8. Underwritten Registrations.
If any of the Registrable Securities covered by any
Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by
the Company, provided that such investment bank or manager shall
be reasonably satisfactory to a majority of the holders of
Registrable Securities to be included in the underwritten
offering.
No person may participate in any underwritten
registration hereunder unless such person (i) agrees to sell such
person's Registrable Securities on the basis provided in any
underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements, and (ii) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the
terms of such underwriting arrangements.
9. Miscellaneous
(a) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the
Company obtains the written consent of the Placement Agent and
the holders of at least 66 2/3% of the then outstanding
Registrable Securities affected by such amendment, modification
or supplement. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a
matter which relates exclusively to the rights of holders of
Registrable Securities whose securities are being sold pursuant
to a Registration Statement and which does not directly or
indirectly affect the rights of holders of Registrable Securities
whose securities are not being sold pursuant to such Registration
Statement may be given by holders of a majority of the
Registrable Securities being sold by such holders.
(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next day air courier,
telex, or telecopy: (i) If to a holder of Registrable
Securities, at the most current address given by such holder to
the Company in accordance with the provisions of this
Section 9(b),
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which address initially is, with respect to each
purchaser, the address set forth on the signature page attached
hereto; and (ii) if to the Company initially at the address set
forth on the first page of the Purchase Agreement, attention:
Secretary and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 9(b),
with a copy to Thelen, Marrin, Xxxxxxx & Xxxxxxx LLP, San Jose,
CA.
All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally
delivered; two business days after being deposited in the mail,
postage prepaid, if mailed; one business day after being sent by
next day air courier; when answered back, if telexed; and when
receipt acknowledged, if telecopied.
(c) Transfer of Registration Rights. The rights
granted to the holders pursuant to this Agreement to cause the
Company to register securities may be assigned in connection with
the transfer, assignment or sale of any Registrable Security to
the extent such securities and rights may be transferred,
assigned or sold pursuant to applicable laws and to the
agreements to which the particular holder is a party; provided,
however, that no transfer or assignment of such rights shall be
effective or valid unless the purchaser, transferee or assignee,
after giving effect to the transfer, assignment or sale of the
Registrable Securities, owns or has the right to acquire at least
5,000 shares of Common Stock.
(d) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth
of Pennsylvania without regard to principles of conflict of laws.
(g) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, 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 which may be hereafter declared invalid,
void or unenforceable.
(h) Entire Agreement. This Agreement is intended by
the parties to be a final expression of their agreement and a
complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties nor undertakings, other than those set forth or
referred to herein
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with respect to the registration rights
granted by the Company with respect to the securities sold
pursuant to the Purchase Agreement. This Agreement supersedes all
prior agreements and understandings between the parties with
respect to such subject matter.
(i) Attorneys' Fees. In any action proceeding brought
to enforce any provision of this Agreement, or where any
provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and any other available
remedy.
(j) Expiration. This Agreement shall expire on the
earlier of (i) the date on which all Registrable Securities have
been sold by the Purchasers and (ii) the fifth anniversary of the
Closing Date.
IN WITNESS WHEREOF, the parties have executed this
agreement as of the date first written above.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
By:______________________________________
Xxxxx Xxxxx
President and Chief Executive Officer
PENNSYLVANIA MERCHANT GROUP LTD
By:______________________________________
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