REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
the 22nd day of March, 2002, by and among MSU Devices Inc., a Delaware
corporation (the "Company") and the investors listed on Schedule A, each of
which is hereinafter referred to as an "Investor."
RECITALS:
WHEREAS, the Company and the Investors are parties to the Note
Purchase Agreement of even date herewith (the "Note Purchase Agreement")
pursuant to which the Company has agreed to sell, and the Investors have agreed
to purchase, convertible notes of the Company in an aggregate principal amount
of up to $3,000,000 (the "Notes"), which Notes are convertible into the common
stock, par value $.01 per share, of the Company (the "Common Stock"); and
WHEREAS, the Company's and the Investors' respective obligations under
the Note Purchase Agreement are conditioned upon the execution and delivery of
this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(b) The terms "Form S-2" or "Form S-3" mean such registration
form, under the Securities Act as in effect on the date hereof or any
registration form(s) under the Securities Act subsequently adopted by the SEC
which permits inclusion or incorporation of substantial information by reference
to other documents filed by the Company with the SEC.
(c) The term "Holder" shall mean any Investor who holds
Registrable Securities and any holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been transferred in
compliance with Section 1.13 hereof.
(d) The term "Initiating Holders" shall mean any Holder, or
group of Holders acting together, who owns not less than fifty percent (50%) of
the outstanding Registrable Securities. For purposes of such calculation,
holders of Notes shall be considered to hold the shares of Common Stock then
issuable upon conversion of such Notes.
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(e) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Notes and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of the shares referenced
in (i) above, excluding in all cases, however, any Registrable Securities sold
by a Holder in a transaction in which his rights under this Section 1 are not
properly assigned in accordance with Section 1.13.
(g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
(i) The term "Securities Act" means the Securities Act of 1933,
as amended.
1.2 Request for Demand Registration.
(a) If the Company shall receive from the Initiating Holders at
any time after July 31, 2002, a written request that the Company effect the
registration of Registrable Securities with an anticipated aggregate offering
price of at least $1,500,000, then the Company shall:
(i) within 20 days of the receipt thereof, give written
notice of such request to all Holders; and
(ii) use its diligent best efforts to, as soon as
practicable, effect the registration (including, without limitation, filing
post-effective amendments, appropriate qualifications under applicable blue sky
or other state securities laws and appropriate compliance with the Securities
Act) of, subject to the limitations of subsection 1.2(b), all Registrable
Securities as are specified in such request by the Initiating Holders, together
with all Registrable Securities requested by any other Holder or Holders to be
included in such registration by written notice received by the Company within
twenty (20) days of the Company's giving the notice required pursuant to clause
(i) above in accordance with Section 3.5.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
subsection 1.2(a) and the Company shall include such information in the written
notice referred to in subsection 1.2(a). The underwriter will be selected by a
majority in interest of the Initiating Holders and shall be reasonably
acceptable to the Company. In such event, the right of any Holder to include
such Holder's Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by the Company, the underwriter, a majority in interest of the Initiating
Holders and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in subsection 1.4(e)) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Initiating Holders and the Company in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof that have requested to
participate in such registration, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder.
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(c) Notwithstanding the foregoing, if the Company shall furnish
to the Initiating Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer taking action with respect to such filing for a period of not
more than 180 days after receipt of the request of the Initiating Holders;
provided, however, that the Company may not utilize this right more than once in
any twelve-month period.
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected two registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;
(ii) During the period starting with the date 60 days prior
to the Company's good faith estimate of the date of filing of, and ending on a
date 180 days after the effective date of, a registration subject to Section 1.3
hereof; provided, that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form S-2 or Form
S-3 pursuant to a request made pursuant to Section 1.12 below.
(e) Notwithstanding the foregoing provisions of Section 1.2, if
a majority in interest of the Initiating Holders elect not to sell all or any
portion of the Registrable Securities pursuant to a demand registration
statement filed pursuant to Section 1.2 (and not requested to be withdrawn by
the Holders pursuant to Section 1.6) which has become effective, such demand
registration right shall nonetheless be deemed satisfied.
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1.3 Company Registration. If at any time the Company proposes to
register, for its own account or the account of any other security holder of the
Company (other than pursuant to Section 1.2), any of its stock or other
securities in connection with the public offering of such securities solely for
cash and the registration form to be used may be used for the registration of
Registrable Securities (except for a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to an SEC Rule 145 transaction
on Form S-4 or similar forms which may be promulgated in the future), then the
Company shall, at such time, promptly give each Holder written notice of such
registration (a "Company Registration"). Upon the written request of each Holder
given within 20 days after mailing of such notice by the Company in accordance
with Section 3.5, the Company shall, subject to the provisions of Section 1.8
and provided that (unless otherwise agreed by the Company) Holders shall have
together requested that Registrable Securities with an anticipated aggregate
offering price of at least $500,000 be included in such Company Registration,
use its diligent best efforts to include in such Company Registration (and any
related qualification under blue sky laws or other compliance) all of the
Registrable Securities that each such Holder has requested to be registered. The
Company may in its sole discretion withdraw any Company Registration filed
pursuant to this Section 1.3.
1.4 Obligations of the Company. In the case of each registration
effected by the Company pursuant to this Section 1, the Company will keep each
Holder advised in writing as to the initiation of each registration and the
completion thereof. In effecting each such registration, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective and to keep such registration
statement effective until the sooner of up to 120 days or the completion of the
distribution contemplated in the Registration Statement; provided, however, that
(i) such 120-day period shall be extended for a period of time equal to the
period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-2 or Form S-3 which are intended to be offered
on a continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415 under the Securities
Act, or any successor rule under the Securities Act, permits an offering on a
continuous or delayed basis, and provided further that applicable rules under
the Securities Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post- effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (II) reflects
facts or events representing a material or fundamental change in the information
set forth in the registration statement, the incorporation by reference of
information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for a period of 120 days
following the date such registration statement became effective (subject to the
extension of this period as provided in subsection 1.4(a)). If, after a
registration statement becomes effective, the Company advises the Holders that
the registration statement is required to be amended under applicable federal
securities laws, the Holders shall suspend any further sales of their
Registrable Shares, until the Company advises them that the registration
statements has been amended, but not more than 30 days. The 120- day time period
referred to in this subsection during which the registration statement must be
kept current after its effective date shall be extended for an additional number
of business days equal to the number of business days during which the right to
sell the Registrable Shares was suspended pursuant to the preceding sentence.
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(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify as a broker-dealer in any states or jurisdictions
or to do business or to file a general consent to service of process in any such
states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such 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 not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities not later than the effective date of such registration.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company any and all information reasonably requested by or
on behalf of the Company, the underwriter or underwriters, if any, and the SEC
or any other governmental authority including, but not limited to: (a) such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities, as shall be required to
effect the registration of such Holder's Registrable Securities; and (b) the
identity of and compensation to be paid to any proposed underwriter or broker-
dealer to be employed in connection therewith.
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1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions and stock transfer taxes incurred in
connection with two demand registrations, filings or qualifications pursuant to
Section 1.2, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
for the selling Holders shall be borne by the Company; provided, however, that
the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 1.2; provided further, however, that if at the time of such withdrawal,
the Holders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the Holders at the time
of their request and have withdrawn the request following disclosure of such
material adverse change, then the Holders shall not be required to pay any of
such expenses and shall not forfeit their right to a demand registration
pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to any Company
Registrations for each Holder, including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the reasonable fees and disbursements of one counsel
for the selling Holders, but excluding underwriting discounts and commissions
and stock transfer taxes relating to Registrable Securities.
1.8 Underwriting Requirements. In connection with any Company
Registration involving an underwriting of shares of the Company's capital stock,
the Company shall not be required under Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters), subject to
reductions in the number of shares to be registered as set forth below. If the
total amount of securities, including Registrable Securities requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling stockholders
according to the total amount of securities entitled to be included therein
owned by each selling stockholder or in such other proportions as shall mutually
be agreed to by such selling stockholders) but in no event shall (i) the amount
of Registrable Securities of any Holders included in the offering be reduced in
order to include shares held by stockholders with no registration rights or (ii)
the amount of Registrable Shares of the selling Holders included in the offering
be reduced below 20% of the total amount of securities included in such
offering..
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1.9 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act, the Exchange Act or any state
securities law, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (each, a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 1.10(a) shall not apply to and the Company shall not be liable for
(i) amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), (ii) any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person or (iii) any such loss,
claim, damage, liability or action to the extent it arises out of or is based on
any statement or omission, if, prior to the sale of Registrable Securities
giving rise to such loss, claim, damage, liability or action, the Company shall
have corrected such statement or omission in a subsequent preliminary or final
prospectus or amendment or supplement thereto filed with the SEC and shall have
otherwise complied with Section 1.4 hereof, and the Holder failed to deliver
such document to the purchaser of its securities.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, the Exchange Act
or any state securities law, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 1.10(b) exceed the gross
proceeds from the offering received by such Holder.
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(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, except to the extent that such
indemnifying party has been materially prejudiced thereby in its ability to
defend such action solely as a result of the failure to give such notice;
provided, however, that the omission so to deliver written notice to the
indemnifying party will not relieve the indemnifying party of any liability that
it may have to any indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10 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
herein, 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
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 a 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.
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(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
(g) No person guilty of fraudulent misrepresentations, within
the meaning of Section 11(f) of the Securities Act, shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
1.11 Reporting Requirements. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration or pursuant to
a registration on Form S-2 or Form S- 3, the Company agrees that, until such
time as the Holders no longer hold any Registrable Securities, it will, at its
expense, use its best efforts to:
(a) file on time such information, documents and reports as the
SEC may require or prescribe for companies who are subject to Section 13 or
Section 15(d) of the Exchange Act and otherwise make publicly available (as
understood and defined in Rule 144 under the Securities Act) such financial and
other information as may be necessary or advisable in order to enable the
Holders to be permitted to sell Registrable Securities pursuant to the
provisions of Rule 144 (or any successor rule or regulation thereto or any
statute hereafter adopted to replace or establish the exemption that is now
covered by Rule 144);
(b) if not then subject to Section 13 or Section 15(d) of the
Exchange Act, upon the request of any Holder, make publicly available (as
understood and defined in Rule 144) the information specified in subparagraph
(c)(2) of Rule 144, and will take such further action as any Holder 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 limitations of the exemptions provided by Rule 144 (or any
successor rule or regulation thereto or any statute hereafter adopted to replace
or establish the exemption that is now covered by Rule 144); and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of this Section
1.11, (ii) a written statement that it qualifies as a registrant whose
securities may be resold pursuant to Form S-2 or Form S-3 (at any time at which
it so qualifies), (iii) 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
(iii) such other information (but not an opinion of counsel) as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of Registrable Securities without registration.
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1.12 S-2 and S-3 Registration. In case the Company shall receive a
written request from the Holder or Holders of the Registrable Securities that
the Company effect a registration on Form S-2 or Form S-3 with respect to all or
a part of the Registrable Securities owned by such Holder or Holders, the
Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) use its diligent best efforts to effect, as soon as
practicable, such registration (including, without limitation, filing
post-effective amendments, appropriate qualifications under applicable blue sky
or other state securities laws and appropriate compliance with the Securities
Act) as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request of such Holder or Holders given
within 20 days after mailing of notice pursuant to clause (a) above by the
Company in accordance with Section 3.5; provided, however, that the Company
shall not be obligated to effect any such registration pursuant to this Section
1.12: (1) if Form S-2 or S- 3 are not available for such offering by the
Holders; (2) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and other such securities, if any, at an aggregate price
to the public of less than $1,000,000; (3) if the Company has previously
effected two registrations on a Form S- 2 or Form S-3 on behalf of the Holders;
(4) if the Company shall furnish to the Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such Form S-2 or S-3 registration to be effected at such
time, in which event the Company shall have the right to defer the filing of the
Form S-2 or Form S-3 registration statement for a period of not more than 120
days after receipt of the request of the Holder or Holders under this Section
1.12; provided, however, that the Company shall not utilize this right more than
once in any twelve month period; or (5) during the 180 day period after the
effective date of, a registration of the Company's securities under the
Securities Act; and
(c) All expenses incurred in connection with registrations
provided pursuant to this Section 1.12, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of a single counsel for the selling Holder or
Holders and counsel for the Company, but excluding any underwriters' discounts
or commissions associated with Registrable Securities, shall be borne by the
Company. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
1.13 Assignment of Registration Rights.
(a) Subject to subsection 1.13(b), the rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 100,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: (a) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement; and (c) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.
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(b) For purposes hereof, the transfer of a Holder's rights under
this Agreement (i) to a constituent partner or member of the transferor or (ii)
to an entity controlling, controlled by or under common control with the
transferor will be without restriction as to minimum stockholdings.
(c) Other than as set forth above, the parties hereto hereby
agree that the registration rights hereunder shall not be transferable or
assigned and any contemplated transfer or assignment in contravention of this
Agreement shall be deemed null and void and of no effect whatsoever.
1.14 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during the period of up to 180 days following the date of the first sale to the
public pursuant to an underwritten registration by the Company, it shall not, to
the extent requested by the Company and such underwriter, sell, transfer or
dispose of (other than to donees who agree to be similarly bound) any securities
of the Company held by it at any time during such period, except Common Stock
included in such registration; provided, however, that all officers and
directors of the Company and holders of 5% of the outstanding securities of the
Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the shares or other securities
subject to the foregoing restriction until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.14 shall not apply to a registration relating solely to employee
benefit plans on Form S-l or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to an SEC Rule 145 transaction
on Form S-4 or similar forms which may be promulgated in the future.
1.15 Termination of Registration Rights. The right of any Holder to
request registration or inclusion in any registration pursuant to this Section 1
shall terminate if all shares of Registrable Securities held by such Holder may
immediately be sold under Rule 144 during any 90-day period.
2. Certain Representations, Warranties and Covenants of the
Company.
2.1 Delivery of Reports. The Company shall provide to each Holder,
within 90 days of the end of each fiscal quarter of the Company, the Company's
quarterly report on Form 10-Q for such fiscal quarter, and, within 120 days
after the end of each of the Company's fiscal years, the Company's annual report
on Form 10-K for such fiscal year.
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2.2 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities
(including Registrable Securities that are issuable upon the conversion of the
Notes), enter into any agreement with any holder or prospective holder of any
securities of the Company which would allow such holder or prospective holder
(a) to include such securities in any registration filed under Section 1.2 or
Section 1.3 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of such holder's securities will not reduce the
amount of the Registrable Securities of the Holders included in such
registration or (b) to make a demand registration which could result in such
registration statement being filed prior to the date set forth in subsection
1.2(a) or within 180 days of the effective date of any registration effected
pursuant to Section 1.2.
2.3 Registration Rights of Others. The Company represents and warrants
that, as of the date hereof, no person has any enforceable right, by contract or
otherwise, to require the Company to register any securities of the Company
(including any securities issuable upon the conversion of any other security of
the Company), except as expressed in the Investor Rights Agreements and Special
Warrants executed by the Company in connection with the offering of special
warrants consummated in January 2002 pursuant to the agency agreement between
the Company and XxXxxxxxx Xxxxxx Inc. dated December 21, 2001.
3. Miscellaneous.
3.1 Successors and Assigns; No Third Party Beneficiaries
. Except as otherwise provided herein, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including transferees of any shares of
Registrable Securities). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Texas, without giving effect to conflicts of laws
principles.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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3.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the address for such party set forth beneath such party's name on Schedule A
(or at such other address for a party as shall be specified by like notice) and,
in the case of the Company:
MSU Devices Inc.
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Notice given by facsimile shall be confirmed by appropriate answer
back and shall be effective upon actual receipt if received during the
recipient's normal business hours, or at the beginning of the recipient's next
business day after receipt if not received during the recipient's normal
business hours. All notices by facsimile shall be confirmed promptly after
transmission in writing by certified mail or personal delivery. Any party may
change any address to which notice is to be given to it by giving notice as
provided above of such change of address.
3.6 Amendments and Waivers. Other than with respect to Schedule A
hereto (which may be amended by the Company pursuant to Section 2(b) of the Note
Purchase Agreement to reflect additional Investors who have purchased Notes and
who have agreed to become a party hereto by executing and delivering a
counterpart signature page hereto in the form attached hereto as Schedule B),
any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of at least a majority of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this Section
shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities and the
Company.
3.7 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.8 Entire Agreement. This Agreement (including the Schedules hereto)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
3.9 Termination. This Agreement shall terminate upon the conversion of
all of the issued and outstanding Notes in connection with the Next Financing
described in Section 5(b) of the Notes.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
COMPANY:
MSU DEVICES INC.
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx,
Vice President and
Chief Financial Officer
INVESTORS:
REDDLINE VENTURES INC.
By: /s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx, President
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