REGISTRATION RIGHTS AGREEMENT
Registration
Rights Agreement (the “Agreement”), dated as of November 5, 2007, by and
between Signet International Holdings, Inc., a corporation organized under
the
laws of State of Delaware, with its principal executive office at 000 Xxxxx
Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 (the “Company”), and
Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted company, with
its principal office at 00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 0, Xxxxxx, XX 00000 (the
“Holder”).
Whereas, in
connection with the Investment Agreement by and between the Company and the
Investor of this date (the “Investment Agreement”), the Company has
agreed to issue and sell to the Investor an indeterminate number of shares
of
the Company’s Common Stock, $.001 par value per share (the “Common Stock”),
to be purchased pursuant to the terms and subject to the conditions
set
forth in the Investment Agreement; and
Whereas,
to induce the Investor to execute and deliver the Investment Agreement,
the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “1933 Act”), and applicable
state securities laws, with respect to the shares of Common Stock issuable
pursuant to the Investment Agreement.
Now
therefore, in consideration of the foregoing promises and the mutual covenants
contained hereinafter and other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows:
Section
1. DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following meanings:
“Execution
Date” means the date of this Agreement set forth above.
“Investor”
means Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted
company.
“Person”
means a corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
“Potential
Material Event” means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in
the
Registration Statement, which shall be evidenced by determinations in good
faith
by the Board of Directors of the Company that disclosure of such information
in
the Registration Statement would be detrimental to the business and affairs
of
the Company, or (ii)
any
material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in the Registration Statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information.
“Principal
Market” shall mean The American Stock Exchange, National Association of
Securities Dealer’s, Inc., Over-the-Counter electronic bulletin board, the
Nasdaq National Market or The Nasdaq SmallCap Market whichever is the principal
market on which the Common Stock of the Company is listed.
“Register,”
“Registered,” and “Registration” refer to the Registration
effected by preparing and filing one (1) or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or
any
successor rule providing for offering securities on a continuous basis (“Rule
415”), and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the
“SEC”).
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“Registrable
Securities” means (i) the shares of Common Stock issued or
issuable pursuant to the Investment Agreement, and (ii) any
shares of capital stock issued or issuable with respect to such shares of Common
Stock, if any, as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, which have not been (x)
included in the Registration Statement that has been declared
effective
by the SEC, or (y) sold under circumstances meeting all of the
applicable conditions of Rule 144 (or any similar provision then in force)
under
the 1933 Act.
“Registration
Statement” means the registration statement of the Company filed under the
1933 Act covering the Registrable Securities.
All
capitalized terms used in this Agreement and not otherwise defined herein shall
have the same meaning ascribed to them as in the Investment
Agreement.
Section
2. REGISTRATION.
(a) The
Company shall, within fifteen (15) days of the date of this Agreement, file
with
the SEC the Registration Statement or Registration Statements (as is necessary)
on Form SB-2 (or, if such form is unavailable for such a registration, on such
other form as is available for such registration), covering the resale of all
of
the Registrable Securities, which Registration Statement(s) shall state that,
in
accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon stock splits, stock dividends or similar
transactions. The Company shall initially register for resale 479,700 shares
of
Common Stock which would be issuable on the date preceding the filing of the
Registration Statement based on the closing bid price of the Company’s Common
Stock on such date and the amount reasonably calculated that represents Common
Stock issuable to other parties as set forth in the Investment Agreement except
to the extent that the SEC requires the share amount to be reduced as a
condition of effectiveness.
(b) The
Company shall use all commercially reasonable efforts to have the Registration
Statement(s) declared effective by the SEC within ninety (90) calendar days
after the Execution Date.
(c) The
Company
agrees not to include any other securities in the Registration Statement
covering the Registrable Securities without Investor’s prior written consent
which Investor may withhold in its sole discretion. Furthermore, the Company
agrees that it will not file any other Registration Statement for other
securities, until thirty calendar days after the Registration Statement for
the
Registrable Securities is declared effective by the SEC.
Section
3. RELATED OBLIGATIONS.
At
such
time as the Company is obligated to prepare and file the Registration Statement
with the SEC pursuant to Section 2(a), the Company will effect the registration
of the Registrable Securities in accordance with the intended method of
disposition thereof and, with respect thereto, the Company shall have the
following obligations:
(a) The
Company
shall use all commercially reasonable efforts to cause such Registration
Statement relating to the Registrable Securities to become effective within
ninety (90) days after the Execution Date and shall keep such Registration
Statement effective until the earlier to occur of the date on which (A)
the Investor shall have sold all the Registrable Securities;
or
(B) the Investor has no right to acquire any additional shares
of Common Stock under the Investment Agreement (the
“Registration Period”). The Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit
to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made,
not
misleading. The Company shall use all commercially reasonable efforts to respond
to all SEC comments within seven (7) business days from receipt of such comments
by the Company. The Company shall use all commercially reasonable efforts to
cause the Registration Statement relating to the Registrable Securities to
become effective no later than five (5) business
days after notice from the SEC that the Registration Statement may be declared
effective.
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The
Investor agrees to provide all information which it is required by law to
provide to the Company, including the intended method of disposition of the
Registrable Securities, and the Company’s obligations set forth above shall be
conditioned on the receipt of such information.
(b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be
necessary to keep such Registration Statement effective during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act
with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the Investor thereof as set forth in such Registration
Statement. In the event the number of shares of Common Stock covered by the
Registration Statement filed pursuant to this Agreement is at any time
insufficient to cover all of the Registrable Securities, the Company shall
amend
such Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30) calendar days after the necessity therefor arises (based
on
the then Purchase Price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely), assuming the Company has sufficient
authorized shares at that time, and if it does not, within thirty (30) calendar
days after such shares are authorized. The Company shall use commercially
reasonable efforts to cause such amendment and/or new Registration Statement
to
become effective as soon as practicable following the filing
thereof.
(c) The
Company shall make available to the Investor whose Registrable Securities are
included in any Registration Statement and its legal counsel without charge
(i) promptly after the same is prepared and filed with the SEC
at least one (1) copy of such Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, the prospectus included
in
such Registration Statement (including each preliminary prospectus) and, with
regards to such Registration Statement(s), any correspondence by or on behalf
of
the Company to the SEC or the staff of the SEC and any correspondence from
the
SEC or the staff of the SEC to the Company or its representatives; (ii)
upon the effectiveness of any Registration Statement, the
Company shall
make available copies of the prospectus, via XXXXX, included in such
Registration Statement and all amendments and supplements thereto; and
(iii) such other documents, including copies of any preliminary
or final prospectus, as the Investor may reasonably request from time to time
in
order to facilitate the disposition of the Registrable Securities.
(d) The
Company shall use commercially reasonable efforts to (i)
register and qualify the Registrable Securities covered by
the
Registration Statement under such other securities or “blue sky” laws of such
states in the United States as the Investor reasonably requests; (ii)
prepare and file in those jurisdictions, such amendments
(including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period; (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at
all
times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), or
(y) subject itself to general taxation in any such
jurisdiction. The Company shall promptly notify the Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.
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(e)
As
promptly as practicable after becoming aware of such event, the Company shall
notify Investor in writing of the happening of any event as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (“Registration Default”) and use all diligent efforts to
promptly prepare a supplement or amendment to such Registration Statement and
take any other necessary steps to cure the Registration Default (which, if
such
Registration Statement is on Form S-3, may consist of a document to be filed
by
the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934 Act (as defined below) and to be incorporated by reference in the
prospectus) to correct such untrue statement or omission, and make available
copies of such supplement or amendment to the Investor. The Company shall also
promptly notify the Investor (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when
the
Registration Statement or any post-effective amendment has become effective
(the
Company will prepare notification of such effectiveness which shall be delivered
to the Investor on the same day of such effectiveness and by overnight mail),
additionally, the Company will promptly provide to the Investor, a copy of
the
effectiveness order prepared by the SEC once it is received by the Company;
(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or related prospectus or related information,
(iii) of the Company’s reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate,
(iv) in the event the Registration Statement is no longer
effective, or (v) if the Registration Statement is stale as a
result of the Company’s failure to timely file its financials or otherwise. The
Company acknowledges that its failure to cure the Registration Default within
ten (10) business days will cause the Investor to suffer damages in an amount
that will be difficult to ascertain. Accordingly, the parties agree that it
is
appropriate to include a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties’ good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. It is the intention of the parties
that interest payable under any of the terms of this Agreement shall not exceed
the maximum amount permitted under any applicable law. If a law, which applies
to this Agreement, which sets the maximum interest amount, is finally
interpreted so that the interest in connection with this Agreement exceeds
the
permitted limits, then: (1) any such interest shall be reduced
by the amount necessary to reduce the interest to the permitted limit; and
(2) any sums already collected (if any) from the Company which
exceed the permitted limits will be refunded to the Company. The Investor may
choose to make this refund by reducing the amount that the Company owes under
this Agreement or by making a direct payment to the Company. If a refund reduces
the amount that the Company owes the Investor, the reduction will be treated
as
a partial payment.
(f) The
Company shall use all commercially reasonable efforts to prevent the issuance
of
any stop order or other suspension of effectiveness of the Registration
Statement, or the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension
is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and to notify the Investor holding Registrable Securities being
sold of the issuance of such order and the resolution thereof or its receipt
of
actual notice of the initiation or threat of any proceeding concerning the
effectiveness of the registration statement.
(g) The
Company shall permit the Investor and one (1) legal counsel, designated by
the
Investor, to review and comment upon the Registration Statement and all
amendments and supplements thereto at least one (1) calendar day prior to their
filing with the SEC. However, any postponement of a filing of a Registration
Statement or any postponement of a request for acceleration or any postponement
of the effective date or effectiveness of a Registration Statement by written
request of the Investor (collectively, the "Investor's Delay") shall not act to
trigger any penalty of any kind, or any cash amount due or any in-kind amount
due the Investor from the Company under any and all agreements of any nature
or
kind between the Company and the Investor. The event(s) of an Investor's Delay
shall act to suspend all obligations of any kind or nature of the Company under
any and all agreements of any nature or kind between the Company and the
Investor.
(h) At
the request
of the Investor, the Company's counsel shall furnish to the Investor an opinion
letter confirming the effectiveness of the registration statement. Such opinion
letter shall be issued as of the date of the effectiveness of the registration
statement and be in a form suitable to the Investor.
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(i) The
Company shall hold in confidence and not make any disclosure of information
concerning the Investor unless (i) disclosure of such
information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or governmental
body
of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation
of
this Agreement or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning the Investor is sought
in or by a court or governmental body of competent jurisdiction or through
other
means, give prompt written notice to the Investor and allow the Investor, at
the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order covering such information.
(j) The
Company shall use all commercially reasonable efforts to maintain designation
and quotation of all the Registrable Securities covered by any Registration
Statement on the Principal Market. If, despite the Company’s commercially
reasonable efforts, the Company is unsuccessful in satisfying the preceding
sentence, it shall use commercially reasonable efforts to cause all the
Registrable Securities covered by any Registration Statement to be listed on
each other national securities exchange and automated quotation system, if
any,
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or system. The Company shall pay all fees
and
expenses in connection with satisfying its obligation under this Section
3(j).
(k) The
Company shall cooperate with the Investor to facilitate the prompt preparation
and delivery of certificates representing the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates
to
be in such denominations or amounts, as the case may be, as the Investor may
reasonably request (and after any sales of such Registrable Securities by the
Investor, such certificates not bearing any restrictive legend).
(l) The
Company shall provide a transfer agent for all the Registrable Securities not
later than the effective date of the first Registration Statement filed pursuant
hereto.
(m) If
requested by the Investor, the Company shall (i) as soon as
reasonably practical incorporate in a prospectus supplement or post-effective
amendment such information as the Investor reasonably determines should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
offering of the Registrable Securities to be sold in such offering; (ii)
make all required filings of such prospectus supplement or
post-effective amendment as soon as reasonably possible after being notified
of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by the Investor.
(n) The
Company shall use all commercially reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be
necessary to facilitate the disposition of such Registrable
Securities.
(o) The
Company shall otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.
(p) Within
one (1) business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver to the
transfer agent for such Registrable Securities, with copies to the Investor,
confirmation that such Registration Statement has been declared effective by
the
SEC.
(q) The
Company
shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of Registrable Securities pursuant to the
Registration Statement.
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Section
4. OBLIGATIONS OF
THE INVESTOR.
(a) At
least
five (5) calendar days prior to the first anticipated filing date of the
Registration Statement the Company shall notify the Investor in writing of
the
information the Company requires from the Investor for the Registration
Statement. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities and the Investor agrees to furnish to the Company that
information regarding itself, the Registrable Securities and the intended method
of disposition of the Registrable Securities as shall reasonably be required
to
effect the registration of such Registrable Securities and the Investor shall
execute such documents in connection with such registration as the Company
may
reasonably request. The Investor covenants and agrees that, in connection with
any sale of Registrable Securities by it pursuant to the Registration Statement,
it shall comply with the “Plan of Distribution” section of the then current
prospectus relating to such Registration Statement.
(b) The
Investor, by its acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with
the
preparation and filing of any Registration Statement hereunder, unless the
Investor has notified the Company in writing of an election to exclude all
of
the Investor’s Registrable Securities from such Registration
Statement.
(c)
The Investor agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3(f)
or
the first sentence of 3(e), the Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until the Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f) or the
first sentence of 3(e).
Section
5. EXPENSES OF
REGISTRATION.
All
expenses, other than underwriting discounts and commissions and other than
as
set forth in the Investment Agreement, incurred in connection with registrations
including comments, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printing and accounting fees, and fees and disbursements of counsel for
the Company or for the Investor shall be paid by the Company.
Section
6. INDEMNIFICATION.
In
the
event any Registrable Securities are included in the Registration Statement
under this Agreement:
(a) To
the fullest
extent permitted by law, the Company, under this Agreement, will, and hereby
does, indemnify, hold harmless and defend the Investor who holds Registrable
Securities, the directors, officers, partners, employees, counsel, agents,
representatives of, and each Person, if any, who controls, any Investor within
the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended
(the “1934 Act”) (each, an “Indemnified Person”), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, attorneys’ fees, amounts paid in settlement or expenses, joint or several
(collectively, “Claims”), incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto
(“Indemnified Damages”), to which any of them may become subject insofar
as such Claims (or actions or proceedings, whether commenced or threatened,
in
respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in the Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which the Investor has requested in
writing that the Company register or qualify the Shares (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required
to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which the statements
therein were made, not misleading,
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(ii)
any untrue statement or alleged untrue statement of a material fact
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
any
other law, including, without limitation, any state securities law, or any
rule
or regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). Subject to
the restrictions set forth in Section 6(c) the Company shall reimburse the
Investor and each such controlling person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a):
(i) shall not apply to a Claim arising out of or based upon a
Violation which is due to the inclusion in the Registration Statement of the
information furnished to the Company by any Indemnified Person expressly for
use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto; (ii) shall not be
available to the extent such Claim is based on (a) a failure of
the Investor to deliver or to cause to be delivered the prospectus made
available by the Company or (b) the Indemnified Person’s use of
an incorrect prospectus despite being promptly advised in advance by the Company
in writing not to use such incorrect prospectus; (iii) any
claims based on the manner of sale of the Registrable Securities by the Investor
or of the Investor’s failure to register as a dealer under applicable securities
laws; (iv) any omission of the Investor to notify the Company
of any material fact that should be stated in the Registration Statement or
prospectus relating to the Investor or the manner of sale; and (v)
any amounts paid in settlement of any Claim if such settlement
is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the resale of the Registrable Securities by the
Investor pursuant to the Registration Statement.
(b) In
connection
with any Registration Statement in which Investor is participating, the Investor
agrees to severally and jointly indemnify, hold harmless and defend, to the
same
extent and in the same manner as is set forth in Section 6(a), the Company,
each
of its directors, each of its officers who signs the Registration Statement,
each Person, if any, who controls the Company within the meaning of the 1933
Act
or the 1934 Act and the Company’s agents (collectively and together with an
Indemnified Person, an “Indemnified Party”), against any Claim or
Indemnified Damages to which any of them may become subject, under the 1933
Act,
the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and only
to
the extent, that such Violation is due to the inclusion in the Registration
Statement of the written information furnished to the Company by the Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c), the Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained
in this Section 6(b) and the agreement with respect to contribution contained
in
Section 7 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Investor, which
consent shall not be unreasonably withheld; provided, further, however, that
the
Investor shall only be liable under this Section 6(b) for that amount of a
Claim
or Indemnified Damages as does not exceed the net proceeds to such Investor
as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless
of
any investigation made by or on behalf of such Indemnified Party and shall
survive the resale of the Registrable Securities by the Investor pursuant to
the
Registration Statement. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus were corrected on a timely basis in the
prospectus, as then amended or supplemented. This indemnification provision
shall apply separately to each Investor and liability hereunder shall not be
joint and several.
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(c) Promptly
after
receipt by an Indemnified Person or Indemnified Party under this Section 6
of
notice
of
the commencement of any action or proceeding (including any governmental action
or proceeding) involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, 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 control of the
defense thereof with counsel mutually satisfactory to the indemnifying party
and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right
to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the Indemnified
Person or Indemnified Party, the representation by counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one (1) separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as applicable,
and such counsel shall be selected by the Investor, if the Investor is entitled
to indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with
any
negotiation or defense of any such action or Claim by the indemnifying party
and
shall furnish to the indemnifying party all information reasonably available
to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding affected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of
a
release from all liability in respect to such Claim. Following indemnification
as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. 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 Person
or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such
action.
(d) The
indemnity
agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the
law.
Section
7. CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i)
no contribution shall be made under circumstances
where the maker would
not have been liable for indemnification under the fault standards set forth
in
Section 6; (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of fraudulent misrepresentation; and (iii)
contribution by any seller of Registrable Securities shall
be limited
in amount to the net amount of proceeds received by such seller from the sale
of
such Registrable Securities.
Section
8. REPORTS UNDER
THE 1934 ACT.
With
a
view to making available to the Investor the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investor to sell securities of the Company to the public
without registration (“Rule 144”), provided that the Investor holds any
Registrable Securities are eligible for resale under Rule 144 (k), the Company
agrees to:
8
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) file
with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company’s obligations under Section 5(c) of the Investment Agreement)
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
(c) furnish
to the
Investor, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) 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 as
may be reasonably requested to permit the Investor to sell such securities
pursuant to Rule 144 without registration.
Section
9. NO ASSIGNMENT
OF REGISTRATION RIGHTS.
The
rights and obligations under this Agreement shall not be
assignable.
Section
10. AMENDMENT OF
REGISTRATION RIGHTS.
The
provisions of this Agreement may be amended only with the written consent of
the
Company and Investor.
Section
11. MISCELLANEOUS.
(a) Any
notices or
other communications required or permitted to be given under the terms of this
Agreement that must be in writing will be deemed to have been delivered
(i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided
a confirmation of
transmission is mechanically or electronically generated and kept on file by
the
sending party); or (iii) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If
to the
Company:
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxxx
Xxxxx, Xxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000)000-0000
If
to the
Investor:
Dutchess
Private Equities Fund, Ltd.
00
Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Each
party shall provide five (5) business days prior notice to the other party
of
any change in address, phone number or facsimile number.
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(b) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
(c) This
Agreement and the Transaction Documents constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those
set
forth or referred to herein and therein.
(d) This
Agreement and the Transaction Documents supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(e) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof. Whenever required by the context
of this Agreement, the singular shall include the plural and masculine shall
include the feminine. This Agreement shall not be construed as if it had been
prepared by one of the parties, but rather as if all the parties had prepared
the same.
(f) This
Agreement may be executed in two or more identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
(g) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(h) In
case any
provision of this Agreement is held by a court of competent jurisdiction to
be
excessive in scope or otherwise invalid or unenforceable, such provision shall
be adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining
provisions of this Agreement will not in any way be affected or impaired
thereby.
Section
12. DISPUTES
SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW
All
disputes arising under this agreement shall be governed by and interpreted
in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to
principles of conflict of laws. The parties to this agreement will submit all
disputes arising under this agreement to arbitration in Boston, Massachusetts
before a single arbitrator of the American Arbitration Association (“AAA”). The
arbitrator shall be selected by application of the rules of the AAA, or by
mutual agreement of the parties, except that such arbitrator shall be an
attorney admitted to practice law in the Commonwealth of Massachusetts. No
party
to this agreement will challenge the jurisdiction or venue provisions as
provided in this section. Nothing contained herein shall prevent the party
from
obtaining an injunction.
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SIGNATURE
PAGE OF REGISTRATION RIGHTS AGREEMENT
Your
signature on this Signature Page evidences your agreement to be bound by the
terms and conditions of the Investment Agreement and the Registration Rights
Agreement as of the date first written above.
The
undersigned signatory hereby certifies that he has read and understands the
Registration Rights Agreement, and the representations made by the undersigned
in this Registration Rights Agreement are true and accurate, and agrees to
be
bound by its terms.
DUTCHESS
PRIVATE EQUITIES FUND, LTD.,
By:
Xxxxxxx X. Xxxxxxxx, Director
By:
Xxxxxx X. Xxxxxxxxx, CEO
11