EXHIBIT 10.23
SMARTDISK CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made as of the
24th day of December, 2002, by and among SmartDisk Corporation, a Delaware
corporation (the "COMPANY"), and each of the investors (the "INVESTORS") listed
on Exhibit A hereto.
R E C I T A L S
A. The Company and the Investors have entered into a Series A
Redeemable Convertible Preferred Stock Purchase Agreement dated December 9,
2002, as amended on December 24, 2002 (the "Purchase Agreement").
B. Under the Purchase Agreement, Investors have agreed to purchase and
the Company has agreed to sell 2,552,364.8 shares of the Company's Series A
Redeemable Convertible Preferred Stock (the "Preferred Shares").
C. The Purchase Agreement contains as a condition to the Investors'
obligations under the Purchase Agreement that the Company and the Investors
enter into this Agreement in order to provide the Investors with certain rights
to register shares of the Company's Common Stock.
D. The Company desires to induce the Investors to purchase the
Preferred Shares pursuant to the Purchase Agreement by agreeing to the terms
and conditions set forth herein.
NOW THEREFORE, in reliance on the foregoing recitals and in
consideration of the mutual covenants contained herein, and in the Purchase
Agreement the parties hereto agree as follows:
A G R E E M E N T
1. REGISTRATION RIGHTS. The Company and the Investors covenant and
agree as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
1.1.1 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
of 1933, as amended (the "ACT"), and the declaration or ordering of
effectiveness of such registration statement or document.
1.1.2 The term "Registrable Securities" means (i)
any shares of Company $0.001 par value Common Stock ("Common Stock") acquired
by a Holder upon conversion of the Preferred Shares, (ii) any shares of Common
Stock acquired by a Holder pursuant to a rights offering conducted by the
Company at any time on or before December 18, 2004 (the "Rights Shares"), and
(iii) any other shares of Common Stock or other securities 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 Preferred Shares, the
Common Stock into which the Preferred Shares are convertible, or the Rights
Shares, provided that the foregoing definition shall exclude in all cases any
Registrable Securities sold by a person in a transaction in which his or her
rights under this Agreement are not assigned. Notwithstanding the foregoing,
Common Stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Act under Section 4(1) thereof so that
all transfer restrictions, and restrictive legends with respect thereto, if
any, are removed upon the consummation of such sale.
1.1.3 The number of shares of "Registrable
Securities Then Outstanding" shall be determined by the number of shares of
Common Stock outstanding which are Registrable Securities, plus the
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number of shares of Common Stock issuable pursuant to conversion of outstanding
Preferred Shares, plus the number of shares of Common Stock issuable pursuant
to any other convertible securities that are Registrable Securities.
1.1.4 The term "Holder" means any person owning or
having the right to acquire, Registrable Securities or any assignee thereof in
accordance with Section 1.13 hereof.
1.1.5 The term "Form S-3" means such form under the
Act as in effect on the date hereof or any successor form under the Act.
1.1.6 The term "SEC" means the Securities and
Exchange Commission.
1.1.7 The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.2 REQUEST FOR REGISTRATION.
1.2.1 If the Company shall receive at any time after
the earliest of (a) June 24, 2003, (b) such time as it has provided the
Investors with written notice of abandonment of the Rights Offering, as defined
in the Purchase Agreement, and a written commitment not to conduct a rights
offering to its shareholders for two years from the date of the notice without
the written consent of a majority in interest of the Investors, or (c) such
time as the Rights Offering has been conducted and closed, a written request
from the Holders of a majority of the Registrable Securities Then Outstanding
that the Company file a registration statement under the Act covering the
registration of at least twenty percent (20%) of the Registrable Securities
Then Outstanding (or a lesser percent if the anticipated aggregate offering
price, net of underwriting discounts and commissions, would exceed Ten Million
Dollars ($10,000,000)), then the Company shall, within ten (10) days of the
receipt thereof, give written notice of such request to all Holders and shall,
subject to the limitations of subsection 1.2.2, use its best efforts to effect
as soon as practicable, and in any event within 60 days of the receipt of such
request, the registration under the Act of all Registrable Securities which the
Holders request to be registered within twenty (20) days of receipt of such
notice mailed by the Company in accordance with Section 2.5.
1.2.2 If the Holders initiating the registration
request hereunder ("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 this Section 1.2
and the Company shall include such information in the written notice referred
to in subsection 1.2.1. 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 his 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
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
1.4.5 enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders 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, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder, including all
Registrable Securities issuable upon conversion of Preferred Shares or other
convertible securities; provided, however, that the number of shares of
Registrable Securities to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from the underwriting.
1.2.3 Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 1.2 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
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the filing of such registration statement, the Company shall have the right to
defer such filing for a period of not more than seventy-five (75) 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 (12)-month
period.
1.2.4 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:
1.2.4.1 After the Company has effected one (1)
registration pursuant to this Section 1.2 and such registration has been
declared or ordered effective; or
1.2.4.2 During the period starting with the date
sixty (60) days prior to the Company's good faith estimate of the date of filing
of, and ending on a date one hundred eighty (180) days (or such lesser period as
officers, directors and greater than 5% stockholders of the Company shall be
contractually obligated to refrain from selling Company securities), after the
effective date of a registration subject to Section 1.3 hereof that is conducted
as a fully committed, underwritten registration; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective.
1.3 COMPANY REGISTRATION. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its stock under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Act, a registration in which the only stock being
registered is Common Stock issuable upon conversion of debt securities which
are also being registered, a registered rights offering to all holders of
Company Common Stock, or any registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after receipt of such notice mailed by the Company in accordance with
Section 2.5, the Company shall, subject to the provisions of Section 1.8, cause
to be registered under the Act all of the Registrable Securities that each such
Holder has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
1.4.1 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, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to ninety (90)
days, such time period to be extended by the number of days (a) a stop order
shall be in effect with respect to the registration statement and (b) in the
period beginning on the date notice is given pursuant to Section 1.4.6 and
ending on the date a prospectus supplement is filed or a post-effective
amendment is declared effective, in each instance curing the misleading
statement or omission that was the subject of the notice.
1.4.2 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 Act and the Exchange Act and the regulations thereunder
with respect to the disposition of all securities covered by such registration
statement for up to ninety (90) days.
1.4.3 Furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them.
1.4.4 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 to do business or to
file a general consent to service of process in any such states or
jurisdictions.
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1.4.5 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, including, without limitation, participating in investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Registrable Securities. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.
1.4.6 Notify each Holder of Registrable Securities
covered by such registration statement promptly at any time when a prospectus
relating thereto is required to be delivered under the Act of the happening of
any event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and prepare
and file as soon as practicable (but in no event later than ten (10) business
days following notice of the occurrence of such event to each such Holder in
accordance with Section 2.5 hereof) with the SEC and promptly notify each such
Holder of the filing of, a supplement to such prospectus or an amendment to the
registration statement so that, as thereafter delivered to such Holders, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made and in the case of an amendment to the Registration Statement,
use reasonable best efforts to cause it to become effective as soon as possible
1.4.7 Cause all such Registrable Securities
registered pursuant hereto to be listed on each securities exchange on which
similar securities issued by the Company are then listed or are to be listed on
the Nasdaq SmallCap Market, if not listed on a securities exchange, if
eligible.
1.4.8 Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereto and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
1.4.9 In the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Common Stock included in such registration statement for
sale in any jurisdiction, the Company will promptly notify each Holder of
Registrable Securities covered by such registration statement of such order and
will use its best efforts to promptly obtain the withdrawal of such order; and
1.4.10 Use its best efforts to furnish, at the
request of any Holder requesting registration of Registrable Securities
pursuant to this Section 1, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters,
on the date that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters, if any, and
to the Holders requesting registration of Registrable Securities.
1.4.11 Otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable but no later than fifteen
(15) months after the effective date of the registration statement, an earnings
statement covering a period of twelve (12) months beginning after the effective
date of the registration statement, in a manner which satisfies the provisions
of Section 11(a) of the Act.
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 such information regarding itself, the
Registrable Securities
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held by it, and the intended method of disposition of such securities as shall
be reasonably required to effect the registration of such Holder's Registrable
Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 of this Agreement if, as a
result of the application of the preceding sentence, the number of shares or
the anticipated aggregate offering price of the Registrable Securities to be
included in the registration does not equal or exceed the number of shares or
the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2.1.
1.6 EXPENSES OF REQUESTED REGISTRATION. All expenses other
than underwriting discounts and commissions incurred in connection with
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 with reasonable promptness following their learning
of such material adverse change, then the Holders shall not be required to pay
any of such expenses and shall retain their rights 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 the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as
provided in Section 1.13), 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
relating to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection with any
offering 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), and then only
in such quantity as the underwriters determine in their sole discretion will
not jeopardize the success of the offering by the Company. If the total amount
of securities, including Registrable Securities, requested by shareholders 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 shareholders according to
the total amount of securities entitled to be included therein owned by each
selling shareholder or in such other proportions as shall mutually be agreed to
by such selling shareholders) but in no event shall (i) the amount of
Registrable Securities of the selling Holders included in the offering be
reduced below thirty percent (30%) of the total amount of securities included
in such offering, or (ii) notwithstanding (i) above, any shares being sold by a
shareholder exercising a demand registration right similar to that granted in
Section 1.2 be excluded from such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling shareholder which is a
Holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and shareholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "Selling
Shareholder," and any pro-rata reduction with respect to such "selling
shareholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Selling Shareholder," as defined in this sentence.
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.
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1.10 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 1:
1.10.1 To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, any underwriter (as defined in
the Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the 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 (collectively 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 Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the 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 1.10.1 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
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable to any Holder, underwriter or controlling person hereunder
for 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 such Holder, underwriter or controlling person, as
the case may be.
1.10.2 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 Act, 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 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 1.10.2, in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.10.2 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
1.10.2 exceed the net proceeds from the offering received by such Holder,
except where a court has finally determined that the loss, claim, damage or
liability as to which indemnification is claimed was primarily caused by the
willful fraud of such Holder.
1.10.3 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 differing 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, if prejudicial to its ability to defend such
action,
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shall relieve such indemnifying party of any liability to the indemnified party
under this Section 1.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.10.
1.10.4 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 therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, that, in no event shall any
contribution by a Holder under this subsection 1.10.4 exceed the net proceeds
from the offering received by such Holder, except where a court has finally
determined that the loss, claim, damage or liability in question was primarily
caused by the willful fraud of such Holder. 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.
1.10.5 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.
1.10.6 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.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the 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-3, the Company agrees to:
1.11.1 make and keep public information available,
as those terms are understood and defined in SEC Rule 144, so long as the
Company remains subject to the periodic reporting requirements under Sections
13 or 15(d) of the Exchange Act;
1.11.2 take such action as is necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities;
1.11.3 file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the
Exchange Act; and
1.11.4 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 SEC Rule
144, the Act and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, (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 in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
1.12 ASSIGNMENT OF REGISTRATION RIGHTS. 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 at least one hundred thousand (100,000) shares of such
securities as presently constituted, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of
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the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; and provided,
further, that 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 Act. For the purposes of determining the
number of shares of Registrable Securities held by a transferee or assignee,
the holdings of transferees and assignees of a partnership or limited liability
company who are partners, members or retired partners or members of such
partnership or limited liability company (including spouses and ancestors,
lineal descendants and siblings of such partners, members or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the partnership or limited liability company,
provided that all assignees and transferees who would not qualify individually
for assignment of registration rights shall have a single attorney-in-fact for
the purpose of exercising any rights, receiving notices or taking any action
under Section 1.
1.13 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, 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 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 his securities will not reduce the amount of
the Registrable Securities of the Holders which is included, (b) to make a
demand registration which could result in such registration statement being
declared effective within one hundred eighty (180) days of the effective date
of any registration effected pursuant to Section 1.2 or (c) cut back rights
more favorable than or as favorable as the Holders' rights contained in Section
1.8 hereof.
1.14 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be
entitled to exercise any right provided for in this Section 1 after such time
as Rule 144 or another similar exemption under the Act is available for the
sale of all of such Holder's shares during a three (3)-month period without
registration.
2. MISCELLANEOUS.
2.1 SUCCESSORS AND ASSIGNS. 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 the Rights Shares, the Preferred Shares or the
underlying Common Stock). 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.
2.2 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
2.3 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
2.4 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.
2.5 NOTICES. Unless otherwise provided, any notice required
or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier or
sent by telegram or fax, or forty-eight (48) hours after being deposited in the
U.S. mail, as certified or registered mail, with postage prepaid, and addressed
to the party to be notified at such party's address as set forth below or on
Exhibit A hereto or as subsequently modified by written notice.
2.6 AMENDMENTS AND WAIVERS. 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 a majority of the
SmartDisk Corporation
Registration Rights Agreement
Page 9
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of any
Registrable Securities then outstanding, each future Holder of all such
Registrable Securities, and the Company.
2.7 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(x) such provision shall be excluded from this Agreement, (y) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(z) the balance of the Agreement shall be enforceable in accordance with its
terms.
2.8 AGGREGATION OF STOCK. All Rights Shares, Preferred
Shares, and Shares of underlying Common Stock held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
2.9 APPROVAL UNDER EXISTING INVESTOR'S RIGHTS AGREEMENT.
Phoenix House Investments, LP ("Phoenix"), as the holder of a majority of the
outstanding "Registrable Securities," as such term is defined in that certain
Investor's Rights Agreement dated as of May 22, 1998, by and among the Company,
Phoenix House Investments, L.L.C. (the predecessor of Phoenix), Toshiba
Corporation and Xxxxxxx International Systems Corporation, does hereby consent
to the Company's entering into this Agreement and granting of the rights
contained herein, as required by and in accordance with Section 1.14 of the
Investor's Rights Agreement.
[Signature Page Follows]
SmartDisk Corporation
Registration Rights Agreement
Page 10
The parties have executed this Registration Rights Agreement as of the
date first above written.
COMPANY: INVESTORS:
SMARTDISK CORPORATION PHOENIX HOUSE INVESTMENTS, LP
By: /S/ Xxxxxxx X. Xxxxxxxxx By: PHOENIX HOUSE INVESTMENTS GP, INC.
------------------------------- its general partner
Xxxxxxx X. Xxxxxxxxx, President
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000-0000
By: /S/ Addison X. Xxxxxxx
-----------------------------------
Addison X. Xxxxxxx, President
Address: 000 Xxxx Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxx 00000
/S/ Addison X. Xxxxxxx
----------------------------------------
Addison X. Xxxxxxx
Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
SmartDisk Corporation
Registration Rights Agreement
Page 11
EXHIBIT A
INVESTORS
NO. OF
NAME ADDRESS PREFERRED SHARES
-------------------------------------------------------------------------------
Phoenix House Investments, LP 000 Xxxx Xxxx Xxxxxx 0,000,000.0
Xxxxxx Xxxx, Xxxxxx 00000
Addison X. Xxxxxxx 0000 Xxxxxxxxxx Xxxxxx 000,000.0
Xxxxxx, Xxxxxxx 00000
