REGISTRATION RIGHTS AGREEMENT
Exhibit
10.10
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of October
11, 2000, by and between Interactive Imaging Systems, Inc., a Delaware corporation (the “Company”)
and certain of the shareholders in the Company who become a party to this Agreement, each of whom
will acquire Common Stock in the Company on or after October 11, 2000, pursuant to one or more
offerings by the Company (collectively, the “Investors” and each individually, an “Investor).
RECITALS:
A. Certain Investors and the Company have entered into Subscription Agreements pursuant to
which such Investors have purchased shares of the Company’s $.001 par value Common Stock at U.S.
$.50 per share (the “Subscription Agreements”).
B. Each of the Investors has agreed to certain restrictions on the transfer of the Common
Stock and in return, the Company has agreed to grant certain registration rights with respect to
the shares of the Company’s Common Stock that are issued to the Investors, subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. TRANSFER LIMITATION
1.1 Rationale. The Investors and the Company believe it to be in their
best interests to impose certain restrictions on the transfer or other disposition of the Common
Stock in order to provide for continuity in the control and management of the Company and to
prevent the Common Stock from becoming owned by persons or entities whose purposes and interests
would not be in the best interests of the Company, its business and the shareholders of the
Company.
1.2 Dispositions Restricted. Prior to October 11, 2002, no Investor shall
make or suffer to be made any sale, gift, pledge, mortgage, encumbrance, distribution, transfer,
assignment, hypothecation or disposition of any kind (a “Disposition”) of any of his shares of
Common Stock without first obtaining the consent of the Board of Directors of the Company; except
that no such consent shall be required in the case of a Disposition to another then current
shareholder of the Company. The Company shall not suffer or permit any Disposition, except as may
be expressly permitted under this Agreement. The foregoing restrictions on Dispositions shall
automatically terminate on the earlier to occur of: (a) October 11, 2002; (b) the closing of the
first public offering by the Company of shares of Common Stock of the Company registered under the
Securities Act of 1933, as amended; or (c) the closing of the sale of the majority of the
Company’s Common Stock or assets to a third party.
1.3 Legend. During the term of the foregoing restrictions on Dispositions,
there shall be placed upon every certificate representing the Common Stock the following legend:
This certificate and the shares represented hereby are subject to,
and transfer of such shares is restricted by, the provisions of an
agreement among the issuing Company and
certain of its shareholders dated as of October 11, 2000, and any
amendments thereto, a copy of which agreement is on file at the
principal office of the Company.
Upon expiration of the foregoing restrictions on Dispositions, each Investor may request the
Company to issue a new certificate representing the Common Stock without the foregoing legend.
2. REGISTRATION RIGHTS
2.1 Certain Definitions. For purposes of this Agreement:
(a) Registration. The terms “register”, “registered”, and “registration” refer to a
registration effected by preparing and filing a registration statement in compliance with the
Securities Act of 1933, as amended (the “Securities Act”), including Regulation S-B thereunder, if
available, and the declaration or ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term “Registrable Securities” means: (1) all the
shares of Common Stock of the Company held by the Investors and (2) any shares of 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, all such shares of Common Stock described in clause (1); excluding in
all cases, however, any Registrable Securities sold by a person in a transaction which violates
Section 1 or in which rights under this Section 2 are not assigned in accordance with Section 3 of
this Agreement.
(c) Registrable Securities Then Outstanding. The number of shares of “Registrable
Securities then outstanding” shall mean the number of shares of Common Stock which are Registrable
Securities and are then issued and outstanding.
(d) Holder. The term “Holder” means any person owning of record Registrable Securities
that have not been sold to the public or sold pursuant to Rule 144 promulgated under the Securities
Act or any assignee of record of such Registrable Securities to whom rights under this Section 2
have been duly assigned in accordance with this Agreement.
(e) SEC. The term “SEC” or “Commission” means the U.S. Securities and Exchange Commission.
2.2 Demand for Registration. If, at any one time after October 11, 2002 (i)
the Company shall not then have its Common Stock listed for trading on a recognized stock
market or exchange in the United States or Canada or on the OTC Bulletin Board, and (ii) the
Company shall receive a written request from Holders of Registrable Securities requesting that the
Company file a registration statement covering Registrable Securities owned by them and
constituting at least a majority of the Registrable Securities then outstanding, then the Company
shall (x) give all other Holders written notice of such request, and (y) use commercially
reasonable efforts to file, within one hundred twenty (120) days of receipt of such request, a
registration statement covering all Registrable Securities which the Holders request to be
registered prior to the date of the initial filing of the registration statement.
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2.3 Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities under this Agreement, the Company shall, as expeditiously as commercially
reasonable:
(a) Furnish to the Holders and to the underwriters, if any, such number of copies of the
registration statement, prospectus, and 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 the Registrable Securities owned by them that are included in such
registration.
(b) Use its commercially reasonable 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.
(c) 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.
(d) Use its reasonable best efforts either to (i) cause all the Registrable Securities covered
by any registration statement to be listed on a recognized stock market or exchange in the United
States or in Canada, if the listing of such Registrable Securities is then permitted under the
rules of such market or exchange, or (ii) secure the quotation of the Registrable Securities on the
OTC Bulletin Board.
2.4 Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 2.2 and 2.3 that the selling Holders shall furnish
to the Company such information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be reasonably required to timely
effect the registration of their Registrable Securities.
2.5 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 2.
2.6 Indemnification. With respect to Registrable Securities that are
included in a registration statement under Section 2.2:
(a) By the Company. To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, directors of 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 or the Securities Exchange Act of 1934, as
amended (the “1934 Act”), against any expenses, losses, claims, damages, or liabilities (joint or
several) (or actions in respect thereof) to which they may become subject under the Securities Act,
the 1934 Act or other federal or state law, insofar as such expenses, losses, claims, damages, or
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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, preliminary prospectus, final prospectus, offering circular or other
document 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 1934 Act,
any federal or state securities law or any rule or regulation promulgated under the Securities
Act, the 1934 Act or any federal or state securities law in connection with the offering covered
by such registration statement; and the Company will reimburse each such Holder, partner, officer,
director, underwriter or controlling person for any legal or other expenses reasonably incurred by
them, as incurred, in connection with investigating, defending or settling any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 2.6(a) 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 in any
such case 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 or its
agent, partner, officer, director, underwriter or controlling person of such Holder.
(b) By Selling Holders. 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 have
signed the registration statement, each person, if any, who controls the Company within the meaning
of the Securities Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holders partners, directors or officers or any person
who controls such Holder within the meaning of the Securities Act or the 1934 Act, against any
losses, claims, damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, partner or director,
officer or controlling person of such other Holder may become subject under the Securities Act, the
1934 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 or its agent expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, underwriter or other Holder,
partner, officer, director or controlling person of such other Holder in connection with
investigating, defending or settling any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection 2.6(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
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Holder, which consent shall not be unreasonably withheld; and provided,
further, that the total amounts payable in indemnity by a Holder under this Section 2.6(b)
in respect of any Violation shall not exceed the net proceeds received by such Holder in the
registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under this Section 2.6 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 2.6, 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 the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own counsel, with the
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, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the indemnified party under
this Section 2.6, 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 2.6.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity agreements of the
Company and Holders are subject to the condition that, insofar as they relate to any Violation made
in a preliminary prospectus but which Violation is eliminated or remedied in the amended prospectus
on file with the SEC at the time the registration statement in question becomes effective or the
amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such
indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any Holder exercising rights
under this Agreement, or any controlling person of any such Holder, makes a claim for
indemnification pursuant to this Section 2.6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 2.6 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the part of any such selling Holder
or any such controlling person in circumstances for which indemnification is provided under this
Section 2.6; then, and in each such case, the Company and such Holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject (after contribution
from others) 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 expense, loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of each such party in connection
with such statements or omissions as well as any other relevant considerations; provided,
however, that, in any such case, (A) the total amounts payable in contribution by any
Holder under this
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Section 2.6(e) shall not exceed the net proceeds received by such Holder in the registered
offering out of which such responsibility arises; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and Holders under this Section 2.6 shall
survive the completion of any offering of Registrable Securities in a registration statement, and
otherwise.
2.7 Market Stand-Off’ Agreement. Each Holder hereby agrees that it shall not, to the
extent requested by the Company or an underwriter of securities of the Company, sell or otherwise
transfer or dispose of any Registrable Securities or any shares of capital stock of the Company
then owned by such Holder (other than to donees or partners of the Holder who agree to be
similarly bound) for up to one hundred eighty (180) days following the effective date of any
registration statement (other than a registration statement relating to any employee benefit plan
or to any acquisition, merger, consolidation or other corporate reorganization) of the Company
filed under the Securities Act (whether filed pursuant to the provisions of this Agreement or
otherwise); provided, however, that:
(a) such agreement shall not apply to shares of capital stock of the Company sold pursuant to
such registration statement;
(b) all executive officers and directors of the Company then holding Common Stock of the
Company enter into a similar agreement, and any other stockholder of the Company then-owning at
least two percent (2%) of the shares of the Company’s Common Stock on a fully-diluted basis, also
enters into a similar agreement; and
(c) in an offering other than the Company’s initial public offering, such agreement shall
apply only for a period of 90 days from the effective date of the registration statement filed
under the Securities Act with respect thereto.
In order to enforce the foregoing covenant, the Company shall have the right to place
restrictive legends on the certificates representing the shares subject to this Section and to
impose stop transfer instructions with respect to the shares of stock of each Holder (and the
shares or securities of every other person subject to the foregoing restriction) until the end of
such period.
2.8 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the sale of the
Registrable Securities to the public without registration, after such time as a public market
exists for the Common Stock of the Company, the Company agrees to:
(a) Make and keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities to the general
public;
(b) File with the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the 1934 Act (at any time after it has become subject to
such reporting requirements); and
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(c) So long as a Holder owns any Registrable Securities, to furnish
to the Holder forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144 (at any time after 90 days after the effective
date of the first registration statement filed by the Company for an offering of its securities to
the general public), of the Securities Act and the 1934 Act (at any time after it has become
subject to the reporting requirements of the 1934 Act), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the Company as a Holder
may reasonably request in availing itself of any rule or regulation of the Commission allowing a
Holder to sell any such securities without registration (at any time after the Company has become
subject to the reporting requirements of the 1934 Act).
2.9 Expenses of Registration. The Company shall bear and pay all expenses, other than
underwriting discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2.2 and 2.3, 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
selected by those Holders with a majority of the Registrable Securities included in the
registration.
3. ASSIGNMENT
Notwithstanding anything herein to any the contrary, the registration rights of a Holder under
Section 2 hereof may be assigned by a Holder only to a party who acquires all of the shares of
Registrable Securities of such Holder in a transaction allowed pursuant to the terms of Section 1,
if then applicable; provided, however that no party may be assigned any of the
foregoing rights unless the Company is given written notice by the assigning party at the time of
such assignment stating the name and address of the assignee and identifying the securities of the
Company as to which the rights in question are being assigned; and provided,
further that any such assignee shall receive such assigned rights subject to all the terms
and conditions of this Agreement, including without limitation the provisions of this Section 3.
4. GENERAL PROVISIONS
4.1 Amendment of Rights. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and Holders of a
majority of all Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 4.1 shall be binding upon each Holder, each permitted successor or
assignee of such Holder and the Company.
4.2 Governing Law. The internal laws of the State of Delaware (irrespective of its
conflict of law principles) will govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the parties hereto.
4.3 Severability. If any provision of this Agreement, or the application thereof, will
for any reason and to any extent be invalid or unenforceable, the remainder of this Agreement and
application of such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and
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other purposes of the void or unenforceable provision.
4.4 Counterparts. This Agreement may be executed in any number of counterparts, each
of which will be an original as regards any party whose signature appears thereon and all of which
together will constitute one and the same instrument. This Agreement will become binding when one
or more counterparts hereof, individually or taken together, will bear the signatures of all
parties reflected hereon as signatories. Facsimile copies of such counterparts are acceptable.
4.5 Notices. Any notice or other communication required or permitted to be given under
this Agreement will be in writing, will be delivered personally, by registered or certified mail,
postage prepaid, by confirmed facsimile or by nationally recognized courier service, and will be
deemed given upon delivery, if delivered personally, or five days after deposit in the mails, if
mailed, or upon receipt if delivered by confirmed facsimile or nationally recognized courier
service to the following addresses:
| (i) | If to Company: | |||
| Interactive Imaging Systems, Inc. | ||||
| 0000 Xxxxxxxx-Xxxxxxxxx Xxxxxxxx Xxxx | ||||
| Xxxxxxxxx, Xxx Xxxx 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
| Attention: Xxxx X. Xxxxxxx, President | ||||
| With a copy to: | ||||
| Xxxxxx X. Xxxxx, Esq. | ||||
| Xxxxxxxxx & Xxxxxxx LLP | ||||
| 0000 Xxxxx Xxxxxx | ||||
| Xxxxxxxxx, Xxx Xxxx 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
| (ii) | If to Investors: |
To the addresses set forth on the counterpart signature pages hereto or to such other address
as a party may have furnished to the other parties in writing pursuant to this Section 4.5.
4.6 Absence of Third Party Beneficiary Rights. No provisions of this Agreement are
intended, nor will be interpreted, to provide or create any third party beneficiary rights or any
other rights of any kind in any client, customer, affiliate, stockholder, partner or any party
hereto or any other person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties to this Agreement.
4.7 Entire Agreement. This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date
and year first above written.
| INTERACTIVE IMAGING SYSTEMS, INC. |
||||
By:
|
/s/ Xxxx X. Xxxxxxx | |||
Name:
|
||||
Title:
|
President | |||
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Registration Rights Agreement
Counterpart Signature Page
Counterpart Signature Page
The undersigned, being a subscriber for shares of Common Stock in the Company, executes and
agrees to be bound by and obtain the benefits of, the Registration Rights Agreement dated as of
October 11, 2000; provided, however, that the Registration Rights Agreement shall not be effective
as to any subscriber whose subscription is not accepted by the Company.
INVESTOR: |
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Signature: |
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Print Name: |
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Address: |
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Date: |
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