REGISTRATION RIGHTS AGREEMENT
Registration
Rights Agreement (the “Agreement”),
dated
as of May 30, 2006, by and between USCorp, a corporation organized under the
laws of State of Nevada, with its principal executive office at 0000 X.Xxxxxx
Xxxxxx, Xxx Xxxxx, XX 00000 (the “Company”),
and
Dutchess Private Equities Fund, L.P., a Delaware limited partnership 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, $.01par 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, L.P., a Delaware limited
partnership.
“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”).
1
“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 thirty (30) days of the Execution Date, 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 ________
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 one hundred and twenty (120)
calendar days after the filing of the Registration Statement.
(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
one
hundred and twenty (120) days after the filing of the Registration Statement
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. 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.
2
(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.
3
(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.
4
(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 form suitable to the Investor.
(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.
5
(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.
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). If
so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
(d)The
Investor may not participate in any underwritten registration hereunder unless
such Investor (i) agrees to sell such Investor's Registrable Securities on
the
basis provided in any underwriting arrangements in usual and customary form
entered into by the Company, (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and
(iii)
agrees to pay its pro rata share of all underwriting discounts
and commissions and any expenses in excess of those payable by the Company
pursuant to Section 5 below.
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.
6
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,
(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.
7
(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 are 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 effected 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.
8
(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:
(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.
9
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:
0000
X.
Xxxxxx Xxx., Xxxxx 000
Xxx
Xxxxx, XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If
to the
Investor:
Dutchess
Private Equities Fund, LP
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.
(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.
10
(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.
11
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, L.P.,
BY
ITS GENERAL PARTNER,
DUTCHESS
CAPITAL MANAGEMENT, LLC
By:
/s/
Xxxxxxx X. Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx, Managing Member
|
By:
/s/
Xxxxxx Xxxxx
Xxxxxx
Xxxxx, CEO
12
