REGISTRATION RIGHTS AGREEMENT
Exhibit
10.35
This
Registration Rights Agreement (this "Agreement")
is
made and entered into as of June 15, 2007, by and among Communication
Intelligence Corporation, a Delaware corporation (the "Company"),
and
the purchasers listed on Schedule
I
hereto
(the "Purchasers").
This
Agreement is being entered into pursuant to the Note and Warrant Purchase
Agreement dated June 15, 2007 between and among the Company and the Purchasers
(the "Purchase
Agreement").
The
Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Business
Day"
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the state of California generally are
authorized or required by law or other government actions to close.
"Commission"
means
the Securities and Exchange Commission.
"Common
Stock"
means
the Company's Common Stock, par value $0.01 per share.
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
"Holder"
or
"Holders"
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
"Indemnified
Party"
shall
have the meaning set forth in Section 4(c).
"Indemnifying
Party"
shall
have the meaning set forth in Section 4(c).
"Losses"
shall
have the meaning set forth in Section 4(a).
"Person"
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Proceeding"
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
"Prospectus"
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
"Registrable
Securities"
means
the shares of Common Stock issuable upon exercise of the Warrants.
"Registration
Statement"
means
the registration statements and any additional registration statements
contemplated by Section 2, including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus, including pre-
and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
"Rule
144"
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
145”
means
Rule 145 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Securities
Act"
means
the Securities Act of 1933, as amended.
2. Company
Registration.
(a) Notice
of
Registration.
If at
any time or from time to time the Company shall determine to register any of
its
equity securities (including as a result of any demand registration) other
than
(i) a registration relating solely to employee benefit plans or (ii) a
registration relating solely to a Rule 145 transaction, the Company
will:
(i) promptly
give to each Purchaser written notice thereof but not less than fifteen (15)
days prior to filing of such registration statement; and
(ii) include
in such registration (and any related qualifications including compliance with
applicable state securities laws), and in any underwriting involved therein,
all
the Registrable Securities specified in a written request or requests, made
within twenty (20) days after the date of such written notice from the Company,
by any Purchaser. If a Purchaser decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the Company, such
Purchaser shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
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(b) Underwriting.
If the
registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Purchasers
as a part of the written notice given pursuant to Section 2(a)(i). In such
event, the right of any Purchaser to registration pursuant to Section 2 shall
be
conditioned upon such Purchaser’s participation in such underwriting, and the
inclusion of Registrable Securities in the underwriting shall be limited to
the
extent provided herein.
All
Purchasers proposing to distribute their securities through such underwriting
shall (together with the Company and the other Purchasers distributing their
securities through such underwriting) enter into an underwriting agreement
in
customary form with the managing underwriter selected for such underwriting
by
the Company. Notwithstanding any other provision of this Section 2, if the
managing underwriter determines that marketing factors require a limitation
of
the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the Company; second,
to those holders of registration rights under agreements relating thereto in
existence immediately prior to the date hereof; third, to Purchasers of
Registrable Securities who possess registration rights pursuant to this
Agreement; and third, to any stockholder of the Company (other than a Purchaser
and other than a stockholder holding registration rights under agreements
relating thereto in existence immediately prior to the date hereof). The Company
shall so advise all Purchasers requesting to be included in the registration
and
underwriting, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
the
Purchasers requesting to be included in the registration and underwriting in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities sought to be included by them. To facilitate the allocation of shares
in accordance with the above provisions, the Company or the underwriters may
round the number of shares allocated to any Purchaser to the nearest 100 shares.
If any Purchaser disapproves of the terms of any such underwriting, such person
may elect to withdraw therefrom by written notice to the Company. For any
Purchaser which is a partnership or corporation, the partners, retired partners
and shareholders of such Purchaser, 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 “Purchasers,” and any pro rata
reduction with respect to such “Purchasers” shall be based upon the aggregate
amount of shares carrying registration rights owned by all entities and
individuals included in such “Purchasers,” as defined in this sentence.
(c) Right
to
Terminate Registration.
The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Section 2 prior to the effectiveness of such registration
whether or not any Purchaser has elected to include securities in such
registration. The registration expenses of such withdrawn registration shall
be
borne by the Company in accordance with Section 3 hereof.
(d) Agreement
Not to Sell.
Each
Purchaser covenants and agrees that (i) it will not sell any Registrable
Securities under the Registration Statement until it has received copies of
the
Prospectus as then amended or supplemented and notice from the Company that
such
Registration Statement and any post-effective amendments thereto have become
effective and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
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3. Registration
Expenses.
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in this Section 3, shall
be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in
the
foregoing sentence shall include, without limitation, (i) all registration
and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the OTC Bulletin Board and each other
securities exchange or market on which Registrable Securities are required
hereunder to be listed, (B) with respect to filing fees required to be paid
to
the National Association of Securities Dealers, Inc. and the NASD Regulation,
Inc. and (C) in compliance with state securities or Blue Sky laws (including,
without limitation, fees and disbursements in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of
such
jurisdictions), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing
prospectuses, if any, (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company's independent public accountants (including the expenses
of any comfort letters or costs associated with the delivery by independent
public accountants of a comfort letter or comfort letters). In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense
of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required
hereunder.
4. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Purchaser, the officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as
a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees of each of them, each Person who
controls any such Purchaser (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents
and
employees of each such controlling Person, to the fullest extent permitted
by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys' fees) and expenses (collectively, "Losses"),
as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in the Registration Statement, any Prospectus
or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus
or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i)
such untrue statements or
4
omissions
are based solely upon information regarding such Purchaser or such other
Indemnified Party furnished in writing to the Company by such Purchaser
expressly for use therein and (ii) that the foregoing indemnity agreement
is
subject to the condition that, insofar as it relates to any untrue statement,
allegedly untrue statement, omission or alleged omission made in any preliminary
prospectus but eliminated or remedied in the final prospectus (filed pursuant
to
Rule 424 of the Securities Act), such indemnity agreement shall not inure
to the
benefit of any Purchaser, underwriter, broker or other Person acting on behalf
of holders of the Registrable Securities, from whom the Person asserting
any
loss, claim, damage, liability or expense purchased the Registrable Securities
which are the subject thereof, if a copy of such final prospectus had been
made
available to such Person and such Purchaser, underwriter, broker or other
Person
acting on behalf of holders of the Registrable Securities and such final
prospectus was not delivered to such Person with or prior to the written
confirmation of the sale of such Registrable Securities to such Person. The
Company shall notify the Purchasers promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with
the
transactions contemplated by this Agreement.
(b) Indemnification
by Purchasers.
Each
Purchaser shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents and employees
of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as determined by a court of competent jurisdiction
in a final judgment not subject to appeal or review), as incurred, arising
solely out of or based solely upon any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement
or
omission is contained in any information so furnished in writing by such
Purchasers or other Indemnifying Party to the Company specifically for inclusion
in the Registration Statement or such Prospectus. Notwithstanding anything
to
the contrary contained herein, each Purchaser shall be liable under this Section
4(b) for only that amount as does not exceed the net proceeds to such Purchaser
as a result of the sale of Registrable Securities pursuant to such Registration
Statement.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified
Party"),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the "Indemnifying
Party)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination
is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying
Party.
5
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel (which shall be reasonably acceptable to the Indemnifying Party)
that
a conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects
to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from
all
liability on claims that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided,
that the Indemnifying Party may require such Indemnified Party to undertake
to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution.
If a
claim for indemnification under Section 4(a) or 4(b) is unavailable to an
Indemnified Party because of a failure or refusal of a governmental authority
to
enforce such indemnification in accordance with its terms (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying
such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying Party
on the one hand and the Indemnified Party on the other from the offering of
the
Notes and Warrants. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault, as applicable, of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined
by
reference to, among other things, whether any action in question, including
any
untrue or alleged untrue
6
statement
of a material fact or omission or alleged omission of a material fact, has
been
taken or made by, or relates to information supplied by, such Indemnifying
Party
or Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 4(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section was available
to
such party in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties. Notwithstanding anything to the contrary contained herein, the
Purchasers shall be liable under this Section 4(d) for only that amount as
does
not exceed the net proceeds to such Purchasers as a result of the sale of
Registrable Securities pursuant to such Registration Statement.
5. Rule
144.
As
long
as any Purchaser owns any Warrant Shares, the Company covenants to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Purchaser
owns any Warrant Shares, if the Company is not required to file reports pursuant
to Section 13(a) or 15(d) of the Exchange Act, it will prepare and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any Purchaser may reasonably
request in writing, all to the extent required from time to time to enable
such
Person to sell the Warrant Shares without registration under the Securities
Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including providing any legal opinions relating to such
sale
pursuant to Rule 144.
7
6. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Purchaser, of any of their obligations
under this Agreement, each Purchaser or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
The Company and each Purchaser agree that monetary damages would not
provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has, as of the date hereof entered
into
and currently in effect, nor shall the Company or any of its subsidiaries,
on or
after the date of this Agreement, enter into any agreement with respect to
its
securities that is inconsistent with the rights granted to the Purchasers in
this Agreement or otherwise conflicts with the provisions hereof.
(c) No
Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Purchasers in such
capacity pursuant hereto or as disclosed on Schedule
2.1(c)
of the
Purchase Agreement) may include securities of the Company in the Registration
Statement, and the Company shall not after the date hereof enter into any
agreement providing such right to any of its securityholders, unless the right
so granted is subject in all respects to the prior rights in full of the
Purchasers set forth herein, and is not otherwise in conflict with the
provisions of this Agreement.
(d) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and the Purchasers of a majority of the Registrable
Securities outstanding.
(e) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earlier of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified for
notice prior to 5:00 p.m., Pacific Standard Time on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or communication
is
delivered via facsimile at the facsimile telephone number specified for notice
later than 5:00 p.m., Pacific Time, on any date and earlier than 11:59 p.m.,
Pacific Time, on such date, (iii) the Business Day following the date of
mailing, if sent by nationally recognized overnight courier service or (iv)
actual receipt by the party to whom such notice is required to be given. The
addresses for such communications shall be with respect to each Purchaser at
its
address set forth under its name on Schedule
I
attached
hereto, or with respect to the Company, addressed to:
8
000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxx Xxxx
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
with
copies (which copies
shall
not
constitute notice
to
the
Company) to: Xxxxx
Xxxxxx Xxxxxxxx LLP
0000
X.X.
Xxxxx Xxx., 00xx
Xxxxx
Xxxxxxxx,
Xxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx, Esq.
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
or
to
such other address or addresses or facsimile number or numbers as any such
party
may most recently have designated in writing to the other parties hereto by
such
notice. Copies of notices to Purchasers shall be sent to their respective street
or email addresses indicated in the attached Schedule I.
(f) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Purchaser and its successors and assigns.
(g) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(h) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of California, without giving effect to any of the conflicts
of law principles which would result in the application of the substantive
law
of another jurisdiction. This Agreement shall not be interpreted or construed
with any presumption against the party causing this Agreement to be
drafted.
(i) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(j) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to
be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
9
(h) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
[SIGNATURE
PAGE FOLLOWS]
10
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
By:
/s/ Xxxxx Xxxx
Name:
Xxxxx Xxxx
Title:
Chief Financial and Legal Officer
PURCHASER:
By:
/s/ Xxxxxxx
Xxxxxxx
Name:
Xxxxxxx Xxxxxxx
Title:
11
Schedule
I
List
of Purchasers
12
