EXHIBIT 10.13
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of _______,
2004, is executed and delivered by and among Q Matrix, Inc., a Delaware
corporation (the "Company"), and each of the subscribers in the Company's
private placement of units consisting of convertible notes and warrants to
purchase common stock (the "Offering") as described in the Company's
Confidential Private Placement Memorandum dated June __, 2004 (collectively,
the "Holders.")
WITNESSETH:
WHEREAS, pursuant to the terms of the Offering, the Holders have
purchased units of convertible notes and warrants to purchase common stock
which, upon the occurrence of certain events, will be convertible into, or
exercisable to purchase shares of the Company's common stock, and as a
condition of the Offering, the Company is to provide registration rights with
respect to the shares that may be issued pursuant to the convertible notes and
warrants (the "Registrable Securities"); and
WHEREAS, upon the occurrence of certain events the Registrable Securities
that would be issued and delivered by the Company in reliance upon the
exemption from the registration provisions of the United States Securities Act
of 1933, as amended (the "Securities Act"), for non public offerings pursuant
to Sections 4(2) and 4(6) of the Securities Act and Regulation D under the
Securities Act; and
WHEREAS, the terms and conditions of the Offering provide for the
execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. As used in this Agreement, the capitalized terms set forth
below shall have the following meanings:
"Affiliate" shall mean, as to a specified Person, a Person that directly,
or indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with, the Persons specified.
"Company" shall have the meaning set forth in the preamble, and shall
also include the Company's successors.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, association, limited liability company, joint venture, trust,
unincorporated entity or other entity, or the government of any country or
sovereign state, or of any state, province, municipality or other political
subdivision thereof.
"Prospectus" shall mean the Prospectus included in any Registration
Statement including any preliminary Prospectus, and any such Prospectus as
amended or supplemented by any Prospectus supplement, including post effective
amendments, in each case including all material incorporated or deemed to be
incorporated by reference therein.
"Qualified Offering" shall have the same meaning as that used in the form
of 10% Convertible Notes issued to the Holders.
"Registrable Securities" shall have the meaning set forth in the
preamble; provided, however, that any shares of Common Stock shall cease to be
Registrable Securities when they shall have been included in an effective
Registration Statement or sold pursuant to Rule 144.
"Registration Expenses" shall mean any and all expenses incident to the
performance by the Company of its obligations under this Agreement, including,
but not limited to: (i) all SEC and NASD registration and filing fees; (ii)
all fees and expenses incurred in connection with compliance with state
securities or blue sky laws; (iii) all expenses of printing and distributing
any Registration Statement, any Prospectus, and any amendments or supplements
thereto; and (iv) the fees and disbursements of counsel for the Company and of
the independent public accountants of the Company.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including a Prospectus, amendments and supplements to such
registration statement, including post effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"Rule 144" means Rule 144 of the General Rules and Regulations
promulgated under the Securities Act or any successor rule.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall have the meaning set forth in the preamble.
"Underwriter" shall have the meaning set forth in Section 2(11) of the
Securities Act who signs an underwriting agreement with the Company for an
underwritten offering of any of the Company's equity securities.
2. Registration.
(a) The Company agrees that following the date of Closing of a Qualified
Offering, the Company shall file a registration statement, and shall use
commercially reasonably efforts to cause such Registration Statement to become
effective with respect to such Registrable Securities in accordance with the
registration procedure set forth in Section 4 hereof. Such Registration
Statement will be part of a registration statement filed to register
securities sold in the Qualified Offering.
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(b) In the event that the registration is pursuant to a "firm
commitment" underwriting, each Holder shall (together with the Company and any
other holders of Common Stock distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
underwriter or underwriters selected for underwriting by the Company.
3. Holdback Agreements. If any of the Holders' Registrable Securities are
covered by a Registration Statement filed pursuant to this Agreement, if
requested of all holders of registrable shares of the Common Stock of the
Company covered by such Registration Statement by the managing underwriters in
an underwritten offering (if timely notified in writing by the Company or the
managing underwriters), the Holders agree not to effect any public sale or
distribution of securities of the Company of any class included in such
Registration Statement, including a sale pursuant to Rule 144 (except as a
part of such underwritten offering) to the same extent as has been requested
by such other holders, during the 10 day period prior to, and the 180 day
period beginning on, the effective date of any underwritten offering made
pursuant to such Registration Statement.
4. Expenses and Procedures. This Section 4 shall be applicable to a
registration of Registrable Securities pursuant to this Agreement.
(a) Expenses of Registration. All Registration Expenses (exclusive of
underwriting discounts and commissions) shall be borne by the Company. The
Holders shall bear all underwriting discounts, selling commissions, sales
concessions and similar expenses applicable to any sale of the Registrable
Securities sold by the Holders.
(b) Registration Procedures. In the case of the registration,
qualification or compliance effected by the Company pursuant to this
Agreement, the Company will keep the Holders advised as to the initiation of
registration, qualification and compliance and as to the completion thereof.
At its expense, the Company will furnish such number of Prospectuses and other
documents incident thereto as the Holders or underwriters from time to time
may reasonably request.
(c) Information. The Company may require each seller of Registrable
Securities as to which any registration is being effected to furnish such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request.
(d) Delay or Suspension. Notwithstanding anything herein to the
contrary, the Company may, at any time, suspend the effectiveness of any
Registration Statement for a period of up to 30 consecutive days or 60 days in
the aggregate in any calendar year, as appropriate (a "Suspension Period"), by
giving notice to the Holders to be included in the Registration Statement, if
the Company shall have determined, after consultation with its counsel, that
the Company is required to disclose any material corporate development which
the Company determines could reasonably be expected to have a material effect
on the Company. The Holders agree by acquisition of such Registrable
Securities that, upon receipt of any notice from the Company of a Suspension
Period, the Holders shall forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus
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until the Holders (i) are advised in writing by the Company that the use of
the applicable Prospectus may be resumed, (ii) have received copies of a
supplemental or amended prospectus, if applicable, and (iii) have received
copies of any additional or supplemental filings which are incorporated or
deemed to be incorporated by reference in such Prospectus. The Company shall
prepare, file and furnish to the Holders immediately upon the expiration of
any Suspension Period, appropriate supplements or amendments, if applicable,
to the Prospectus and appropriate documents, if applicable, incorporated by
reference in the Registration Statement. The Company agrees to use its best
efforts to cause any Suspension Period to be terminated as promptly as
possible and to cause such Registration Statement to continuously remain
effective until such time as the Registrable Securities are either sold by the
Holders or are eligible for sale by the Holders or their respective affiliates
in accordance with the provisions of subsection (k) of Rule 144.
(e) Blue Sky. The Company will, as expeditiously as possible, use its
best efforts to register or qualify the Registrable Securities covered by a
Registration Statement under the securities or blue sky laws of such
jurisdictions as the Holders or, in the case of an underwritten public
offering, the managing underwriter shall reasonably request, provided that the
Company shall not be required in connection therewith or as a condition
thereto to qualify to do business in any jurisdiction where it is not so
qualified or to take any action which would subject it to taxation or service
of process in any jurisdiction where it is not otherwise subject to such
taxation or service of process.
(f) Notification of Material Events. The Company will, as expeditiously
as possible, immediately notify the Holders, 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 contained in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing and, as expeditiously as possible,
amend or supplement such prospectus to eliminate the untrue statement or the
omission, and use its best efforts to cause any such amendment or supplement
to become effective.
(g) Opinions. The Company will use its best efforts (if the offering is
underwritten) to furnish, at the request of the Holders, on the date that
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration: (i) an opinion of counsel representing the Company for the
purposes of such registration dated such date, addressed to the
Underwriter(s), stating that such Registration Statement has become effective
under the Securities Act and that (A) to the best knowledge of such counsel,
no stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the Registration Statement, the
related prospectus, and each amendment or supplement thereof, comply as to
form in all material respects with the requirements of the Securities Act
(except that such counsel need express no opinion as to financial statements
and financial and statistical data contained therein) and (C) to such other
effects as may reasonably be requested by counsel for the Underwriter(s), and
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(ii) a letter dated such date from the independent public accountants retained
by the Company, addressed to the Underwriter(s), stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the Registration Statement or the Prospectus, or any
amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act, and such
letter shall additionally cover such other financial matters (including
information as to the period ending no more than five business days prior to
the date of such letter) with respect to the registration in respect of which
such letter is being given as such underwriters or the Holders may reasonably
request.
5. Certification by Selling Shareholders. The Holders shall review the
Registration Statement prepared and filed in connection with any such
registration and shall represent and warrant to the Underwriter, if any, and
the Company that none of the Holders knows of an untrue statement of a
material fact concerning any of the Holders included in the Registration
Statement or the omission from the Registration Statement of any material fact
concerning any of the Holders required to be stated therein or necessary to
make the statements therein not misleading.
6. Indemnification and Contribution.
(a) In connection with any Registration Statement, the Company agrees to
indemnify and hold harmless the Holders, each Affiliate of the Holders, the
directors, partners, officers, employees and agents of the Holders and each
person who controls any of the Holders, if any, within the meaning of either
the Securities Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed or
in any amendment thereof, or in any preliminary Prospectus or Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon 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, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any of the
Holders specifically for inclusion therein, (ii) the Company will not be
liable to any indemnified party under this indemnity agreement with respect to
any Registration Statement or Prospectus to the extent that any such loss,
claim, damage or liability of such indemnified party results from the use of
the Prospectus during a period when the use of the Prospectus has been
suspended in accordance with Section 4(d) hereof, provided that the
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indemnified party received prior notice of such suspension, which notice shall
be deemed to have been received by the indemnified party within 48 hours after
the giving thereof; and (iii) the Company shall not be liable to any
indemnified party with respect to any preliminary Prospectus to the extent
that any such loss, claim, damage or liability of such indemnified party
results from the fact that such indemnified party sold Registrable Securities
to a person as to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus or of the Prospectus as
then amended or supplemented in any case where such delivery is required by
the Securities Act, if the loss, claim, damage or liability of such
indemnified party results from an untrue statement or omission of a material
fact contained in the preliminary Prospectus which was corrected in the
Prospectus or in the Prospectus as then amended or supplemented. This
indemnity agreement will be in addition to any liability that the Company may
otherwise have. The Company also agrees to indemnify and provide contribution
to each person who is an Underwriter and who signs an underwriting agreement
and/or a selected dealer agreement with respect to the Registrable Securities,
its officers and directors, and each person who controls each such
Underwriter, on substantially the same basis as that of the indemnification of
and contribution to the Holders provided in this Section 6(a).
(b) By its participation in a Registration Statement, each Holder shall
be deemed to have agreed to indemnify and hold harmless (i) the Company, (ii)
each of its directors, (iii) each of its officers who signs such Registration
Statement (iv) each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and (v) any other Holder or any
of its directors, officers, partners, members, agents or employees or any
person who controls such Holder to the same extent as the foregoing indemnity
from the Company to the Holders and each of their affiliates, but only with
respect to written information relating to each such Holder furnished to the
Company by or on behalf of the Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. Each Holder shall also be
deemed to have agreed to indemnify and contribute to each Underwriter who
signs an underwriting agreement and/or a selected dealer agreement in
connection with such Registration Statement, its officers and directors, and
each person who controls each such Underwriter, on substantially the same
basis as that of the indemnification of and contribution to the Company
provided in this Section 6(b). Anything in this Agreement contained to the
contrary notwithstanding, the liability of each Holder for indemnification or
contribution hereunder shall be limited to the amount of proceeds received by
such Holder in the offering giving rise to such liability after deducting any
discounts or commissions paid by such Holder in connection with sales of
Registrable Securities. The obligations of the Holders hereunder are several,
not joint.
(c) Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 6, notify the indemnifying party in writing of the commencement
thereof; but the failure so to promptly notify the indemnifying party will not
relieve the indemnifying party from liability under Section 6(a) or 6(b)
hereof unless and to the extent that it is materially prejudiced thereby. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
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party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and
local counsel) if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action included both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution or such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnified party shall not settle or
compromise any action for which it seeks indemnification or contribution
hereunder without the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties or actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such
claim, action, suit or proceeding.
(d) The provisions of this Section 6 shall remain in full force and
effect regardless of any investigation made by or on behalf of the Holders or
the Company or any other persons who are entitled to indemnification pursuant
to the provisions of this Section 6, and shall survive the sale by the Holders
of Registrable Securities.
7. Rule 144. As long as the Company is subject to the reporting requirements
of Section 13 or 15 of the Exchange Act, the Company shall use commercially
reasonable efforts to promptly file the reports required to be filed by it
pursuant to Section 13(a) or 15(d) of the Exchange Act and the rules and
regulations adopted by the SEC thereunder. If the Company is at any time not
required to file such reports, it shall promptly make publicly available such
information as is necessary to permit sales pursuant to Rule 144. Upon the
request of any of the Holders, the Company shall deliver to such Holders a
written statement as to whether it has complied with such requirements and
such other documents as may be reasonably requested by such Holder related to
the availability of Rule 144.
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8. Amendments. This Agreement may not be amended, modified or supplemented,
and waivers of or consents to departures from the provisions of this Agreement
may not be given, unless they would not have an adverse effect upon the rights
of the Holders and the Company has obtained the consent of the Holders.
9. Successors and Assigns. This Agreement shall inure to the benefit of, and
be binding upon, the Company, the Holders and their respective successors,
assigns and transferees.
10. Third Party Beneficiaries. The Holders from time to time shall be third
party beneficiaries of the agreements of the Company contained herein.
11. Headings. The headings which are contained in this Agreement are for the
sole purpose of convenience of reference, and shall not limit or otherwise
affect the interpretation of any of the provisions hereof.
12. Governing Law. This Agreement shall be governed by the laws of the State
of California applicable to contracts made and to be wholly performed therein.
13. Notices. All notices and other communications hereunder shall be in
writing, and shall be made by hand delivery, registered first class mail, or
any courier providing overnight delivery, at the addresses set forth for
notices in the Subscription Agreement. All such notices and other
communications shall be deemed to have been duly given upon receipt.
14. Entire Agreement. This Agreement sets forth the entire agreement among
the parties with respect to the subject matter hereof.
15. Severability. In the event that any one or more of the provisions of
this Agreement, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions of this Agreement shall not be in any way impaired
or affected thereby.
16. Interpretation. As used in this Agreement, unless the context otherwise
requires: words describing the singular number shall include the plural and
vice versa; words denoting any gender shall include all genders; words
denoting natural persons shall include corporations, partnerships and other
entities, and vice versa; and the words "hereof," "herein," and "hereunder,"
and words of similar import, shall refer to this Agreement as a whole, and not
to any particular provision of this Agreement.
17. Waiver. The failure of the Company or the Holders to at any time enforce
any of the provisions of this Agreement shall not be deemed or construed to be
a waiver of any such provision, nor to in any way affect the validity of this
Agreement or any provision hereof or the right of the Company or the Holders
to thereafter enforce each and every provision of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as of the date above written.
"Company"
Q MATRIX, INC.
By /s/
Xxxxx X. Xxxxxxxx
President
"Holders"
By their execution of the Subscription
Agreement and Investment Letter
relating to the Offering, each Holder
agrees to the terms of this Registration
Rights Agreement.
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