Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of January 13,
2005, by and among Infinity, Inc., a Colorado corporation, with headquarters
located at 0000 Xxxx Xxxx Xxxxxx, Xxxxx X, Xxxxxxx, Xxxxxx 00000 (the
"COMPANY"), and the undersigned buyers (each, a "BUYER" and collectively, the
"BUYERS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell at the Initial Closing to the
Buyers (i) senior secured notes of the Company (including accrued and unpaid
interest thereon, the "INITIAL NOTES"), which will be convertible into shares of
the Company's common stock, $0.0001 par value per share (the "COMMON STOCK"), in
accordance with the terms of the Initial Notes (the shares of Common Stock
issuable upon such conversion, the "INITIAL NOTE SHARES"), and (ii) warrants to
purchase shares of Common Stock (the "INITIAL WARRANTS," and the shares of
Common Stock issuable upon exercise of the Initial Warrants, the "INITIAL
WARRANT SHARES");
B. In connection with the Securities Purchase Agreement, the Company has
the option, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to issue and sell to the Buyers, from time to time during
the Additional Note Issuance Period (as defined in the Securities Purchase
Agreement) (i) additional senior secured conditionally convertible notes of the
Company (any such additional notes, including accrued and unpaid interest
thereon, "ADDITIONAL NOTES" and, collectively with the Initial Notes, "NOTES"),
which will be convertible into shares of Common Stock in accordance with the
terms of the Additional Notes (the shares of Common Stock issuable upon such
conversion, "ADDITIONAL NOTE SHARES," and together with the Initial Note Shares,
"NOTE SHARES") and (ii) additional warrants to purchase shares of Common Stock
(any such warrants, "ADDITIONAL WARRANTS," and the shares of Common Stock
issuable upon exercise of such Additional Warrants, "ADDITIONAL WARRANT SHARES"
and together with the Initial Warrant Shares, the "WARRANT SHARES");
C. To induce the Buyers to execute and deliver the Securities Purchase
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.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "ADDITIONAL REGISTRABLE SECURITIES" means (i) Additional Warrant
Shares issued or issuable upon exercise of any Additional Warrants
and (ii) any shares of capital stock issued or issuable with respect
to such Additional Warrant Shares and Additional Warrants as a
result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any
limitations on exercises of the Additional Warrants.
b. "ADDITIONAL REGISTRATION STATEMENT" means a registration statement
or registration statements of the Company filed under the 1933 Act
covering Additional Registrable Securities.
c. "EFFECTIVENESS DEADLINE" means the Initial Effectiveness Deadline,
an Additional Effectiveness Deadline, a Subsequent Effectiveness
Deadline, a Deficiency Effectiveness Deadline, an Additional
Deficiency Effectiveness Deadline or a Subsequent Deficiency
Effectiveness Deadline (each as defined below), as applicable.
d. "FILING DEADLINE" means the Initial Filing Deadline, an Additional
Filing Deadline, a Subsequent Filing Deadline, a Deficiency Filing
Deadline, an Additional Deficiency Filing Deadline or a Subsequent
Deficiency Filing Deadline (each as defined below), as applicable.
e. "INITIAL REGISTRABLE SECURITIES" means (i) the Initial Warrant
Shares issued or issuable upon exercise of the Initial Warrants and
(ii) any shares of capital stock issued or issuable with respect to
the Initial Warrant Shares and the Initial Warrants as a result of
any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitations on
exercises of the Initial Warrants.
f. "INITIAL REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act
covering the Initial Registrable Securities.
g. "INVESTOR" means a Buyer, any transferee or assignee thereof to whom
a Buyer assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with
Section 9 and any transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
h. "NOTE REGISTRABLE SECURITIES" means (i) Note Shares issued or
issuable upon conversion of any outstanding Notes and (ii) any
shares of capital stock issued or issuable with respect to such Note
Shares and Notes as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without
regard to any limitations on the conversion of the Notes.
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i. "NOTE REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act
covering Note Registrable Securities.
j. "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a governmental or any department or
agency thereof.
k. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing one or more Registration Statements
(as defined below) 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 or delayed 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").
l. "REGISTRABLE SECURITIES" means the Initial Registrable Securities,
any Additional Registrable Securities, and any Note Registrable
Securities; provided, however, that any such Registrable Securities
shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such securities becomes
effective under the 1933 Act and such securities are disposed of in
accordance with such Registration Statement, (ii) such securities
are sold in accordance with Rule 144 (as defined in Section 8) or
(iii) such securities become transferable without any restrictions
in accordance with Rule 144(k) (or any successor provision).
m. "REGISTRATION STATEMENT" means the Initial Registration Statement,
any Additional Registration Statement or any Note Registration
Statement.
n. "TRADING DAY" means any day on which the Common Stock is traded on
the principal securities exchange or securities market on which the
Common Stock is then traded; provided that "Trading Day" shall not
include any day on which the Common Stock is scheduled to trade, or
actually trades on such exchange or market, for less than 4.5 hours.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory and Optional Registration
(i) Initial Mandatory Registration. The Company shall prepare,
and, as soon as practicable but in no event later than 30 days after the Initial
Closing Date (the "INITIAL FILING DEADLINE"), file with the SEC the Initial
Registration Statement on Form S-3, covering the resale of all of the Initial
Registrable Securities. In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(d). The Initial
Registration Statement prepared pursuant hereto shall register for resale
Initial Registrable Securities consisting of at least that number of shares of
Common Stock equal to 110% of the number of Initial Warrant Shares issuable upon
exercise of all the outstanding Initial Warrants as of the second Trading
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Day immediately preceding the date that the Initial Registration Statement is
initially filed with the SEC. The calculations set forth in this paragraph shall
be made without regard to any limitations on the exercise of the Initial
Warrants and such calculation shall assume that the Initial Warrants are then
exercisable into shares of Common Stock at the then-prevailing Warrant Exercise
Price (as defined in the Initial Warrants). The Company shall use its best
efforts to have the Initial Registration Statement declared effective by the SEC
as soon as practicable, but in no event later than the date which is 150 days
after the Initial Closing Date (the "INITIAL EFFECTIVENESS DEADLINE").
(ii) Additional Mandatory Registration. The Company shall
prepare, and, as soon as practicable but in no event later than 20 days after an
Additional Closing Date (each, an "ADDITIONAL FILING DEADLINE"), file with the
SEC an Additional Registration Statement on Form S-3, covering the resale of the
Additional Registrable Securities relating to the Additional Warrants issued in
the Additional Closing occurring on such Additional Closing Date. In the event
that Form S-3 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration, subject to the provisions of
Section 2(d). Each Additional Registration Statement prepared pursuant hereto
shall register for resale Additional Registrable Securities consisting of at
least that number of shares of Common Stock equal to 110% of the number of
Additional Warrant Shares issuable upon exercise of all the Additional Warrants
issued in such Additional Closing as of the second Trading Day prior to the date
such Additional Registration Statement is initially filed with the SEC. The
calculations set forth in this paragraph shall be made without regard to any
limitations on the exercise of the Additional Warrants and such calculation
shall assume that the Additional Warrants are then exercisable into shares of
Common Stock at the then-prevailing Warrant Exercise Price (as defined in the
Additional Warrants). The Company shall use its best efforts to have the
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the date which is 150 days after the
Additional Closing Date (the "ADDITIONAL EFFECTIVENESS DEADLINE").
(iii) Subsequent Mandatory Registration. In the event that (a)
the holder of any Note delivers a Notice of Redemption at Option of Holder (as
defined in the Notes) pursuant to Section 3(c) of such Note and the Company does
not pay the Redemption Price (as defined in the Notes) within the time period
specified in Section 3(d) of such Note, (b) the holder of any Note declares such
Note to be due and payable immediately pursuant to Section 11(b) of such Note
and the Company does not pay the Acceleration Amount (as defined in the Notes)
within five (5) Business Days (as defined in the Notes) of such Note becoming
due under Section 11(b) of such Note, or (c) there is an Event of Default (as
defined in the Notes) arising from an event described in clause (iv) or (v) of
Section 11(a) of such Note, the Company shall prepare, and, as soon as
practicable but in no event later than 15 days thereafter (each, a "SUBSEQUENT
FILING DEADLINE"), file with the SEC one or more Note Registration Statements on
Form S-3, covering the resale of the Note Registrable Securities. In the event
that Form S-3 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration, subject to the provisions of
Section 2(d). Each Note Registration Statement prepared pursuant hereto shall
register for resale Note Registrable Securities relating to all outstanding
Notes and consisting of, with respect to each such Note, at least that number of
shares of Common Stock equal to the difference between (i) 150% of (x) the
aggregate principal amount of such Note, divided by (y) the arithmetic average
of the Weighted Average Price (as
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defined in the Notes) of the Common Stock on each of the five (5) consecutive
Trading Days ending on the second Trading Day immediately preceding the date
such Note Registration Statement is initially filed with the SEC, less (ii) the
number of Note Registrable Securities, if any, relating to such Note that are
covered by, and may be resold pursuant to, an effective Registration Statement.
The calculations set forth in the paragraph shall be made without regard to any
limitations on the conversion of the Notes, and such calculations shall assume
that the Notes are then convertible into shares of Common Stock at the
then-prevailing Conversion Price (as defined in the Notes), except as provided
above. The Company shall use its best efforts to have the Note Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the date that is 75 days after the Subsequent Filing Deadline (the
"SUBSEQUENT EFFECTIVENESS DEADLINE").
(iv) Optional Registration. The Company may, from time to
time, prepare and file with the SEC one or more Note Registration Statements on
Form S-3, covering the resale of any or all of the Note Registrable Securities
or include such Note Registrable Securities in another Registration Statement.
In the event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration, subject to
the provisions of Section 2(d).
b. Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of such Registrable Securities held
by each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement. For purposes hereof, the number of Registrable
Securities held by an Investor includes all Registrable Securities issuable upon
exercise of Warrants held by such Investor or conversion of the Notes held by
such Investor, without regard to any limitation on the exercise of the Warrants
or conversion of the Notes.
c. Legal Counsel. Subject to Section 5 hereof, the Buyers holding
securities representing at least two-thirds (2/3) of the Registrable Securities
shall have the right to select one legal counsel to review and oversee any
offering pursuant to this Section 2 ("LEGAL COUNSEL"), which shall be Xxxxxx
Xxxxxx Xxxxx Xxxxxxxx or such other counsel as thereafter designated in writing
to the Company by the holders of at least two-thirds (2/3) of the Registrable
Securities. The Company shall reasonably cooperate with Legal Counsel in
performing the Company's obligations under this Agreement.
d. Ineligibility for Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall undertake to register the Registrable Securities on
Form S-3 as soon as such form is available, provided that
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the Company shall maintain the effectiveness of the Registration Statement then
in effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.
e. Sufficient Number of Shares Registered.
(i) In the event the number of shares of Common Stock
available under the Initial Registration Statement filed pursuant to Section
2(a)(i) is insufficient to cover all of the Initial Registrable Securities
required to be covered by the Initial Registration Statement or an Investor's
allocated portion of the Initial Registrable Securities pursuant to Section
2(b), the Company shall, as soon as practicable, but in any event not later than
15 days after the first date on which the number of shares available under the
Initial Registration Statement is so insufficient (the "DEFICIENCY FILING
DEADLINE"), amend the Initial Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so
that there are registered for resale Initial Registrable Securities consisting
of at least that number of shares of Common Stock equal to 110% of the number of
Initial Warrant Shares issuable upon exercise of all the outstanding Initial
Warrants as of the second Trading Day immediately preceding the date of the
filing of the amendment or new Registration Statement with the SEC. The Company
shall use its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable, but in any event not later
than 75 days following the applicable Deficiency Filing Deadline (the
"DEFICIENCY EFFECTIVENESS DEADLINE"). For purposes of the foregoing provision,
the number of shares of Common Stock available under the Initial Registration
Statement shall be deemed "insufficient to cover all of the Initial Registrable
Securities" if as of any date of determination, the number of shares of Common
Stock equal to 100% of the number of Initial Warrant Shares issuable as of such
time upon exercise of all the outstanding Initial Warrants is greater than the
number of shares of Common Stock available for resale under the Initial
Registration Statement. The calculations set forth in this paragraph shall be
made without regard to any limitations on the exercise of the Initial Warrants.
(ii) In the event the number of shares of Common Stock
available under any Additional Registration Statement filed pursuant to Section
2(a)(ii) is insufficient to cover all of the Additional Registrable Securities
required to be covered by such Additional Registration Statement or an
Investor's allocated portion of the Additional Registrable Securities pursuant
to Section 2(b), the Company shall, as soon as practicable, but in any event not
later than 15 days after the first date on which the number of shares available
under such Additional Registration Statement is so insufficient (an "ADDITIONAL
DEFICIENCY FILING DEADLINE"), amend an Additional Registration Statement, or
file a new Registration Statement (on the short form available therefor, if
applicable), or both, so that there is registered for resale Additional
Registrable Securities consisting of at least that number of shares of Common
Stock equal to 110% of the number of Additional Warrant Shares issuable upon
exercise of all the outstanding Additional Warrants to which the Additional
Registration Statement relates as of the second Trading Day immediately
preceding the date of the filing of the amendment or new Registration Statement
with the SEC. The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable,
but in any event not later than 75 days following the applicable Additional
Deficiency Filing Deadline (an "ADDITIONAL DEFICIENCY EFFECTIVENESS DEADLINE").
For purposes of the foregoing provision, the number of shares of Common Stock
available under an Additional Registration Statement shall be deemed
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"insufficient to cover all of the Additional Registrable Securities" if as of
any date of determination, the number of shares of Common Stock equal to 100% of
the number of Additional Warrant Shares issuable as of such time upon exercise
of all the outstanding Additional Warrants to which the Additional Registration
Statement relates is greater than the number of shares of Common Stock available
for resale under such Additional Registration Statement. The calculations set
forth in this paragraph shall be made without regard to any limitations on the
exercise of the Additional Warrants.
(iii) In the event the number of shares of Common Stock
available under any Note Registration Statement filed pursuant to Section
2(a)(iii) is insufficient to cover all of the Note Registrable Securities
relating to each outstanding Note or an Investor's allocated portion of such
Note Registrable Securities pursuant to Section 2(b), the Company shall, as soon
as practicable, but in any event not later than 15 days after the first date on
which the number of shares available under such Note Registration Statement is
so insufficient (the "SUBSEQUENT DEFICIENCY FILING DEADLINE"), amend such Note
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so that there is registered for
resale as Note Registrable Securities relating to such Note, that number of
shares of Common Stock equal to (i) 150% of (x) the aggregate principal amount
of such Note, divided by (y) the arithmetic average of the Weighted Average
Price (as defined in the Notes) of the Common Stock on each of the five (5)
consecutive Trading Days ending on the Trading Day immediately preceding the
date of the filing of the amendment or new Registration Statement with the SEC.
The Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable, but in any
event not later than 75 days following the applicable Subsequent Deficiency
Filing Deadline (the "SUBSEQUENT DEFICIENCY EFFECTIVENESS DEADLINE"). For
purposes of the foregoing provision, the number of shares of Common Stock
available under a Note Registration Statement filed pursuant to Section
2(a)(iii) shall be deemed "insufficient to cover all of the Note Registrable
Securities relating to each outstanding Note" if as of any date of
determination, the number of shares of Common Stock equal to 120% of (x) the
aggregate principal amount of each outstanding Notes to which such Note
Registration Statement relates, divided by (y) the arithmetic average of the
Weighted Average Price (as defined in the Notes) of the Common Stock on each of
the five (5) consecutive Trading Days ending on the Trading Day immediately
preceding such date of determination, is greater than the aggregate number of
shares of Common Stock available for resale under any Note Registration
Statements as Registrable Securities relating to such Note. The calculations set
forth in this paragraph shall be made without regard to any limitations on the
conversion of the Notes and such calculations shall assume that the Notes are
then convertible into shares of Common Stock at the then-prevailing Conversion
Price.
f. Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement.
(i) If (i) a Registration Statement covering all the Initial
Registrable Securities and required to be filed by the Company pursuant to
Section 2(a)(i) or Section 2(e)(i) of this Agreement is not (A) filed with the
SEC on or before the applicable Filing Deadline or (B) declared effective by the
SEC on or before the applicable Effectiveness Deadline or (ii) on any day after
the Registration Statement has been declared effective by the SEC sales of all
the Initial Registrable Securities required to be included on such Registration
Statement cannot be
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made (other than during an Allowable Grace Period (as defined in Section 3(t)))
pursuant to the Registration Statement (including because of a failure to keep
the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement or to
register sufficient shares of Common Stock as determined in accordance with
Section 2(e)), then, as partial relief for the damages to any holder of the
Initial Warrants by reason of any such delay in or reduction of its ability to
sell the underlying shares of Common Stock (which remedy shall not be exclusive
of any other remedies available at law or in equity), the Company shall pay to
such holder an amount in cash equal to the product of (i) the total Aggregate
Exercise Price (as defined in the Initial Warrants) of all Initial Warrants held
by such holder and to which the Registration Statement relates, multiplied by
(ii) the sum of (A) 0.02, if the Registration Statement is not filed by the
applicable Filing Deadline, plus (B) 0.02, if the Registration Statement is not
declared effective by the applicable Effectiveness Deadline, plus (C) the
product of (I) 0.000667 multiplied by (II) the sum (without duplication) of (x)
the number of days after the applicable Filing Deadline that such Registration
Statement is not filed with the SEC, plus (y) the number of days after the
applicable Effectiveness Deadline that such Registration Statement is not
declared effective by the SEC, plus (z) the number of days after such
Registration Statement has been declared effective by the SEC that such
Registration Statement is not available (other than during an Allowable Grace
Period) for the sale of at least all the Initial Registrable Securities required
to be included and maintained on such Registration Statement pursuant to Section
2(e).
(ii) If (i) a Registration Statement covering any Additional
Registrable Securities and required to be filed by the Company pursuant to
Section 2(a)(ii) or Section 2(e)(ii) of this Agreement is not (A) filed with the
SEC on or before the applicable Filing Deadline or (B) declared effective by the
SEC on or before the applicable Effectiveness Deadline or (ii) on any day after
such Registration Statement has been declared effective by the SEC sales of all
the Additional Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(t))) pursuant to such Registration Statement
(including because of a failure to keep the Registration Statement effective, to
disclose such information as is necessary for sales to be made pursuant to such
Registration Statement or to register sufficient shares of Common Stock as
determined in accordance with Section 2(e)), then, as partial relief for the
damages to any holder of the Additional Warrants by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to such holder an amount in cash equal to the
product of (i) the total Aggregate Exercise Price (as defined in the Additional
Warrants) of all Additional Warrants held by such holder and to which the
Registration Statement relates, multiplied by (ii) the sum of (A) 0.02, if the
Registration Statement is not filed by the applicable Filing Deadline, plus (B)
0.02, if the Registration Statement is not declared effective by the applicable
Effectiveness Deadline, plus (C) the product of (I) 0.000667 multiplied by (II)
the sum (without duplication) of (x) the number of days after the applicable
Filing Deadline that such Registration Statement is not filed with the SEC, plus
(y) the number of days after the applicable Effectiveness Deadline that such
Registration Statement is not declared effective by the SEC, plus (z) the number
of days after such Registration Statement has been declared effective by the SEC
that such Registration Statement is not available (other than during an
Allowable Grace Period) for the sale of at least all the Additional Registrable
Securities required to be included and maintained on such Registration Statement
pursuant to Section 2(e).
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(iii) If (i) a Registration Statement covering all the Note
Registrable Securities and required to be filed by the Company pursuant to
Section 2(a)(iii) or Section 2(e)(iii) of this Agreement is not (A) filed with
the SEC on or before the applicable Filing Deadline or (B) declared effective by
the SEC on or before the applicable Effectiveness Deadline or (ii) on any day
after the Registration Statement has been declared effective by the SEC, sales
of all the Note Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(t))) pursuant to the Registration Statement
(including because of a failure to keep the Registration Statement effective, to
disclose such information as is necessary for sales to be made pursuant to the
Registration Statement or to register sufficient shares of Common Stock as
determined in accordance with Section 2(e)), then, as partial relief for the
damages to any holder of the Notes by reason of any such delay in or reduction
of its ability to sell the underlying shares of Common Stock (which remedy shall
not be exclusive of any other remedies available at law or in equity), the
Company shall pay to such holder an amount in cash equal to the product of (i)
the principal amount of the Notes held by such holder, multiplied by (ii) the
sum of (A) 0.02, if the Registration Statement is not filed by the applicable
Filing Deadline, plus (B) 0.02, if the Registration Statement is not declared
effective by the applicable Effectiveness Deadline, plus (C) the product of (I)
0.000667 multiplied by (II) the sum (without duplication) of (x) the number of
days after the applicable Filing Deadline that such Registration Statement is
not filed with the SEC, plus (y) the number of days after the applicable
Effectiveness Deadline that such Registration Statement is not declared
effective by the SEC, plus (z) the number of days after such Registration
Statement has been declared effective by the SEC that such Registration
Statement is not available (other than during an Allowable Grace Period) for the
sale of at least all the Note Registrable Securities required to be included and
maintained on such Registration Statement pursuant to Section 2(e).
(iv) If at any time after a Note Registration Statement
covering the resale of Note Registrable Securities filed pursuant to Section
2(a)(iv) has been declared effective by the SEC, sales of any such Note
Registrable Securities that actually have been issued to, and continue to be
held by, any holder of the Notes, or former holder of Notes which were converted
into Note Registrable Securities, cannot be made (other than during an Allowable
Grace Period (as defined in Section 3(t)) or during a time at which such issued
Note Registrable Securities may be sold by such holder pursuant to Rule 144(k)
of the 0000 Xxx) pursuant to such Registration Statement (including because of a
failure to keep the Registration Statement effective, or to disclose such
information as is necessary for sales to be made pursuant to the Registration
Statement) then, as partial relief for any damages to such holder of the Notes
by reason of the reduction in its ability to sell such Note Registrable
Securities (which remedy shall not be exclusive of any other remedies available
at law or in equity), the Company shall pay to such holder an amount in cash
equal to the product of (i) the aggregate principal amount of the Notes that
were converted into any such Note Registrable Securities, multiplied by (ii) the
product of (I) 0.000667 multiplied by (II) the number of days after such
Registration Statement has been declared effective by the SEC that such
Registration Statement is not available (other than during an Allowable Grace
Period) for the sale of such Note Registrable Securities.
(v) The payments to which a holder shall be entitled pursuant
to this Section 2(f) are referred to herein as "REGISTRATION DELAY PAYMENTS."
Registration Delay Payments shall be paid on the earlier of (I) the last day of
the calendar month during which such
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Registration Delay Payments are incurred and (II) the third Business Day after
the event or failure giving rise to the Registration Delay Payments is cured. In
the event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of the
lesser of 1.5% per month (prorated for partial months) or the highest lawful
maximum interest rate, in each case, until paid in full.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated, or elects, to file a
Registration Statement with the SEC pursuant to Section 2(a) or 2(e), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the applicable Registrable Securities
(but in no event later than the applicable Filing Deadline) and use its best
efforts to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such filing (but in
no event later than the applicable Effectiveness Deadline). The Company shall
keep each Registration Statement effective pursuant to Rule 415 at all times
until the earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under the
1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the "REGISTRATION
PERIOD"). Such 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 term "best efforts"
shall mean, among other things, that the Company shall submit to the SEC, within
two (2) Business Days after the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on the Registration Statement, as the case may be, a
request for acceleration of effectiveness of such Registration Statement to a
time and date not later than 48 hours after the submission of such request.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a 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 at all times 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 seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), the Company shall have incorporated such report by reference into
the Registration Statement, if applicable, or shall file
10
such amendments or supplements with the SEC on the same day on which the 1934
Act report is filed which created the requirement for the Company to amend or
supplement the Registration Statement.
c. The Company shall (A) permit Legal Counsel to review and comment
upon (i) the Initial Registration Statement at least five (5) Business Days
prior to its filing with the SEC, (ii) any Additional Registration Statement and
any Note Registration Statement at least three (3) Business Days prior to its
filing with the SEC and (iii) all other Registration Statements and all
amendments and supplements to all Registration Statements (except for Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K and any similar or successor reports) within a reasonable number of days
prior to their filing with the SEC, and (B) not file any document, registration
statement, amendment or supplement described in the foregoing clause (A) in a
form to which Legal Counsel reasonably objects. The Company shall not submit a
request for acceleration of the effectiveness of a Registration Statement or any
amendment or supplement thereto without providing prior notice thereof to Legal
Counsel and each Investor. The Company shall furnish to Legal Counsel, without
charge, (i) promptly after the same is prepared and filed with the SEC, one copy
of any Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference that
have not been filed via XXXXX, and all exhibits and (ii) upon the effectiveness
of any Registration Statement, one copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto. The Company
shall reasonably cooperate with Legal Counsel in performing the Company's
obligations pursuant to this Section 3.
d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference that
have not been filed via XXXXX, all exhibits and each preliminary prospectus,
(ii) upon the effectiveness of any Registration Statement, ten (10) copies of
the prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
e. The Company shall use its best efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by the Investors of the Registrable Securities covered by a Registration
Statement under the securities or "blue sky" laws of all the states of the
United States, (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
11
otherwise be required to qualify but for this Section 3(e) or (y) subject itself
to general taxation in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each 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.
f. The Company shall notify Legal Counsel and each Investor in
writing of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
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 (provided that in no event shall such
notice contain any material, nonpublic information), and promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile on the same day of such effectiveness and
by overnight mail), (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a 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 Legal Counsel and each Investor who holds 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
for such purpose.
h. At the reasonable request (in the context of the securities laws)
of any Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors; provided that such Investor shall reimburse the Company for its
out-of-pocket expenses incurred in connection with the furnishing of any such
letter and opinion.
i. At the reasonable request (in the context of the securities laws)
of any Investor, the Company shall make available for inspection during regular
business hours by (i) any Investor, (ii) Legal Counsel and (iii) one firm of
accountants or other agents retained by the
12
Investors (collectively, the "INSPECTORS"), all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree to hold in strict confidence and shall not make
any disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector has knowledge. Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Each Inspector which exercises its rights under this
Section 3(i) shall be obligated to execute a non-disclosure agreement containing
such reasonable terms as the Company may request. The fees and expenses of the
Inspectors shall be borne by the applicable Investor.
j. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company 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 an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
k. The Company shall use its best efforts to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange 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 (ii) secure
designation and quotation of all the Registrable Securities covered by the
Registration Statement on The NASDAQ National Market System, or (iii) if,
despite the Company's best efforts to satisfy the preceding clause (i) or (ii),
the Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure the inclusion for quotation on The NASDAQ SmallCap Market for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(k).
l. The Company shall cooperate with the Investors who hold
Registrable
13
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Investors may reasonably request and registered in
such names as the Investors may request.
m. The Company shall provide a transfer agent and registrar of all
such Registrable Securities not later than the effective date of the applicable
Registration Statement.
n. If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as an Investor requests to be included therein relating to the
sale and distribution of Registrable Securities, including information with
respect to the number of Registrable Securities being offered or sold, the
purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering; (ii) as soon as practicable
make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Investor of such Registrable Securities.
o. The Company shall use its best 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 in the
United States as may be necessary to consummate the disposition of such
Registrable Securities.
p. The Company shall make generally available to its security
holders as soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 0000 Xxx) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of a Registration Statement.
q. Within two (2) Business Days after a Registration Statement which
covers applicable Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in substantially the form attached hereto as Exhibit A,
provided that if the Company changes its transfer agent, it shall immediately
deliver any previously delivered notices under this Section 3(r) and any
subsequent notices to such new transfer agent.
r. The Company shall make such filings with the National Association
of Securities Dealers, Inc. (including providing all required information and
paying required fees thereto) as and when requested by an Investor and make all
other filings reasonably necessary for Investors to sell Registrable Securities
pursuant to a Registration Statement.
s. Notwithstanding anything to the contrary in Section 3(f), at any
time after the applicable Registration Statement has been declared effective by
the SEC, the Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the
14
Company, otherwise required (a "GRACE PERIOD"); provided, that the Company shall
promptly (i) notify the Investors in writing of the existence of material
non-public information giving rise to a Grace Period (provided that in each
notice the Company shall not disclose the content of such material non-public
information to the Investors) and the date on which the Grace Period will begin,
and (ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed 20 consecutive
days and during any 365 day period such Grace Periods shall not exceed an
aggregate of 40 days and the first day of any Grace Period must be at least two
(2) Trading Days after the last day of any prior Grace Period (an "ALLOWABLE
GRACE PERIOD"). For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the holders receive the
notice referred to in clause (i) and shall end on and include the later of the
date the holders receive the notice referred to in clause (ii) and the date
referred to in such notice. The provisions of Section 3(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material non-public information is no longer applicable.
4. OBLIGATIONS OF THE INVESTORS.
a. At least six (6) Business Days prior to the first anticipated
filing date of a Registration Statement and at least five (5) Business Days
prior to the filing of any amendment or supplement to a Registration Statement,
the Company shall notify each Investor in writing of the information, if any,
the Company requires from each such Investor if such Investor elects to have any
of such Investor's Registrable Securities included in such Registration
Statement or, with respect to an amendment or a supplement, if such Investor's
Registrable Securities are included in such Registration Statement (each an
"INFORMATION REQUEST"). Provided that the Company shall have complied with its
obligations set forth in the preceding sentence, 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 of a
particular Investor that such Investor shall furnish to the Company, in response
to an Information Request, such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.
b. Each Investor, by such Investor's 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 such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.
c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f) or written notice from the Company of a Grace Period,
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g) or the first sentence of 3(f) or receipt
of notice that no
15
supplement or amendment is required or that the Grace Period has ended.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including all registration, listing
and qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company shall be paid by the Company, except as
provided in Section 3(h). The Company shall also reimburse the Investors for the
reasonable fees and disbursements of Legal Counsel in connection with
registration, filing or qualification pursuant to Sections 2 and 3 of this
Agreement.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an "INDEMNIFIED PERSON"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable 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 a
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 Registrable Securities are
offered ("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 not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or 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, (iii) any violation or alleged violation
16
by the Company of the 1933 Act, the 1934 Act, any other law, including any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement or (iv)
any material violation of this Agreement by the Company (the matters in the
foregoing clauses (i) through (iv) being, collectively, "VIOLATIONS"). Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any 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 by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(d); (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
preliminary prospectus prior to the use giving rise to a violation and such
Indemnified Person, notwithstanding such advice, used it; (iii) shall not be
available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(d); and (iv) shall not apply to 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 transfer of the
Registrable Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
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, and each Person, if any,
who controls the Company within the meaning of the 1933 Act or the 1934 Act
(each 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 occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party 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 such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the aggregate liability
of the Investor in connection with any Violation
17
shall not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to the Registration Statement giving rise to
such Claim. 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 transfer of the Registrable Securities by the Investors pursuant to
Section 9. 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 was corrected on a timely basis in the prospectus, as
then amended or supplemented.
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. In any such proceeding, any
Indemnified Person or Indemnified Party may retain its own counsel, but, except
as provided in the following sentence, the fees and expenses of that counsel
will be at the expense of that Indemnified Person or Indemnified Party, as the
case may be, unless (i) the indemnifying party and the Indemnified Person or
Indemnified Party, as applicable, shall have mutually agreed to the retention of
that counsel, (ii) the indemnifying party does not assume the defense of such
proceeding in a timely manner or (iii) in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel for 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 Company shall pay reasonable fees for up to one
separate legal counsel for the Investors, and such legal counsel shall be
selected by the Investors holding at least two-thirds (2/3) in interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates. 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 prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise with respect to
any pending or threatened action or claim in respect of which indemnification or
contribution may be or has been sought hereunder (whether or not the Indemnified
Party or Indemnified Person is an actual or potential party to such action or
claim), 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
18
Claim or litigation. 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.
d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
e. 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.
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 Person involved in the sale of Registrable Securities which Person is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) in connection with such sale, shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited to an amount equal to the net amount of
proceeds received by such seller from the sale of such Registrable Securities
pursuant to the Registration Statement giving rise to such action or claim for
indemnification less the amount of any damages that such seller has otherwise
been required to pay in connection with such sale.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors 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 Investors to sell securities of the
Company to the public without registration ("RULE 144"), 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 4(c) of the
Securities Purchase Agreement) and the filing of such
19
reports and other documents is required for the applicable provisions of Rule
144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon written 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 Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within
five (5) Business Days after such transfer or assignment; (ii) the Company is,
within five (5) Business Days after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold at least two-thirds (2/3) of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
11. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
b. Any notices, consents, waivers or other communications required
or
20
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business 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:
Infinity, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxx X
Xxxxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
and
Infinity, Inc.
000 00xx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Senior Vice President
With a copy to:
Xxxxx Xxxxxx & Xxxxxx, LLP
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx, Esq.
If to Legal Counsel:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of
21
Buyers, or if, in the case of a Buyer or other party named above, to such other
address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party at
least five (5) days prior to the effectiveness of such change.
If to an Investor (other than a Buyer), to such Investor at the address
and/or facsimile number reflected in the records of the Company. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or deposit with a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
c. 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.
d. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting the City of New
York, borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
e. This Agreement and the other 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. This
Agreement and the other Transaction Documents supersede all prior
22
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to each other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
i. 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.
j. All consents and other determinations to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Investors holding at least two-thirds (2/3) of the Registrable
Securities, determined as if all of the Notes and the Warrants then outstanding
have been converted into or exercised for Registrable Securities without regard
to any limitations on conversion of the Notes or the exercise of the Warrants.
Any consent or other determination approved by Investors as provided in the
immediately preceding sentence shall be binding on all Investors.
k. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
l. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and, to the extent
provided in Sections 6(a) and 6(b) hereof, each Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any who controls any Investor within the meaning of the 1933 Act and the 1934
Act and each of the Company's directors, each of the Company's officers who
signs the Registration Statement, and each Person, if any, who controls the
Company within the meaning of the 1933 Act and the 1934 Act, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
m. Unless the context otherwise requires, (a) all references to
Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained
in or attached to this Agreement, (b) each accounting term not otherwise defined
in this Agreement has the meaning assigned to it in accordance with GAAP, (c)
words in the singular or plural include the singular and plural and pronouns
stated in either the masculine, the feminine or neuter gender shall
23
include the masculine, feminine and neuter and (d) the use of the word
"including" in this Agreement shall be by way of example rather than limitation.
* * * * * *
24
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
INFINITY, INC. HFTP INVESTMENT L.L.C.
By: Promethean Asset Management L.L.C.
Its: Investment Manager
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Partner and Authorized
Signatory
AG DOMESTIC CONVERTIBLES, L.P.
By: Xxxxxx, Xxxxxx & Co., L.P.
Managing Member of the General
Partner
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Authorized Person
AG OFFSHORE CONVERTIBLES, LTD.
By: Xxxxxx, Xxxxxx & Co., L.P.
Director
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Authorized Person
SCHEDULE OF BUYERS
INVESTOR ADDRESS INVESTOR'S LEGAL REPRESENTATIVE'S
INVESTOR'S NAME AND FACSIMILE NUMBER ADDRESS AND FACSIMILE NUMBER
HFTP Investment L.L.C. c/o Promethean Asset Management L.L.C. Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxxxxxxx Xxxxxx, 00xx Floor 000 X. Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx Attention: Xxxx X. Xxxx, Esq.
Telephone: 000-000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
AG Domestic Convertibles, L.P. c/o Xxxxxx, Xxxxxx & Co. Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxx Attention: Xxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Residence: Delaware
AG Offshore Convertibles, Ltd. x/x Xxxxxx, Xxxxxx & Xx. Xxxx, Xxxxx, Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxx Attention: Xxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Residence: British Virgin Islands
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
ATTN:___________________
RE: INFINITY, INC.
Ladies and Gentlemen:
We are counsel to Infinity, Inc., a Colorado corporation (the "COMPANY"),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and among the
Company and the buyers named therein (collectively, the "HOLDERS") pursuant to
which the Company issued to the Holders senior secured notes (the "INITIAL
NOTES"), convertible into shares of the Company's common stock, $0.0001 par
value per share (the "COMMON STOCK"), and warrants to purchase an aggregate of
_________ shares of Common Stock, subject to adjustment (the "INITIAL
WARRANTS"), and pursuant to which the Company has the option to issue to the
Holders additional senior secured notes (such additional notes together with the
Initial Notes, the "NOTES"), convertible into shares of Common Stock and
additional warrants to purchase shares of Common Stock, subject to adjustment
(such additional warrants together with the Initial Warrants, the "WARRANTS"),
as set forth in, and subject to the terms and conditions of, the Securities
Purchase Agreement. Pursuant to the Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants and conversion of the Notes, under the Securities Act of 1933, as
amended (the "1933 ACT"). In connection with the Company's obligations under the
Registration Rights Agreement, on ____________ ___, 200_, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________) (the
"REGISTRATION STATEMENT") with the Securities and Exchange Commission (the
"SEC") relating to ________ Registrable Securities (subject to adjustment)
issued or issuable upon [EXERCISE OF WARRANTS ISSUED ON ________ __, 200_] [AND]
[CONVERSION OF NOTES DATED ______ __, 200_], which names each of the Holders as
a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:______________________________
cc: [LIST NAMES OF HOLDERS]
