EXHIBIT 10.10
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of May 24, 1996, by and between QUIETPOWER SYSTEMS, INC., a Delaware
corporation (the "Company"), DAYSTAR PARTNERS, L.P., a California limited
partnership ("DayStar"), and the other parties listed on Schedule 1 attached
hereto (the "Other Lenders"), each of whom is purchasing a Bridge Loan Note from
the Company under a Note Purchase Agreement (the "Purchase Agreement"). DayStar
and the Other Lenders are collectively referred to herein as the "Purchasers."
FACTUAL BACKGROUND
A. The Company and the Purchasers have entered into Purchase Agreements
pursuant to which the Purchasers will receive warrants to acquire common stock
of the Company (the "Warrant Shares"); and
B. The Company and the Purchasers desire to provide for certain
arrangements with respect to the registration of the Warrant Shares under the
Securities Act of 1933, as amended.
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
1.1 Act: The Securities Act of 1933, as amended, or any other statute in
effect from time to time corresponding to such act.
1.2 Holder: Any Purchaser who holds Registrable Securities or any holder
of Registrable Securities to whom registration rights have been transferred in
compliance with paragraph 9.2 hereof.
1.3 Initiating Holders: A Holder or Holders who in the aggregate holds not
less than 30% of the outstanding Registrable Securities.
1.4 Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
1
REGISTRATION RIGHTS AGREEMENT
1.5 Participating Holders: Those Holders participating in any registration
pursuant to Article II or Article III hereof.
1.6 Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
1.7 Register, registered, and registration: A registration effected by
preparing and filing a Registration Statement in compliance with the Act and the
declaration or ordering of effectiveness of such Registration Statement by the
SEC.
1.8 Registrable Securities: All Warrant Shares owned by the Purchasers
(and their permitted transferees) or issuable to the Purchasers (or to their
permitted transferees) upon exercise of warrants or options or conversion of
other securities of the Company; provided that a security ceases to be a
Registrable Security when it is transferred other than pursuant hereto or if it
is no longer a Restricted Security. A security is a Restricted Security unless
and until:
1.8.1 it has been effectively registered under the Act and may be
disposed of in accordance with the Registration Statement covering it,
except for such registrations withdrawn pursuant hereto; or
1.8.2 as to any Holder, when all of the Common Stock owned by such
Holder may be distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Act within the succeeding six
(6) months without regard to the volume of trading in the Company's
securities.
1.9 Registration Statement: Any registration statement of the Company
which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement.
1.10 SEC: The Securities and Exchange Commission or any other agency
assuming or succeeding to the responsibilities thereof in connection with the
registration of securities.
Capitalized terms not herein defined have the meanings given them in the
Purchase Agreement or the Bridge Loan Notes.
ARTICLE II
COMPANY REGISTRATION
2. Company Registration. Subject to Article V hereof, if at any time after
the date of this Agreement the Company determines to register, either for its
own account or the account
2
REGISTRATION RIGHTS AGREEMENT
of any security holder or holders, any of its common stock on a form that would
also permit the registration of Registrable Securities (expressly excluding any
public offering relating solely to Form S-8 for employee benefit plans or Form
S-4 for certain business combinations, or their successor forms, or any form
that does not permit secondary offerings), the Company shall, each such time,
promptly give each Holder written notice of such determination which notice
shall list those jurisdictions in which the Company intends to attempt to
qualify such securities under applicable blue sky laws. Upon the written request
of every Holder electing to participate, with each such request given within
twenty (20) days after mailing of any such notice by the Company, the Company
shall use its best efforts to include in such registration (and any related
qualification under blue sky laws, and in any underwriting) all of the
Registrable Securities that the Participating Holders have requested be
registered. The Company may withdraw any registration pursuant to this Article
II at any time prior to the effectiveness of the Registration Statement whether
or not any Holder has elected to participate. Subject to the provisions of
Article VIII hereof, each Holder may participate in an unlimited number of
registrations pursuant to this Article II.
ARTICLE III
DEMAND REGISTRATION
3.1 Demand Registration. Subject to the provisions of Article V hereof, if
at any time or from time to time after the IPO of the Company and after six (6)
months following the date hereof an Initiating Holder provides the Company with
a written demand (the "Demand") that the Company effect a registration under the
Act of all or any part of Registrable Securities having an aggregate offering
price in excess of $500,000, then the Company shall (i) give written notice of
the Demand to all other Holders within 10 days following its receipt of the
Demand; and (ii) use its best efforts to effect such registration (a "Demand
Registration") as to all Registrable Securities included in the Demand together
with all or such portion of the Registrable Securities of any other Holder
joining in such Demand as specified in a written notice received by the Company
within 20 days following such other Holder's receipt of the Demand from the
Company. Subject to (i) the provisions of Article V hereof and (ii) the absolute
priority of the Holders, the Company may include in any Demand Registration,
other securities of the Company whether being sold for the accounts of others or
for the account of the Company.
3.2 Limitations on Demand Registrations. The rights of the Holders to
effect a Demand Registration shall be limited as follows:
3.2.1 Except as set forth in subparagraph 3.2.2, the Company shall
not be required to effect more than two Demand Registrations.
3.2.2 Notwithstanding subparagraph 3.2.1 and subject to the
provisions of paragraph 3.3 hereof, the Holders shall be entitled to three
(3) Demand Registrations at the Company's expense on Form S-3 or any
similar short-form registration, provided that the Company qualifies for
such short-form registration, and provided further that any
3
REGISTRATION RIGHTS AGREEMENT
Demand Registration pursuant to this subparagraph 3.2.2 shall not be
counted as one of the Demand Registrations allowed under subparagraph
3.2.1 above.
3.2.3 Notwithstanding subparagraph 3.2.2, the Holders shall be
entitled to an unlimited number of Demand Registrations at their own
expense on any applicable form of registration.
3.2.4 The Company shall not be obligated to effect a registration,
qualification, or compliance under this Article III during the period
starting sixty (60) days prior to the Company's good faith estimate of the
date of filing of, and ending on a date one hundred eighty (180) days
following the effective date of, a Company-initiated registration (other
than a registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan), provided that the Company is
actively and in good faith employing all reasonable efforts to cause such
registration to become effective.
3.2.5 The Company will not be deemed to have provided a Demand
Registration hereunder unless, in addition to the satisfaction of any
other conditions required by this Agreement, such registration has become
effective.
3.2.6 Any Demand Registration must be firmly underwritten by
underwriters selected by the Initiating Holders, subject to the approval
of the Company, which approval shall not be unreasonably withheld, and the
Company and the Initiating Holders shall obtain the commitment of such
underwriter to firmly underwrite the offering.
3.2.7 If the Company shall furnish to the Holders making such Demand
a certificate signed by the President of the Company stating that, in the
unanimous good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for
such Registration Statement to be filed at the date filing would be
required hereunder, then the Company shall have an additional period of
not more than ninety (90) days within which to file such Registration
Statement.
3.3 Registration on Form S-3. If any Holder or Holders request that the
Company file a registration statement on Form S-3 (or any successor form) for a
public offering of Registrable Securities the reasonably anticipated aggregate
offering proceeds of which would exceed $500,000 and the Company is entitled to
use Form S-3 for such offering, then the Company shall use its best efforts to
cause such Registrable Securities to be registered on such form and to be
qualified in such jurisdictions as the Holder or Holders may reasonably request;
provided, however, that the Company shall not be required to effect more than
one (1) registration pursuant to this paragraph in any nine (9) month period or
more than three (3) registrations in total pursuant to this paragraph. The
obligations of this paragraph shall be subject to the limitations set forth in
subparagraphs 3.2.6 and 3.2.7 above.
4
REGISTRATION RIGHTS AGREEMENT
ARTICLE IV
OBLIGATIONS OF THE COMPANY
4.1 Obligations of the Company. Whenever required under Article II or
Article III to use its best effort to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
4.1.1 Prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities as promptly as possible (but in no
event, in the case of a Demand Registration, if audited financial
statements for the immediately preceding year are available, later than
seventy-five (75) days following the Company's receipt of the Demand) and
use its best efforts to cause such Registration Statement to become and
remain effective for a period of not less than one hundred and twenty
(120) days or until the Participating Holders have completed the
distribution described in the Registration Statement, whichever first
occurs; provided, however, that in connection with any proposed
registration intended to permit an offering of any securities from time to
time (i.e., a so-called "shelf registration"), the Company shall in no
event be obligated to cause any such registration to remain effective for
more than one hundred eighty (180) days;
4.1.2 Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement
and the Prospectus used in connection with such Registration Statement as
may be necessary to comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement;
4.1.3 Keep the Participating Holders advised as to the progress of
the registration and offering, and furnish to the Holders, at any time and
from time to time, such numbers of copies of a Prospectus, including a
preliminary prospectus, amendments or supplements, in conformity with the
requirements of the Act, and such other documents as any of them from time
to time may reasonably request in order to facilitate the disposition of
Registrable Securities owned by the Participating Holders;
4.1.4 Notify each Participating Holder of the happening of any event
which might cause the Prospectus included in such Registration Statement,
as then in effect, to include an 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 not misleading or incomplete in the light
of the circumstances then existing, and at the request of any Holder,
prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such Prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such shares, such
Prospectus shall not include an 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 not misleading or incomplete in the light
of the circumstances than existing.
5
REGISTRATION RIGHTS AGREEMENT
4.1.5 Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
4.1.6 Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number of all such Registrable Securities, in each case not later than the
effective date of such registration.
4.1.7 Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or Blue
Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the Registration Statement,
provided that the Company shall not be required to register or qualify the
securities in any jurisdiction where the Company, in connection with such
registration or qualification or as a condition thereto, is required to
qualify to do business or to file a general consent to service of process
(unless the Company is already subject to service in such jurisdiction and
except as required by the Act), and further provided that (anything in
this Agreement to the contrary notwithstanding with respect to the bearing
of expenses) if any jurisdiction in which the securities shall be
qualified shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne by selling
shareholders, then such expenses shall be payable by the Participating
Holders, pro rata, to the extent required by such jurisdiction.
4.2 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to any Participating Holder that such person furnish to the Company such
information regarding such person, the Registrable Securities held by such
person, and the intended method of disposition of such securities as the Company
shall reasonably request and as shall be required in connection with the action
to be taken by the Company.
4.3 Expenses of Registration. Except as set forth in subparagraph 3.2.3
hereof, all expenses incurred in connection with any registration effected
hereunder (excluding underwriters' discounts and commissions and stock transfer
taxes), including without limitation all registration and qualification fees and
printing, legal and accounting fees and costs, shall be borne by the Company. In
addition, the Company shall bear the reasonable attorneys' fees and costs
incurred by the Participating Holders up to an aggregate amount of $10,000.
Further, the Company shall not be required to pay for any expenses of any
registration commenced pursuant to Article III hereof and subsequently withdrawn
at the request of the Participating Holders unless such withdrawal is based upon
either (i) adverse market conditions or (ii) material adverse information
relating to the Company that was unknown or unavailable to the Initiating
Holders at the time of making the Demand. If such withdrawn registration was a
Demand Registration as provided in Section 3.1 hereof, then the Company may
count such withdrawn registration as a Demand Registration, notwithstanding the
provisions of Subsection 3.2.6 hereof, unless such withdrawal is based upon
either (i) adverse market conditions or (ii) material adverse information
relating to the Company that was unknown or unavailable to the Initiating
Holders at the time of making the Demand.
6
REGISTRATION RIGHTS AGREEMENT
4.4 Certain Limitations in Connection With Future Grants of Registration
Rights. From and after the date of this Agreement, the Company shall not enter
into any agreement with any holder or prospective holder of any securities of
the Company providing for the granting of registration rights to such holder
unless (i) such agreement includes provisions substantially equivalent to
paragraph 9.1 hereof and (ii) such agreement requires that, in the case of any
public offering involving an underwritten registered offering under Article II
or Article III hereof, the Holders have priority as to registration over any
subsequent purchaser of the Company's Common Stock.
ARTICLE V
UNDERWRITING REQUIREMENTS
5.1 Underwriting. If any registration hereunder shall involve an
underwriting, then the Company and all Holders shall be so advised in writing.
In such event, the right of any Holder to participate in any registration
hereunder shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. The Company, together with all
Holders proposing to distribute their Registrable Securities through such
underwriting, shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company,
or in the case of a Demand Registration pursuant to Article III hereof, selected
pursuant to the terms hereof. Notwithstanding any other provisions of this
Agreement, if the underwriter or underwriters determine that marketing factors
require a limitation on the number of shares of Common Stock to be underwritten,
then the Company shall so advise all Participating Holders and the securities to
be included in such registration shall be allocated as follows:
5.1.1 In the event of a registration pursuant to Article II hereof,
the Company shall be entitled to include all securities it proposed to
register for its own account in its notice to Holders, and the number of
shares of Registrable Securities which may thereafter be included in the
registration and underwriting shall be allocated first, as nearly as
practical, among the Participating Holders in proportion to the number of
Registrable Securities held by each such person at the time of the initial
filing of the Registration Statement, and then to other participants, as
may be agreed by such other participants.
5.1.2 In the event of a Demand Registration effected pursuant to
paragraph 3.1 hereof, the number of shares of Registrable Securities that
may be included in the registration and underwriting shall be allocated,
as nearly as practical, to the Participating Holders pro rata in
proportion to the number of shares of Registrable Securities held by each
such person at the time of the initial filing of the Registration
Statement, and then to the other participants, including the Company, as
may be agreed by such participants.
5.1.3 No Registrable Securities excluded from the underwriting by
reason of this Article V shall be included in such registration. If any
person disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the
7
REGISTRATION RIGHTS AGREEMENT
Company and the underwriter or underwriters. All Registrable Securities so
withdrawn shall also be withdrawn from the registration and shall not be
transferred in a public distribution prior to one hundred and twenty (120)
days after the effective date of the Registration Statement relating
thereto or such other shorter period of time as the underwriter or
underwriters may require.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Company. To the extent permitted by law, the
Company will indemnify and hold harmless each of the Holders, each of the
Holder's respective partners, officers, directors, employees, heirs, successors,
assigns and agents, and each Person, if any, who controls any Holder within the
meaning of either Section 15 of the Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (each such person being sometimes
hereinafter referred to as an "Indemnified Holder"), from and against any and
all losses, claims, damages, liabilities and expenses (or actions, proceedings
or settlements with respect thereto) including reasonable costs of investigation
and legal fees and expenses, (i) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or in any amendment or supplement thereto
or in any preliminary prospectus) or any document relating thereto, or (ii)
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) arising out of or based upon any violation by
the Company of the Act or any rule or regulation thereunder applicable to the
Company and the relating action or inaction required of the Company in
connection therewith, and the Company will reimburse each Holder, each of its
partners, officers, directors, employees, heirs, successors, assigns and agents,
and each person controlling such Holder, for any and all legal and other
expenses reasonably incurred in connection with investigating, defending or
settling such loss, claim, damage or liability. Notwithstanding the above, this
indemnity and duty to defend shall not apply to any Holder to the extent that
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such Holder expressly for use
in any Registration Statement or Prospectus, or any amendment or supplement
thereto, or any preliminary prospectus, or given supplementally to the SEC, the
National Association of Securities Dealers, any exchange or state securities
regulators. Further, the Company shall not be liable nor have any duty to defend
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(i) such Indemnified Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale of Registrable
Securities, and (ii) the Prospectus would have completely corrected such untrue
statement or omission. Further, the Company shall not be liable nor have any
duty to defend in any case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus if
such untrue statement or alleged untrue statement, omission or alleged omission
is completely corrected in an amendment or supplement
8
REGISTRATION RIGHTS AGREEMENT
to the Prospectus and if, having previously been furnished by or on behalf of
the Company with copies of the Prospectus as so amended or supplemented, such
Indemnified Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of a Registrable Security
to the person asserting such loss, claim, damage, liability or expense who
purchased such Registrable Security which is the subject thereof from such
Indemnified Holder. This indemnity will be in addition to any liability which
the Company may otherwise have. This indemnity shall not apply to any amount
paid or incurred in settlement without the express written consent of the
Company, which consent shall not be unreasonably withheld.
Each Indemnified Holder shall give prompt notice to the Company after it
has actual knowledge of any claim in respect of which indemnity may be sought
from the Company hereunder. In such notice, an Indemnified Holder may in its
discretion demand indemnification, in which case the Company shall assume the
defense thereof at the Company's expense, provided that counsel for the Company
shall be satisfactory to such Indemnified Holder (whose approval shall not be
unreasonably withheld). The failure of any Indemnified Holder to give notice as
provided herein shall not relieve the Company of any of its obligations
hereunder to the extent such failure is not prejudicial. If the Company assumes
the defense in such action, such Indemnified Holder shall retain the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be the expense of such
Indemnified Holder unless (i) the Company has expressly agreed in writing to pay
such fees and expenses, or (ii) the Company shall have a duty to assume the
defense of such action or proceeding and has failed to do so and failed to
employ counsel satisfactory to such Indemnified Holder in any such action or
proceeding as required hereunder, or (iii) the named parties to any such action
or proceeding (including any impleaded parties) include both the Indemnified
Holder and the Company, and such Indemnified Holder shall have been advised by
counsel that there may be one or more legal defenses available to such
Indemnified Holder which are different from or additional to those available to
the Company and which conflict with those of the Company. In all circumstances,
if the Indemnified Holder notifies the Company in writing that it elects to
employ separate counsel at the expense of the Company, the Company shall not
have the obligation to assume the defense of such action or proceeding on behalf
of such Indemnified Holder; it being understood, however, that the Company shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for such Indemnified Holder, which firm shall be designated in writing by
such Indemnified Holder and shall be subject to the approval of the Company,
which approval shall not be unreasonably withheld. The Company shall not be
liable for any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Company agrees
to indemnify and hold harmless such Indemnified Holder from and against any loss
or liability by reason of such settlement or judgment.
6.2 Indemnification by Holders. To the extent permitted by law, each of
the Holders agrees to indemnify and hold harmless the Company, its directors,
employees, officers and agents, and each person, if any, who controls the
Company within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act, and each other Holder, and each other Holder's part-
9
REGISTRATION RIGHTS AGREEMENT
ners, officers, directors, employees, heirs, successors, assigns and agents and
each person controlling such Holder, to the same extent as the foregoing
indemnity from the Company to the Indemnified Holders, but only with respect to
information relating to each Holder furnished in writing by such Holder
expressly for use in any Registration Statement or Prospectus, or any amendment
or supplement thereto, or any preliminary prospectus, or given supplementally to
the SEC, the National Association of Securities Dealers, any exchange or state
securities regulators. In case any action or proceeding shall be brought in
respect of which indemnity may be sought against any Holder hereunder, (a) such
Holder shall have the rights and duties given the Company, and (b) the Company
and its directors, officers, employees or agents and controlling persons shall
have the rights and duties given to each Indemnified Holder by paragraph 6.1. In
no event shall the liability of any Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
6.3 Contribution. If the indemnification provided for in this Article VI
is unavailable to an indemnified party under paragraphs 6.1 or 6.2 hereof (other
than by reason of exceptions provided in those paragraphs) in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand, and
of the Indemnified Holder or Holders, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Indemnified Holder or
Holders on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Indemnified Holder or Holders and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
paragraph 6.1, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
Company, and the Holders agree that it would not be just and equitable if
contribution pursuant to this paragraph 6.3 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to herein. Notwithstanding the provisions
of this paragraph 6.3, no Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by such Holder and distributed to the public were offered to the
public exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
6.4 Survival. All provisions of this Article VI shall survive the
expiration or termination of this Agreement for any reason.
10
REGISTRATION RIGHTS AGREEMENT
ARTICLE VII
TERM AND TERMINATION
7.1 Termination of the Company's Obligations. The Company's obligations
pursuant to Articles II and III shall expire December 31, 2004.
ARTICLE VIII
RULE 144 REPORTING
8.1 Reports Under Exchange Act. With a view to making available to Holders
the benefits of Rule 144 promulgated under the Act ("Rule 144") and any other
rule or regulation of the SEC that may at any time permit the Holders to sell
securities of the Company to the public without registration, the Company agrees
to use its best efforts to:
8.1.1 make and keep public information available, as those terms are
understood and defined in Rule 144, at all times subsequent to ninety (90)
days after the effective date of the first registration statement covering
a public offering of the Company's securities filed with the SEC by the
Company;
8.1.2 file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Act and the Exchange Act; and
8.1.3 so long as such person owns any Registrable Securities,
furnish to the Holders forthwith upon request, a written statement by the
Company that it has complied with the reporting requirements of Rule 144
(at any time after ninety (90) days after the effective date of said first
registration statement filed by the Company), and of the Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), (ii) a copy of the most recent annual or quarterly report
of the Company, and (iii) such other reports and documents so filed by the
Company as may be reasonably requested in availing the Holders of any rule
or regulation of the SEC permitting the selling of any such securities
without registration.
ARTICLE IX
OBLIGATIONS OF THE HOLDERS
9.1 Lockup Agreement. In consideration for the Company agreeing to its
obligations hereunder, if each of the Company's officers and directors and each
person with registration rights with respect to the Company's Common Stock has
previously agreed thereto on the same terms, each of the Holders agrees in
connection with the initial registration of the Company's Common Stock for sale
to the general public and, upon the request of the Company or the
11
REGISTRATION RIGHTS AGREEMENT
underwriters managing any underwritten offering of the Company's securities, not
to sell, make short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed the
lesser of thirteen (13) months or the shortest period agreed by any officer,
employee or shareholder of the Company to be bound in such registration) from
the effective date of such registration as the Company or the underwriters may
specify. If the Holder is to be so obligated, each Holder agrees to execute and
deliver such documentation as may be reasonably required by the underwriters in
connection with this Article IX. This restriction shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or similar
successor forms, or a registration relating solely to a Rule 145 transaction on
Form S-4 or similar or successor forms. If the Company is otherwise inclined to
seek the underwriters' consent to any waiver of the lock up for any other
shareholder, the Company shall first offer the Holders the opportunity to
participate in such waiver on a pro rata basis. In any registered offering after
the initial offering, the Holders shall agree to a similar "lockup" of their
shares (other than those included in the registration) provided the lockup
period does not exceed 180 days.
9.2 Notice of Proposed Transfers. The rights to cause the Company to
register securities under Articles I and II hereunder shall be transferrable or
assignable only to a transferee or assignee of Registrable Securities (as
presently constituted and subject to adjustments for stock splits, stock
dividends, and the like) equal to not less than 0.5% of the Company's
outstanding common stock. Prior to any proposed sale, assignment, transfer or
pledge of any Registrable Securities (other than a transfer not involving a
change in beneficial ownership) unless there is in effect a registration
statement under the Act covering the proposed transfer, the Holder thereof shall
give written notice to the Company of such Holder's intention to effect such
transfer, sale, assignment or pledge in sufficient detail, and, if requested by
the Company, such notice shall be accompanied, at such Holder's expense, by
either (i) an unqualified written opinion of legal counsel who shall be, and
whose legal opinion shall be, reasonably satisfactory to the Company, addressed
to the Company, to the effect that the proposed transfer of the Registrable
Securities may be effected without registration under the Act, or (ii) a "no
action" letter from the SEC to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the SEC
that action be taken with respect thereto, whereupon the Holder of such
Registrable Securities shall be entitled to transfer such Registrable Securities
in accordance with the terms of the notice delivered by the Holder to the
Company. It is agreed that the Company will not request an opinion of counsel
for the Holder for transactions made in reliance on Rule 144 under the Act, as
to which no notice shall be necessary. Each certificate evidencing the
Registrable Securities transferred as above provided shall bear the appropriate
restrictive legend except that such certificate shall not bear any restrictive
legend if in the opinion of counsel for such Holder and the Company such legend
is not required in order to establish compliance with any provision of the Act.
Notwithstanding the foregoing, each Holder agrees that it will not request that
a transfer of the Registrable Securities be made (or that any legend be removed
from the certificate evidencing the Registrable Securities) solely in reliance
on Rule 144(k) under the Act if as a result of such proposed transfer, the
Company would be rendered subject to the reporting requirements of the Exchange
Act.
12
REGISTRATION RIGHTS AGREEMENT
9.3 No Right to Delay. No Holder shall have any right to take any action
to restrain, enjoin, or otherwise delay any registration as a result of any
controversy under this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Assignment. The terms and conditions of this Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto and shall be binding upon the parties with respect to
shares of capital stock subsequently acquired by any Holder.
10.2 Entire Agreement; Amendment; Waiver. This Agreement (including the
Exhibits hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated, except by a written instrument signed by the Company and the Holders
of at least 80% of the then outstanding Registrable Securities and any such
amendment, waiver, discharge or termination shall be binding on all the Holders,
but in no event shall the obligation of any Holder hereunder the materially
increased, except upon the written consent of such Holder.
10.3 Information Confidential. Each Holder acknowledges that the
information received by it pursuant hereto may be confidential and for its use
only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any other
person (other than its employees or agents having a need to know the contents of
such information, and its attorneys) or use such information to the detriment of
the Company, except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or such Holder is required to disclose such information by a
governmental body.
10.4 Further Assurances. The parties hereto shall use their best efforts
to do and perform or cause to be done and performed all such further acts and
shall execute and deliver all such other agreements, certificates, instruments
or documents as any other party may reasonably request in order to carry out the
intent and purpose of this Agreement and the consummation of the transactions
contemplated hereby and thereby. Neither the Company nor any Holder shall
voluntarily undertake any course of action inconsistent with the satisfaction of
the requirements applicable to them set forth in this Agreement and each shall
promptly do all such acts and take all such measures as may be appropriate to
enable them to perform as early as practicable the obligations herein and
therein required to be performed by them.
10.5 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any Person, other than the parties hereto, the
Indemnified Holders, the Company's directors, controlling persons, employees,
officers, agents and their respective heirs, successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
13
REGISTRATION RIGHTS AGREEMENT
10.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
executed by residents of California and wholly to be performed in California.
Each party hereby submits to the exclusive jurisdiction and venue of the
Superior Court of the State of California for the City and County of San
Francisco or the Federal District Court for the Northern District of California
for purposes of any legal or equitable action or proceeding arising out of this
Agreement. Each party agrees that service upon such party in any such action or
proceeding may be made by first class mail, certified or registered, return
receipt requested as provided by the giving of notices in Section 10.8.
10.7 Titles and Subtitles; Form of Pronouns. The titles of the articles
and sections of this Agreement are for convenience only and are not to be
considered in construing this Agreement. All pronouns used in this Agreement
shall be deemed to include masculine, feminine and neuter forms.
10.8 Notices. Except as otherwise expressly provided herein, all notices
and other communications required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon receipted personal delivery
(professional courier permissible), United States certified mail delivery or
confirmed facsimile transmission to the address set forth with respect to such
party on the signature pages of this Agreement (and with copies as indicated
thereon), or to such other address as such party shall have given notice of
pursuant hereto to the other party or parties.
10.9 Rights; Severability. Unless otherwise expressly set forth herein, a
Holder's rights and obligations hereunder are several rights, not rights jointly
held with the other Holders. If one or more provisions of this Agreement are
held to be invalid, illegal or unenforceable under applicable law, portions of
such provisions, or such provisions in their entirety, to the extent necessary,
shall be severed from this Agreement, and the balance of this Agreement shall be
enforceable in accordance with its terms.
10.10 Delays or Omissions. No delays or omissions to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
nonbreaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
10.11 Attorneys' Fees. In the event of litigation hereunder, the
prevailing party or parties shall be entitled to recover its or their costs of
litigation, including reasonable attorneys' fees, in addition to all other
relief as may be granted.
14
REGISTRATION RIGHTS AGREEMENT
10.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
COMPANY: QUIETPOWER SYSTEMS, INC., a Delaware
corporation
By:
--------------------------------------
Xxxxxxxx Xxxxxx, President
Address for Notice:
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn.: President
DAYSTAR: DAYSTAR PARTNERS L.P., a California
limited partnership
By: XXXXX XXXXX CO., INC., its
General Partner
By:
--------------------------------------
Xxxxx Xxxxx, President
Address for Notice:
00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attn.: Xxxxx Xxxxx
OTHER LENDERS
-----------------------------------------
Print Name and Address
-----------------------------------------
-----------------------------------------
-----------------------------------------
15
REGISTRATION RIGHTS AGREEMENT
-----------------------------------------
Print Name and Address
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Print Name and Address
-----------------------------------------
-----------------------------------------
-----------------------------------------
16
REGISTRATION RIGHTS AGREEMENT
