REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This
Registration Rights Agreement (this “Agreement”)
is made
and entered into as of July 6, 2006, by and among China
Security and Surveillance Technology, Inc.,
a
British
Virgin Islands corporation
(together with all successors, including upon the effective time of the Merger,
the “Company”),
and
the investors signatory hereto (each, an “Investor”
and
collectively, the “Investors,”
each
of
which shall include subsequent holders of Shares).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof among the Company and the Investors (the “Purchase
Agreement”).
The
Company and the Investors hereby agree as follows:
1.
Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement will have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms have the respective
meanings set forth in this Section 1:
“Advice”
has
the
meaning set forth in Section 6(d).
“Effective
Date”
means,
as to a Registration Statement, the date on which such Registration Statement
is
first declared effective by the Commission.
“Effectiveness
Date”
means
(a) with respect to each of the Registration Statements required to be filed
under Section
2(a)
and
Section 2(b), the earlier of: (a)(i) the 90th
day
following the Closing Date; provided,
that,
if the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (a)(i) for
each such Registration Statement shall be the 150th
day
following the Closing Date, and (ii) the fifth Trading Day following the date
on
which the Company is notified by the Commission that such Registration Statement
will not be reviewed or is no longer subject to further review and comments;
and
(b) with respect to a Registration Statement required to be filed under Section
2(c), the earlier of: (b)(i) the 90th
day
following the date on which the Company becomes eligible to utilize Form S-3
(or
Form F-3 in the event that the Company has not completed the Merger contemplated
in the Purchase Agreement) to register the resale of Common Stock; provided,
that,
if the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (b)(i) shall
be the 150th
day
following the date on which the Company becomes eligible to utilize Form S-3
(or
F-3 as applicable) to register the resale of Common Stock, and (ii) the fifth
Trading Day following the date on which the Company is notified by the
Commission that the Registration Statement will not be reviewed or is no longer
subject to further review and comments.
“Effectiveness
Period”
has the
meaning set forth in Section 2(b).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Filing
Date”
means
(a) with respect to the Registration Statement required to be filed under
Section 2(a), the 45th
day
following the Closing Date; (b) with respect to the Registration Statement
required to be filed under Section 2(b), the 55th
day
following the Closing Date; and (c) with respect to a Registration Statement
required to be filed under Section 2(c), the 45th
day
following the date on which the Company becomes eligible to utilize Form S-3
(or
Form F-3 in the event that the Company has not completed the Merger contemplated
in the Purchase Agreement) to register the resale of Common Stock.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
has the
meaning set forth in Section 5(c).
“Indemnifying
Party”
has the
meaning set forth in Section 5(c).
“Losses”
has the
meaning set forth in Section 5(a).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities”
means:
(i) the Shares, (ii) the Warrant Shares, (iii) any shares of Common Stock
issuable upon exercise of warrants issued to any placement agent as compensation
in connection with the financing that is the subject of the Purchase Agreement,
and (iv) any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event, or the Merger, or any
conversion price adjustment with respect to any of the securities referenced
in
(i), (ii), or (iii) above.
“Registration
Statement”
means
each of the registration statements required to be filed in accordance with
Section 2(a) and Section 2(b) and any additional registration statement(s)
required to be filed under Section 2(c), including (in each case), the
Prospectus, amendments and supplements to such registration statements or
Prospectus, including pre- and post-effective amendments, all exhibits thereto
and all material incorporated by reference or deemed to be incorporated by
reference therein.
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“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
145”
means
Rule 145 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Shares”
means
the shares of Common Stock issued or issuable to the Investors pursuant to
the
Purchase Agreement.
“Warrants”
means
the
Common Stock purchase warrants issued or issuable to the Investors pursuant
to
the Purchase Agreement and to any placement agent identified in Schedule
3.1(u)
to the
Purchase Agreement in accordance with the terms of the engagement or similar
agreements between the Company and any such agents.
"Warrant
Shares" means
the
shares of Common Stock issued or issuable upon exercise of the
Warrants.
2.
Registration.
(a) In
connection with the Merger, on or prior to the Filing Date contemplated in
clause (a) of the definition of “Filing Date,” the Company shall prepare and
file a Registration Statement on Form S-4 (or such other appropriate form for
such purpose) registering the issuance of all of the Shares by the Company
to
the holders thereof upon the effective time of the Merger. The Company shall
cause such Registration Statement to be declared effective under the Securities
Act as soon as possible but, in any event, by its Effectiveness
Date.
(b) On
or
prior to the Filing Date contemplated in clause (b) of the definition of “Filing
Date,” the Company shall prepare and file with the Commission a Registration
Statement covering the resale of all Registrable Securities for an offering
to
be made on a continuous basis pursuant to Rule 415, on Form S-1 (or on such
other form appropriate for such purpose, including Form F-1 in the event that
the Commission shall require such Registration Statement to be on such Form).
Such Registration Statement shall contain (except if otherwise required pursuant
to written comments received from the Commission upon a review of such
Registration Statement) the “Plan of Distribution” attached hereto as
Annex
A.
The
Company shall cause such Registration Statement to be declared effective under
the Securities Act as soon as possible but, in any event, no later than its
Effectiveness Date, and shall use its reasonable best efforts to keep such
Registration Statement continuously effective under the Securities Act until
the
date which is the earliest of (i) five years after its Effective Date, (ii)
such time as all of the Registrable Securities covered by such Registration
Statement have been publicly sold by the Holders, (iii) such time as all of
the
Registrable Securities covered by such Registration Statement may be sold by
the
Holders pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable
to
the Company’s transfer agent and the affected Holders, or (iv) if the
Registration Statement contemplated by Section 2(a) has been declared effective
and the Share exchange contemplated by Section 4.1(d) of the Purchase Agreement
shall have occurred and the resale by one or more Holders of the resulting
Shares shall be subject to the limitations imposed under Rule 145, such time
as
all Shares then beneficially owned by such Holders can be resold in full without
such Rule 145 limitations (the “Effectiveness
Period”).
By
5:00 p.m. (New York City time) on the Effective Date, the Company shall file
with the Commission in accordance with Rule 424 under the Securities Act the
final prospectus to be used in connection with sales pursuant to such
Registration Statement (whether or not such filing is technically required
under
such Rule). If the Registration Statement contemplated by Section 2(a) has
been
declared effective and the Share exchange contemplated by Section 4.1(d) of
the
Purchase Agreement shall have occurred, then the Company only is required to
name as selling stockholders in a Registration Statement under this Section
2(b)
those Holders who will be subject to Rule 145 limitations. Notwithstanding
anything to the contrary set forth in this Agreement, in the event that (x)
the
Registration Statement contemplated by Section 2(a) has been declared effective,
(y) the Share exchange contemplated by Section 4.1(d) of the Purchase Agreement
shall have occurred,
and (z)
the resale by none of the Holders of the resulting Shares shall be subject
to
the limitations imposed under Rule 145, then the Company shall not be required
to cause the Registration Statement filed pursuant to this Section 2(b) to
be
declared effective.
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(c) Promptly
following any date on which the Company becomes eligible to use a registration
statement on Form S-3 to register the Registrable Securities for resale (or
Form
F-3 if then applicable to the Company), if the Company would then still be
required to have a Registration Statement under Section 2(b) effective, then
the
Company shall file a Registration Statement on Form S-3 (or Form F-3 as
applicable) prior to the Filing Date contemplated in clause (c) of the
definition of “Filing Date,” covering the Registrable Securities (or a
post-effective amendment on Form S-3 (or Form F-3 as applicable) to the then
effective Registration Statement). Such Registration Statement shall contain
(except if otherwise required pursuant to written comments received from the
Commission upon a review of such Registration Statement) the "Plan of
Distribution" attached hereto as Annex
A.
The
Company shall cause such Registration Statement to be declared effective under
the Securities Act as soon as possible but, in any event, by its Effectiveness
Date, and shall use its reasonable best efforts to keep such Registration
Statement continuously effective under the Securities Act during the entire
Effectiveness Period. By 5:00 p.m. (New York City time) on the Effective Date
of
such Registration Statement, the Company shall file with the Commission in
accordance with Rule 424 under the Securities Act the final prospectus to be
used in connection with sales pursuant to such Registration Statement (whether
or not such filing is technically required under such Rule).
(d) If:
(i) a
Registration Statement filed pursuant to Section 2(a) or Section 2(b) or Section
2(c) is not filed on or prior to its Filing Date (if the Company files a
Registration Statement without affording the Holders the opportunity to review
and comment on the same as required by Section 3(a) hereof, the Company shall
not be deemed to have satisfied this clause (i)), or (ii) a Registration
Statement filed pursuant to Section 2(a) or Section 2(b) or Section 2(c) is
not
declared effective by the Commission on or prior to its required Effectiveness
Date (but not in the case of the Registration Statements under Section 2(b)
and
Section 2(c) if the Registration Statement under Section 2(b) is not required
to
be declared effective in accordance with the last sentence of Section 2(b)),
or
if by the Business Day immediately following the Effective Date the Company
shall not have filed a “final” prospectus for the Registration Statement with
the Commission under Rule 424(b) in accordance with Section 2(b) or Section
2(c)
herein, as the case may be (whether or not such a prospectus is technically
required by such Rule), or (iii) after its Effective Date, without regard for
the reason thereunder or efforts therefor, a Registration Statement filed
pursuant to Section 2(b) or Section 2(c) ceases for any reason to be effective
and available to the Holders as to all Registrable Securities to which it is
required to cover at any time prior to the expiration of its Effectiveness
Period for more than an aggregate of 30 Trading Days (which need not be
consecutive) (any such failure or breach being referred to as an “Event,”
and for
purposes of clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 30 Trading Day-period is exceeded,
being referred to as “Event
Date”),
then
in addition to any other rights the Holders may have hereunder or under
applicable law: for each calendar month from the applicable Event Date the
Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to 1.0% of the aggregate Investment Amount
paid by such Holder pursuant to the Purchase Agreement until the applicable
Event is cured. The parties agree that the Company will not be liable for
liquidated damages under this Section in respect of the Warrants. In no event
will the Company be liable for damages in excess of 1.0% of the aggregate
Investment Amount of the Holders in any 30-day period. The partial liquidated
damages pursuant to the terms hereof shall apply on a daily pro-rata basis
for
any portion of a month prior to the cure of an Event, except in the case of
the
first Event Date;
provided, that
the
maximum aggregate liquidated damages payable to a Holder under this Section
2(d), when aggregated with any liquidated damages payable pursuant to Section
4.12 of the Purchase Agreement, shall not exceed ten percent (10%) of the
aggregate Investment Amount paid by such Holder pursuant to the Purchase
Agreement.
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(e) Each
Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex
B
(a
“Selling
Holder Questionnaire”).
The
Company shall not be required to include the Registrable Securities of a Holder
in a Registration Statement filed pursuant to Section 2(b) or Section 2(c)
and
shall not be required to pay any liquidated or other damages under Section
2(d)
as to such Registration Statements to any Holder in connection therewith who
fails to furnish to the Company a fully completed Selling Holder Questionnaire
at least two Trading Days prior to the Filing Date (subject to the requirements
set forth in Section 3(a)).
3.
Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) Not
less
than four Trading Days prior to the filing of a Registration Statement pursuant
to Section 2(b) or Section 2(c) or any related Prospectus or any amendment
or
supplement thereto, the Company shall furnish to each Holder copies of the
“Selling Stockholders” section of such document, the “Plan of Distribution” and
any risk factor contained in such document that addresses specifically this
transaction or the Selling Stockholders, as proposed to be filed which documents
will be subject to the review of such Holder. The Company shall not file a
Registration Statement, any Prospectus or any amendments or supplements thereto
in which the “Selling Stockholder” section thereof differs from the disclosure
received from a Holder in its Selling Holder Questionnaire (as amended or
supplemented).
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(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect
to
each Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration
Statement that would not result in the disclosure to the Holders of material
and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statements and the disposition of all Registrable
Securities covered by each Registration Statement.
(c) Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing and, in the case
of
(v) below, not less than three Trading Days prior to the financial statements
in
any Registration Statement contemplated in sections 2(b) or 2(c) becoming
ineligible for inclusion therein) and (if requested by any such Person) confirm
such notice in writing no later than one Trading Day following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment
to
any such Registration Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a “review” of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement (in connection with a Registration Statement filed pursuant to Section
2(b) or Section 2(c), the Company shall provide true and complete copies thereof
and all written responses thereto to each of the Holders that pertain to the
Holders as a Selling Stockholder or to the Plan of Distribution, but not
information which the Company believes would constitute material and non-public
information); and (C) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of
any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference untrue in any material respect or that requires any revisions to
such
Registration Statement, Prospectus or other documents so that, in the case
of
such Registration Statement or the Prospectus, as the case may be, it will
not
contain any untrue statement of a material fact or omit to state any 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.
6
(d) Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.
(e) Furnish
to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested
by
such Person (including those previously furnished) promptly after the filing
of
such documents with the Commission.
(f) Upon
notification by the Commission that a Registration Statement will not be
reviewed or is no longer subject to further review and comments, the Company
shall request acceleration of such Registration Statement such that it becomes
effective at 5:00 p.m. (New York City time) on such Effective Date.
(g) Deliver
to each Holder, by 9:00 a.m. (New York City time) on the day following the
Effective Date, without charge, an electronic copy of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered
by
such Prospectus and any amendment or supplement thereto.
(h) Prior
to
any public offering of Registrable Securities, register or qualify such
Registrable Securities for offer and sale under the securities or Blue Sky
laws
of all jurisdictions within the United States, to keep each such registration
or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable
the
disposition in such jurisdictions of the Registrable Securities covered by
the
Registration Statements.
(i) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statements, which certificates shall be free,
to
the extent permitted by the Purchase Agreement, of all restrictive legends,
and
to enable such Registrable Securities to be in such denominations and registered
in such names as any such Holders may request.
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, no Registration Statement nor any Prospectus
will
contain 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,
in
light of the circumstances under which they were made, not
misleading.
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4.
Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with any
Trading Market on which the Common Stock is then listed for trading, and (B)
in
compliance with applicable state securities or Blue Sky laws), (ii) printing
expenses (including, without limitation, expenses of printing certificates
for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the
Company, (v) Securities Act liability insurance, if the Company so desires
such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
5.
Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, agents, investment advisors,
partners, members and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable
law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys’ fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus
or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus
or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding
such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use
in
the Registration Statement, such Prospectus or such form of Prospectus or in
any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (2) in the case of an occurrence
of
an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to
the
receipt by such Holder of an Advice or an amended or supplemented Prospectus,
but only if and to the extent that following the receipt of the Advice or the
amended or supplemented Prospectus the misstatement or omission giving rise
to
such Loss would have been corrected. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which
the
Company is aware in connection with the transactions contemplated by this
Agreement.
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(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, arising solely out of or based solely
upon: (x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out
of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent that, (1) such untrue statements or omissions
are
based solely upon information regarding such Holder furnished in writing to
the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (2) in the case of an occurrence of an event of the type specified
in
Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder
of
an Advice or an amended or supplemented Prospectus, but only if and to the
extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have
been
corrected. In no event shall the liability of any selling Holder hereunder
be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination
is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying
Party.
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An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of
the
Indemnified Party, effect any settlement of any pending Proceeding in respect
of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten Trading Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it
is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys’ or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
10
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which
the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6.
Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
(b) No
Piggyback on Registrations.
Except
as and to the extent specified in Schedule
3.1(v)
to the
Purchase Agreement, neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities of
the
Company in a Registration Statement other than the Registrable Securities,
and
the Company shall not during the Effectiveness Period enter into any agreement
providing any such right to any of its security holders.
(c) Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(d) Discontinued
Disposition.
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c), such Holder will forthwith discontinue disposition
of
such Registrable Securities under the Registration Statement until such Holder’s
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
11
(e) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder written notice of such determination and, if within
fifteen days after receipt of such notice, any such Holder shall so request
in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered,
subject to customary underwriter cutbacks applicable to all holders of
registration rights.
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this Section 6(f),
may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of no less than a majority in interest
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of certain Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates.
(g) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
on
any Trading Day, (c) the Trading Day following the date of mailing, if sent
by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
| If to the Company: |
China
Security and Surveillance Technology, Inc.
0/X,
Xxxx 0/X
Xxxxx
Science & Technology Park
Huaqiang,
Shenzhen
China,
518028
Facsimile:
x00 000 000 00000
Attention:
Tu Xxx Xxxx
|
12
| With a copy to: |
Xxxxxx
Xxxx & Priest LLP
000
Xxxxxx Xxxxxx, XX
Xxxxxxxxxx,
XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxx X. Xxxxxxxxxx
|
|
If
to an Investor:
|
To
the address set forth under such Investor's name on the signature
pages hereto.
|
If
to any
other Person who is then a registered Holder:
To
the
address of such Holder as it appears in the stock transfer books of the Company
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
(h) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.
(i) Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(j) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) will be commenced in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts 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 Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for 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. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
Proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce
any
provisions of this Agreement, then the prevailing party in such Proceeding
shall
be reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
13
(k) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(l) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(m) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(n) Independent
Nature of Investors’ Obligations and Rights.
The
obligations of each Investor under this Agreement are several and not joint
with
the obligations of each other Investor, and no Investor shall be responsible
in
any way for the performance of the obligations of any other Investor under
this
Agreement. Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute
the
Investors as a partnership, an association, a joint venture or any other kind
of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement or any other Transaction Document. Each Investor
acknowledges that no other Investor will be acting as agent of such Investor
in
enforcing its rights under this Agreement. Each Investor shall be entitled
to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Investors has been provided
with the same Registration Rights Agreement for the purpose of closing a
transaction with multiple Investors and not because it was required or requested
to do so by any Investor.
[REMAINDER
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14
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
|
CHINA
SECURITY AND SURVEILLANCE TECHNOLOGY, INC.
|
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| |
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| By: | ||
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Name: |
||
| Title: | ||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE
PAGES OF INVESTORS TO FOLLOW]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
| NAME OF INVESTING ENTITY | ||
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| By: | ||
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Name:
Title:
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ADDRESS
FOR NOTICE
|
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| c/o: | ||
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| Street: | ||
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| City/State/Zip: | ||
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| Attention: | ||
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| Tel: | ||
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| Fax: | ||
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