REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This
Registration Rights Agreement (this "Agreement")
is
made and entered into as of June __, 2006, by and among HiEnergy Technologies,
Inc., a Delaware corporation (the "Company"),
and
the purchasers listed on Schedule
I
hereto
(the "Purchasers").
This
Agreement is being entered into pursuant to the Series B Convertible Preferred
Stock Purchase Agreement dated as of the date hereof among the Company and
the
Purchasers (the "Purchase
Agreement").
The
Company and the Purchasers hereby agree as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Advice"
shall
have meaning set forth in Section 3(m).
"Affiliate"
means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For
the
purposes of this definition, "control,"
when
used with respect to any Person, means the possession, direct or indirect,
of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or
otherwise; and the terms of "affiliated,"
"controlling"
and
"controlled"
have
meanings correlative to the foregoing.
"Board"
shall
have meaning set forth in Section 3(n).
"Business
Day"
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the state of New York generally are
authorized or required by law or other government actions to close.
"Closing
Date"
means
the date of the closing of the purchase and sale of the Preferred Stock and
Warrants pursuant to the Purchase Agreement.
"Commission"
means
the Securities and Exchange Commission.
"Common
Stock"
means
the Company's Common Stock, par value $.001 per share.
"Effectiveness
Date"
means
with respect to the Registration Statement the earlier of the one hundred
twentieth (120th)
day
following the Closing Date or the
date
which is within three (3) Business Days after the date on which the Commission
informs the Company (i) that the Commission will not review the Registration
Statement or (ii) that
the
Company may request the acceleration of the effectiveness of the Registration
Statement and the Company makes such request.
"Effectiveness
Period"
shall
have the meaning set forth in Section 2.
"Event"
shall
have the meaning set forth in Section 7(e).
"Event
Date"
shall
have the meaning set forth in Section 7(e).
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
"Filing
Date"
means
the forty-fifth (45th)
day
following the Closing Date.
"Holder"
or
"Holders"
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
"Indemnified
Party"
shall
have the meaning set forth in Section 5(c).
"Indemnifying
Party"
shall
have the meaning set forth in Section 5(c).
"Losses"
shall
have the meaning set forth in Section 5(a).
"Person"
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Preferred
Stock"
means
shares of the Company’s Series B Convertible Preferred Stock, par value $.001
per share and stated value $10,000 per share, issued to the Purchasers pursuant
to the Purchase Agreement.
"Proceeding"
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
"Prospectus"
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
"Registrable
Securities
means
the (i) shares of Common Stock issuable upon conversion of the Preferred Stock
and any dividends payable thereon and (ii) the shares of Common Stock issuable
upon exercise of the Warrants.
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"Registration
Statement"
means
the registration statements and any additional registration statements
contemplated by Section 2, including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus, including pre-
and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
"Rule
144"
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Rule
158"
means
Rule 158 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.
"Securities
Act"
means
the Securities Act of 1933, as amended.
"Special
Counsel"
means
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, for which the Holders will be
reimbursed by the Company pursuant to Section 4.
2.
Resale
Registration.
On
or
prior to the Filing Date, the Company shall prepare and file with the Commission
a "resale" Registration Statement covering all Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form SB-2 (except if the Company is not then eligible
to
register for resale the Registrable Securities on Form SB-2, in which case
such
registration shall be on another appropriate form in accordance herewith).
The
Company shall (i) not permit any securities other than the Registrable
Securities and the securities listed on Schedule
II
hereto
to be included in the Registration Statement and (ii) use its best efforts
to
cause the Registration Statement to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event prior
to
the Effectiveness Date, and to keep such Registration Statement continuously
effective under the Securities Act until such date as is the earlier of (x)
the
date when all Registrable Securities covered by such Registration Statement
have
been sold or (y) the date on which the Registrable Securities may be sold
without any restriction pursuant to Rule 144 as determined by the counsel to
the
Company pursuant to a written opinion letter, addressed to the Company's
transfer agent to such effect (the "Effectiveness
Period").
If at
any time and for any reason, an additional Registration Statement is required
to
be filed because at such time the actual number of shares of Common Stock into
which the Preferred Stock is convertible and the Warrants are exercisable plus
the number of shares of Common Stock exceeds the number of shares of Registrable
Securities remaining under the Registration Statement, the Company shall have
twenty (20) Business Days to file such additional Registration Statement, and
the Company shall use its best efforts to cause such additional Registration
Statement to be declared effective by the Commission as soon as possible, but
in
no event later than sixty (60) days after filing.
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3.
Registration
Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a)
Prepare
and file with the Commission, on or prior to the Filing Date, a Registration
Statement on Form SB-2 (or if the Company is not then eligible to register
for
resale the Registrable Securities on Form SB-2 such registration shall be on
another appropriate form in accordance herewith) in accordance with the method
or methods of distribution thereof as specified by the Holders (except if
otherwise directed by the Holders) and in accordance with applicable law, and
cause the Registration Statement to become effective and remain effective as
provided herein; provided,
however,
that
not less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto,
the
Company shall (i) furnish to the Holders and any Special Counsel, copies of
all
such documents proposed to be filed, which documents will be subject to the
review of such Holders and such Special Counsel, and (ii) cause its officers
and
directors, counsel and independent certified public accountants to respond
to
such inquiries as shall be necessary, in the reasonable opinion of Special
Counsel, to conduct a reasonable review of such documents. The Company shall
not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities or any Special Counsel shall reasonably object in writing within
three (3) Business Days of their receipt thereof.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the 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 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as possible, but in no event later than ten (10) Business
Days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as possible
provide the Holders true and complete copies of all correspondence from and
to
the Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange
Act
with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the Effectiveness Period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify
the Holders of Registrable Securities and any Special Counsel as promptly as
possible (and, in the case of (i)(A) below, not less than three (3) days prior
to such filing) and (if requested by any such Person) confirm such notice in
writing no later than two (2) Business Days following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is 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 and (C) with
respect to the 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 the
Registration Statement or Prospectus or for additional information; (iii) of
the
issuance by the Commission of any stop order suspending the effectiveness of
the
Registration Statement covering any or all of the Registrable Securities or
the
initiation or threatening of any Proceedings for that purpose; (iv) if at any
time any of the representations and warranties of the Company contained in
any
agreement contemplated hereby ceases to be true and correct in all material
respects; (v) 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
of
any Proceeding for such purpose; and (vi) of the occurrence of any event that
makes any statement made in the 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 the Registration
Statement, Prospectus or other documents so that, in the case of the
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 the light of the circumstances under which they were made, not
misleading.
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(d) Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of,
as promptly as possible, (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities
for sale in any jurisdiction.
(e) If
requested by the Holders of a majority in interest of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as
the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to
be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) If
requested by any Holder, furnish to such Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished
or
incorporated by reference) promptly after the filing of such documents with
the
Commission.
(g) Promptly
deliver to each Holder and any Special Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
subject to the provisions of Sections 3(m) and 3(n), 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, use its best efforts to register
or qualify or cooperate with the selling Holders and any Special Counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, 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
a
Registration Statement; provided,
however,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
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(i) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by the
Purchase Agreement and applicable federal and state securities laws, shall
be
free of all restrictive legends, and to enable such Registrable Securities
to be
in such denominations and registered in such names as any Holder may request
in
connection with any sale of Registrable Securities.
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(vi), as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement 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, neither the Registration Statement nor such 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 the light
of the circumstances under which they were made, not misleading.
(k) Use
its
best efforts to cause all Registrable Securities relating to the Registration
Statement to be listed on the OTC Bulletin Board or any other securities
exchange, quotation system or market, if any, on which similar securities issued
by the Company are then listed as and when required pursuant to the Purchase
Agreement.
(l) Comply
in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders all documents
filed or required to be filed with the Commission.
(m) The
Company may require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as
is
required by law to be disclosed in the Registration Statement, Prospectus,
or
any amendment or supplement thereto, and the Company may exclude from such
registration the Registrable Securities of any such Holder who unreasonably
fails to furnish such information within a reasonable time after receiving
such
request.
Each
Holder covenants and agrees that (i) it will not sell any Registrable Securities
under the Registration Statement until it has received copies of the Prospectus
as then amended or supplemented as contemplated in Section 3(g) and notice
from
the Company that such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 3(c) and (ii) it and
its officers, directors or Affiliates, if any, will comply with the prospectus
delivery requirements of the Securities Act as applicable to them in connection
with sales of Registrable Securities pursuant to the Registration
Statement.
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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)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
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
contemplated by Section 3(j), 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.
(n) If
(i)
there is material non-public information regarding the Company which the
Company's Board of Directors (the "Board")
reasonably determines not to be in the Company's best interest to disclose
and
which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or
any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose, then the Company may postpone or suspend filing
or
effectiveness of a registration statement for a period not to exceed 20
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 12 month period; provided,
however,
that no
such postponement or suspension shall be permitted for consecutive 20 day
periods, arising out of the same set of facts, circumstances or
transactions.
4. Registration
Expenses.
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in Section 4, shall be borne
by the Company whether or not the Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to
the
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing
fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with each securities exchange or market on which Registrable
Securities are required hereunder to be listed, (B) with respect to filing
fees
required to be paid by the Company to the National Association of Securities
Dealers, Inc. and the NASD Regulation, Inc. and (C) in compliance with state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of
such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses
of
printing certificates for Registrable Securities and of printing prospectuses
if
the printing of prospectuses is 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 and Special Counsel for the Holders, in the case of the Special Counsel,
to a maximum amount of $5,000, (v) Securities Act liability insurance, if the
Company so desires such insurance, and (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation,
the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.
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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, brokers (including
brokers who offer and sell Registrable Securities as principal as a result
of a
pledge or any failure to perform under a margin call of Common Stock),
investment advisors and employees of each of them, each Person who controls
any
such 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, costs of preparation and attorneys' fees) and
expenses (collectively, "Losses"),
as
incurred, arising out of or based upon any untrue or alleged untrue statement
of
a material fact contained in the Registration Statement, any Prospectus or
any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus
or
supplement thereto), in the light of the circumstances under which they were
made, not misleading, except to the extent, but only to the extent, that such
untrue statements or omissions arise out of or are based upon information
regarding the Holders or such other Indemnified Party furnished in writing
to
the Company by a Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to a Holder or such Holder's proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing
by
a Holder expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto. 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.
(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 out of or based upon any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out
of or based upon any omission or alleged omission of a material fact required
to
be stated therein or necessary to make the statements therein (in the case
of
any Prospectus or form of prospectus or supplement thereto), in the light of
the
circumstances under which they were made, not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in
any
information so furnished in writing by such Holder or other Indemnified Party
to
the Company expressly for use therein and that such information was reasonably
relied upon by the Company 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 any amendment or supplement thereto.
Notwithstanding anything to the contrary contained herein, the Holders shall
be
liable under this Section 5(b) for only that amount as does not exceed the
net
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.
-8-
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified
Party"),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the "Indemnifying
Party)
in
writing, and the Indemnifying Party shall be entitled to 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.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such parties 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 or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which any Indemnified Party is a party
and
indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided,
that the Indemnified Party shall reimburse all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
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(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable
to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative 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.
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. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties pursuant to the law.
6. Rule
144.
As
long
as any Holder owns Shares, Conversion Shares, Warrants or Warrant Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. As long as any Holder owns Shares, Conversion Shares, Warrants or Warrant
Shares, if the Company is not required to file reports pursuant to Section
13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Holders and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
such
Person to sell Conversion Shares and Warrant Shares without registration under
the Securities Act within the limitation of the exemptions provided by Rule
144
promulgated under the Securities Act, including providing any legal opinions
relating to such sale pursuant to Rule 144. Upon the request of any Holder,
the
Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such
requirements.
-10-
7. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, such 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
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has, as of the date hereof entered
into
and currently in effect, nor shall the Company or any of its subsidiaries,
on or
after the date of this Agreement, enter into any agreement with respect to
its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
in Schedule
2.1(c)
of the
Purchase Agreement, neither the Company nor any of its subsidiaries has
previously entered into any agreement currently in effect granting any
registration rights with respect to any of its securities to any Person. Without
limiting the generality of the foregoing, without the written consent of the
Holders of a majority of the then outstanding Registrable Securities, the
Company shall not grant to any Person the right to request the Company to
register any securities of the Company under the Securities Act unless the
rights so granted are subject in all respects to the prior rights in full of
the
Holders set forth herein, and are not otherwise in conflict with the provisions
of this Agreement.
(c) No
Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto or as disclosed in Schedule
2.1(c)
of the
Purchase Agreement or Schedule
II
hereto)
may include securities of the Company in the Registration Statement, and the
Company shall not after the date hereof enter into any agreement providing
such
right to any of its securityholders, unless the right so granted is subject
in
all respects to the prior rights in full of the Holders set forth herein, and
is
not otherwise in conflict with the provisions of this Agreement.
-11-
(d) Piggy-Back
Registrations.
If at
any time when there is not an effective Registration Statement covering (i)
Conversion Shares or (ii) Warrant Shares, 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, the Company shall send to each holder of
Registrable Securities written notice of such determination and, if within
thirty (30) days after receipt of such notice, or within such shorter period
of
time as may be specified by the Company in such written notice as may be
necessary for the Company to comply with its obligations with respect to the
timing of the filing of such registration statement, any such holder shall
so
request in writing, (which request shall specify the Registrable Securities
intended to be disposed of by the Purchasers), the Company will cause the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holder, to the extent requisite
to permit the disposition of the Registrable Securities so to be registered,
provided that if at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation
to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of
a
determination to delay registering, shall be permitted to delay registering
any
Registrable Securities being registered pursuant to this Section 7(d) for the
same period as the delay in registering such other securities. The Company
shall
include in such registration statement all or any part of such Registrable
Securities such holder requests to be registered; provided,
however,
that
the Company shall not be required to register any Registrable Securities
pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k)
of the Securities Act. In the case of an underwritten public offering, if the
managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then
if
the Company after consultation with the managing underwriter should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement,
and
based on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration
statement shall be reduced pro-rata among such Holders (based
upon the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided,
however,
that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction
of
the number of Registrable securities intended to be offered by the Holders
than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).
-12-
(e) Failure
to File Registration Statement and Other Events.
The
Company and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date
and
maintained in the manner contemplated herein during the Effectiveness Period
or
if certain other events occur. The Company and the Holders further agree that
it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if, except as set forth in Section 3(n), (A) the Registration
Statement is not filed on or prior to the Filing Date, or (B) the Registration
Statement is not declared effective by the Commission on or prior to the
Effectiveness Date (or in the event an additional Registration Statement is
filed because the actual number of shares of Common Stock into which the
Preferred Stock is convertible and the Warrants are exercisable plus the number
of Common Shares exceeds the number of shares of Common Stock initially
registered is not filed and declared effective with the time periods set forth
in Section 2), or (C) the Company fails to file with the Commission a request
for acceleration in accordance with Rule 461 promulgated under the Securities
Act within three (3) Business Days of the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or is not subject to further
review, or (D) the Registration Statement is filed with and declared effective
by the Commission but thereafter ceases to be effective as to all Registrable
Securities at any time prior to the expiration of the Effectiveness Period,
without being succeeded immediately by a subsequent Registration Statement
filed
with and declared effective by the Commission in accordance with Section 2
hereof or (E) the Company has breached Section 3(n), or (F) trading in the
Common Stock shall be suspended or if the Common Stock is delisted from the
OTC
Bulletin Board (or other principal exchange on which the Common Stock is traded)
for any reason for more than three (3) Business Days in the aggregate without
subsequent listing on another exchange (any such failure or breach being
referred to as an "Event,"
and
for purposes of clauses (A) and (B) the date on which such Event occurs, or
for
purposes of clause (C) the date on which such three (3) Business Day period
is
exceeded, or for purposes of clause (D) after more than twenty (20) Business
Days, or for purposes of clause (F) the date on which such three (3) Business
Day period is exceeded, being referred to as "Event
Date"),
the
Company shall pay an amount as liquidated damages to each Holder in cash equal
to 2.0% for the first calendar month (prorated for shorter periods) and 1.0%
per
calendar month thereafter (prorated for shorter periods) of the Holder’s initial
investment in the Preferred Stock from the Event Date, until the applicable
Event is cured. Notwithstanding anything to the contrary in this paragraph
(e),
if (I) any of the Events described in clauses (A), (B), (C) or (D) shall have
occurred, (II) on or prior to the applicable Event Date, the Company shall
have
exercised its rights under Section 3(n) hereof and (III) the postponement or
suspension permitted pursuant to such Section 3(n) shall remain effective as
of
such applicable Event Date, then the applicable Event Date shall be deemed
instead to occur on the second Business Day following the termination of such
postponement or suspension.
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and the Holders of seventy-five percent (75%) of the
Registrable Securities outstanding.
-13-
(g) Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses
for
such communications shall be:
|
If
to the Company:
|
HiEnergy
Technologies, Inc.
0000-X
Xxxxx Xxxxxxx, Xxxx X
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Senior Vice President
and
Corporate Secretary
Tel.
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
|
|
with
copies (which shall not constitute notice) to:
|
August
Law Group, P.C.
The
Atrium Building
00000
Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxxxxx X. August
Tel
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
|
|
If
to any Purchaser:
|
At
the address of such Purchaser set forth on Exhibit
A
to
this Agreement, with copies to Purchaser’s counsel as set forth on
Exhibit
A
or
as specified in writing by such:
|
|
|
with
copies (which shall not constitute notice) to:
|
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxxxxxx X. Xxxxxxx
Tel
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
(h) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Holder and its successors and assigns. The Company may not assign this Agreement
or any of its rights or obligations hereunder without the prior written consent
of each Holder. Each Purchaser may assign its rights hereunder in the manner
and
to the Persons as permitted under the Purchase Agreement.
-14-
(i) Assignment
of Registration Rights.
The
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of
this
Agreement, shall be automatically assignable by each Holder to any Affiliate
of
such Holder or any other Holder or
Affiliate of any other Holder
of
all or a portion of
the
Preferred Stock, the Common Shares or the Registrable Securities if: (i) the
Holder agrees in writing with the transferee or assignee to assign such rights,
and a copy of such agreement is furnished to the Company within a reasonable
time after such assignment, (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (a) the name
and
address of such transferee or assignee, and (b) the securities with respect
to
which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment the further disposition of such securities
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all
of
the provisions of this Agreement, and (v) such transfer shall have been made
in
accordance with the applicable requirements of the Purchase Agreement. In
addition, each Holder shall have the right to assign its rights hereunder to
any
other Person with the prior written consent of the Company, which consent shall
not be unreasonably withheld. The rights to assignment shall apply to the
Holders (and to subsequent) successors and assigns.
(j) 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.
(k) Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts
of
law principles which would result in the application of the substantive law
of
another jurisdiction. This Agreement shall not be interpreted or construed
with
any presumption against the party causing this Agreement to be drafted.
Each
of
the Company and the Purchasers (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the Southern
District of New York and the courts of the State of New York located in New
York
county for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is
not
personally subject to the jurisdiction of such court, that the suit, action
or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchasers
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof 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 in this Section 7(k)
shall affect or limit any right to serve process in any other manner permitted
by law.
(l) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
-15-
(m) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to
be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(n) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(o) Shares
Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the
Company or its Affiliates (other than any Holder or transferees or successors
or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason
of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(p) Independent
Nature of Purchasers.
The
Company acknowledges that the obligations of each Purchaser under the
Transaction Documents are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible to the Company in any
way
for the performance of the obligations of any other Purchaser under the
Transaction Documents. The Company acknowledges that nothing contained herein,
or in any Transaction Document, and no action taken by any Purchaser pursuant
hereto or thereto (including, but not limited to, the (i) inclusion of a
Purchaser in the Registration Statement and (ii) review by, and consent to,
such
Registration Statement by a Purchaser) shall be deemed by the Company to
constitute the Purchasers as a partnership, an association, a joint venture
or
any other kind of entity, or create a presumption by the Company that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
The
Company acknowledges that each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of this Agreement or out of the other Transaction Documents against the
Company, and it shall not be necessary for any other Purchaser to be joined
as
an additional party in any proceeding for such purpose. The Company acknowledges
that for reasons of administrative convenience only, the Transaction Documents
have been prepared by counsel for the placement agent and such counsel does
not
represent the Purchasers and the Purchasers have retained their own individual
counsel with respect to the transactions contemplated hereby. The Company
acknowledges that it has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because
it
was required or requested to do so by the Purchasers. The Company acknowledges
that such procedure with respect to the Transaction Documents in no way creates
a presumption by the Company that the Purchasers are in any way acting in
concert or as a group with respect to the Transaction Documents or the
transactions contemplated hereby or thereby.
-16-
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
HIENERGY
TECHNOLOGIES, INC.
|
||
| |
|
|
| By: | ||
|
Name: |
||
| Title | ||
|
PURCHASER:
|
||
| |
|
|
| By: | ||
|
Name: |
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| Title | ||
-17-
Schedule
I
Purchasers
-18-
Schedule
II
Other
Securities to be Included on the Registration Statement
1. Shares
of
Common Stock issuable upon the exercise of warrants issuable to the placement
agent and its designees in connection with the transactions contemplated by
the
Purchase Agreement.
-19-
