REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of October 6, 2005 (this
"Agreement") by and between Microfield Group, Inc., an Oregon corporation, with
principal executive offices located at 0000 XX Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxx 00000 (the "Company"), and Energy Fund III, LLC (the "Holder").
WHEREAS, the Company has agreed to issue and sell to the Holder 878,571
shares of Common Stock (the "Common Stock") of the Company and issue a Warrant
to purchase 439,286 shares (the "Warrants") of the Company's common stock (the
"Warrant Shares"); and
WHEREAS, to induce the Holder to purchase the Common Stock, the Company
has agreed to provide with respect to the Common Stock and the Warrant Shares
certain registration rights under the Securities Act;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the meanings:
1.1 "Affiliate" of any specified Person means any other
Person who directly, or indirectly through one or more intermediaries, is in
control of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, control of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract, securities ownership or otherwise;
and the terms "controlling" and "controlled" have the respective meanings
correlative to the foregoing.
1.2 "Closing Date" means the date of this Agreement.
1.3 "Commission" means the Securities and Exchange
Commission.
1.4 "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder, or
any similar successor statute.
1.5 "Investor" means each of the Holder and any
transferee or assignee of Registrable Securities which agrees to become bound by
all of the terms and provisions of this Agreement in accordance with Section 9
hereof.
1.6 "Investment Amount" means the actual consideration
received by the Company in exchange for Holder's purchase of the Common Stock.
1.7 "Person" means any individual, partnership,
corporation, limited liability company, joint stock company, association, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
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1.8 "Prospectus" means the prospectus (including, without
limitation, any preliminary prospectus and any final prospectus filed pursuant
to Rule 424(b) under the Securities Act, including any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance on Rule 430A under the Securities Act)
included in the Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Registration Statement and by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
1.9 "Public Offering" means an offer registered with the
Commission and the appropriate state securities commissions by the Company of
its Common Stock and made pursuant to the Securities Act.
1.10 "Registrable Securities" means the Common Stock and
the Common Stock issued or issuable upon exercise of the Warrants or in
connection with any distribution, recapitalization, stock-split, stock
adjustment or reorganization of the Company; provided, however, a share of
Common Stock shall cease to be a Registrable Security for purposes of this
Agreement when it no longer is a Restricted Security.
1.11 "Registration Statement" means a registration
statement of the Company filed on an appropriate form under the Securities Act
providing for the registration of, and the sale on a continuous or delayed basis
by the holders of, all of the Registrable Securities pursuant to Rule 415 under
the Securities Act, including the Prospectus contained therein and forming a
part thereof, any amendments to such registration statement and supplements to
such Prospectus, and all exhibits to and other material incorporated by
reference in such registration statement and Prospectus.
1.12 "Restricted Security" means the Common Stock and the
Warrant Shares except any such share that (i) has been registered pursuant to an
effective registration statement under the Securities Act and sold in a manner
contemplated by the prospectus included in such registration statement, (ii) has
been transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable pursuant
to paragraph (k) of Rule 144 under the Securities Act (or any successor
provision thereto) or (iii) otherwise has been transferred and a new share of
Common Stock not subject to transfer restrictions under the Securities Act has
been delivered by or on behalf of the Company.
1.13 "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
2. Registration
2.1 Filing and Effectiveness of Registration Statement.
The Company shall prepare and file with the Commission as soon as reasonably
practicable a Registration Statement relating to the offer and sale of the
Registrable Securities, but in no event later than 60 days after the date of
this Agreement ("Filing Date"), and shall use its best reasonable efforts to
cause the
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Commission to declare such Registration Statement effective under the Securities
Act as promptly as practicable, but in no event later than the 90 days after the
date of this Agreement ("Effective Date"); provided, however, that if the
Commission provides comments to the Company, the Effective Date shall be
extended an additional 30 days. The Company shall promptly (and, in any event,
no more than 48 hours after it receives comments from the Commission), notify
the Holder when and if it receives any comments from the Commission on the
Registration Statement and promptly forward a copy of such comments, if they are
in writing, to the Holder. At such time after the filing of the Registration
Statement pursuant to this Section 2.1 as the Commission indicates, either
orally or in writing, that it has no further comments with respect to such
Registration Statement or that it is willing to entertain appropriate requests
for acceleration of effectiveness of such Registration Statement, the Company
shall promptly, and in no event later than two (2) business days after receipt
of such indication from the Commission, request that the effectiveness of such
Registration Statement be accelerated within forty-eight (48) hours of the
Commission's receipt of such request. The Company shall notify the Holder by
written notice that such Registration Statement has been declared effective by
the Commission within 24 hours of such declaration by the Commission.
2.2 Eligibility for Use of Form S-3 or an SB-2. The
Company agrees that at such time as it meets all the requirements for the use of
a Securities Act Registration Statement on Form S-3 or SB-2, it shall file all
reports and information required to be filed by it with the Commission in a
timely manner and take all such other action so as to maintain such eligibility
for the use of such form.
2.3 Piggyback Registration Rights.
(a) If the Company proposes to register any of
its warrants, Common Stock or any other shares of common stock of the Company
under the Securities Act (other than a registration (A) on Form S-8 or S-4 or
any successor or similar forms, (B) relating to Common Stock or any other shares
of common stock of the Company issuable upon exercise of employee share options
or in connection with any employee benefit or similar plan of the Company, or
(C) in connection with a direct or indirect acquisition by the Company of
another Person or any transaction with respect to which Rule 145 (or any
successor provision) under the Securities Act applies), whether or not for sale
for its own account, it will each such time, give prompt written notice at least
20 days prior to the anticipated filing date of the registration statement
relating to such registration to each Investor, which notice shall set forth
such Investor's rights under this Section 2.3 and shall offer such Investor the
opportunity to include in such registration statement such number of Registrable
Securities as such Investor may request. Upon the written request of any
Investor made within 10 days after the receipt of notice from the Company (which
request shall specify the number of Registrable Securities intended to be
disposed of by such Investor), the Company will use its best efforts to effect
the registration under the Securities Act of all Registrable Securities that the
Company has been so requested to register by each Investor, to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered; provided, however, that (A) if such registration involves a Public
Offering, each Investor must sell its Registrable Securities to any underwriters
selected by the Company with the consent of such Investor on the same terms and
conditions as apply to the Company and (B) if, at any time after giving written
notice of its intention to register any Registrable Securities pursuant to this
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Section 2 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 such Registrable Securities, the Company shall give written
notice to each Investor and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration. The
Company's obligations under this Section 2.3 shall terminate on the date that
the registration statement to be filed in accordance with Section 2.1 is
declared effective by the Commission.
(b) If a registration pursuant to this Section
2.3 involves a Public Offering and the managing underwriter thereof advises the
Company that, in its view, the number of shares of Common Stock that the Company
and the Investors intend to include in such registration exceeds the largest
number of shares of Common Stock that can be sold without having an adverse
effect on such Public Offering (the "Maximum Offering Size"), the Company will
include in such registration only such number of shares of Common Stock as does
not exceed the Maximum Offering Size, and the number of shares in the Maximum
Offering Size shall be allocated pro rata among the Company, the Investors and
any other holders distributing their securities through such underwriting due to
an existing Registration Rights between such holders and the Company. If as a
result of the proration provisions of this Section 2.3(b), any Investor is not
entitled to include all such Registrable Securities in such registration, such
Investor may elect to withdraw its request to include any Registrable Securities
in such registration. With respect to registrations pursuant to this Section
2.3, the number of securities required to satisfy any underwriters'
over-allotment option shall be allocated among the Company, the Investors and
any Third Party Seller pro rata on the basis of the relative number of
securities offered for sale under such registration by each of the Investors,
the Company and any such Third Party Sellers before the exercise of such
over-allotment option.
3. Obligations of the Company. In connection with the
registration of the Registrable Securities, the Company shall:
3.1 Promptly (i) prepare and file with the Commission
such amendments (including post-effective amendments) to the Registration
Statement and supplements to the Prospectus as may be necessary to keep the
Registration Statement continuously effective and in compliance with the
provisions of the Securities Act applicable thereto so as to permit the
Prospectus forming part thereof to be current and useable by Investors for
resales of the Registrable Securities for a period of five (5) years from the
date on which the Registration Statement is first declared effective by the
Commission (the "Effective Time") or such shorter period that will terminate
when all the Registrable Securities covered by the Registration Statement have
been sold pursuant thereto in accordance with the plan of distribution provided
in the Prospectus, transferred pursuant to Rule 144 under the Securities Act or
otherwise transferred in a manner that results in the delivery of new securities
not subject to transfer restrictions under the Securities Act (the "Registration
Period") and (ii) take all lawful action such that each of (A) the Registration
Statement and any amendment thereto does not, when it becomes effective, 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, not misleading
and (B) the Prospectus forming part of the Registration Statement, and any
amendment or supplement thereto, does not at any time during the Registration
Period include an untrue statement of a material fact or omit
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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;
3.2 During the Registration Period, comply with the
provisions of the Securities Act with respect to the Registrable Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the Investors as set forth in the Prospectus forming
part of the Registration Statement;
3.3 (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any Prospectus (including any supplements thereto), provide (A)
draft copies thereof to the Investors and reflect in such documents all such
comments as the Investors (and their counsel) reasonably may propose and (B) to
the Investors a copy of the accountant's consent letter to be included in the
filing and (ii) furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel identified to the
Company, (A) promptly after the same is prepared and publicly distributed, filed
with the Commission, or received by the Company, one copy of the Registration
Statement, each Prospectus, and each amendment or supplement thereto and (B)
such number of copies of the Prospectus and all amendments and supplements
thereto and such other documents, as such Investor may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
Investor;
3.4 (i) Register or qualify the Registrable Securities
covered by the Registration Statement under such securities or "blue sky" laws
of such jurisdictions as the Investors who hold a majority-in-interest of the
Registrable Securities being offered reasonably request, (ii) prepare and file
in such jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period,
(iii) take all such other lawful actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period and (iv) take all such other lawful actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.4, (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;
3.5 As promptly as practicable after becoming aware of
such event, notify each Investor of the occurrence of any event, as a result of
which the Prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits 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, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each Investor as such
Investor may reasonably request;
3.6 As promptly as practicable after becoming aware of
such event, notify each Investor who holds Registrable Securities being sold
(or, in the event of an underwritten
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offering, the managing underwriters) of the issuance by the Commission of any
stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time and take all lawful action to effect the
withdrawal, rescission or removal of such stop order or other suspension;
3.7 Cause all the Registrable Securities covered by the
Registration Statement to be listed on the principal national securities
exchange, and included in an inter-dealer quotation system of a registered
national securities association, on or in which securities of the same class or
series issued by the Company are then listed or included;
3.8 Maintain a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement;
3.9 Cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
registration statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Investors reasonably may request and registered in such names as the Investor
may request; and, within three (3) business days after a registration statement
which includes Registrable Securities is declared effective by the Commission,
deliver and cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such registration statement) an
appropriate instruction and, to the extent necessary, an opinion of such
counsel;
3.10 Take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the Investors of their
Registrable Securities in accordance with the intended methods therefor provided
in the Prospectus which are customary under the circumstances;
3.11 Make generally available to its security holders as
soon as practicable, but in any event not later than three (3) months after (i)
the effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
3.12 In the event of an underwritten offering, promptly
include or incorporate in a Prospectus supplement or post-effective amendment to
the Registration Statement such information as the managers reasonably agree
should be included therein and to which the Company does not reasonably object
and make all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after it is notified of the matters to be
included or incorporated in such Prospectus supplement or post-effective
amendment;
3.13 (i) Make reasonably available for inspection by
Investors, any underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other agent retained by
such Investors or any such underwriter all relevant
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financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and (ii) cause the Company's officers, directors
and employees to supply all information reasonably requested by such Investors
or any such underwriter, attorney, accountant or agent in connection with the
Registration Statement, in each case, as is customary for similar due diligence
examinations; provided, however, that all records, information and documents
that are designated in writing by the Company, in good faith, as confidential,
proprietary or containing any material nonpublic information shall be kept
confidential by such Investors and any such underwriter, attorney, accountant or
agent (pursuant to an appropriate confidentiality agreement in the case of any
such holder or agent), unless such disclosure is made pursuant to judicial
process in a court proceeding (after first giving the Company an opportunity
promptly to seek a protective order or otherwise limit the scope of the
information sought to be disclosed) or is required by law, or such records,
information or documents become available to the public generally or through a
third party not in violation of an accompanying obligation of confidentiality;
and provided, further, that, if the foregoing inspection and information
gathering would otherwise disrupt the Company's conduct of its business, such
inspection and information gathering shall, to the maximum extent possible, be
coordinated on behalf of the Investors and the other parties entitled thereto by
one firm of counsel designated by and on behalf of the majority in interest of
Investors and other parties;
3.14 In connection with any underwritten offering, make
such representations and warranties to the Investors participating in such
underwritten offering and to the managers, in form, substance and scope as are
customarily made by the Company to underwriters in secondary underwritten
offerings;
3.15 In connection with any underwritten offering, obtain
opinions of counsel to the Company (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the managers) addressed to
the underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the Effective Time of the Registration Statement or
most recent post-effective amendment thereto, as the case may be, the absence
from the Registration Statement and the Prospectus, including any documents
incorporated by reference therein, of an untrue statement of a material fact or
the omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, subject to customary
limitations);
3.16 In connection with any underwritten offering, obtain
"cold comfort" letters and updates thereof from the independent public
accountants of the Company (and, if necessary, from the independent public
accountants of any subsidiary of the Company or of any business acquired by the
Company, in each case for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to each
underwriter participating in such underwritten offering (if such underwriter has
provided such letter, representations or documentation, if any, required for
such cold comfort letter to be so addressed), in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with secondary underwritten offerings;
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3.17 In connection with any underwritten offering, deliver
such documents and certificates as may be reasonably required by the managers,
if any, and
3.18 In the event that any broker-dealer registered under
the Exchange Act shall be an "Affiliate" (as defined in Rule 2729(b)(1) of the
rules and regulations of the National Association of Securities Dealers, Inc.
(the "NASD Rules") (or any successor provision thereto)) of the Company or has a
"conflict of interest" (as defined in Rule 2720(b)(7) of the NASD Rules (or any
successor provision thereto)) and such broker-dealer shall underwrite,
participate as a member of an underwriting syndicate or selling group or assist
in the distribution of any Registrable Securities covered by the Registration
Statement, whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including, without limitation, by (A)
engaging a "qualified independent underwriter" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor provision thereto)) to participate in the
preparation of the Registration Statement relating to such Registrable
Securities, to exercise usual standards of due diligence in respect thereof and
to recommend the public offering price of such Registrable Securities, (B)
indemnifying such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof and (C) providing
such information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the NASD Rules.
4. Obligations of the Investors. n connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
4.1 It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request;
4.2 Each Investor by its acceptance of the Registrable
Securities agrees to cooperate with the Company in connection with the
preparation and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities from the Registration Statement; and
4.3 Each Investor agrees that, upon receipt of any notice
from the Company of the occurrence of any event of the kind described in Section
3.5 or 3.6, it shall immediately discontinue its disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3.5 and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
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5. Expenses of Registration. All expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and qualifications fees, printing
and engraving fees, accounting fees, and the fees and disbursements of counsel
for the Company shall be borne by the Company.
6. Indemnification and Contribution
6.1 Indemnification by the Company. The Company shall
indemnify and hold harmless each Investor (each such person being sometimes
hereinafter referred to as an "Indemnified Person") from and against any losses,
claims, damages or liabilities, joint or several, to which such Indemnified
Person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement of a material fact contained in any
Registration Statement or an omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, not misleading, or arise out of or are based upon an untrue statement
of a material fact contained in any Prospectus or an omission or alleged
omission to state therein 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; and the Company hereby agrees to
reimburse such Indemnified Person for all reasonable legal and other expenses
incurred by them in connection with investigating or defending any such action
or claim as and when such expenses are incurred; provided, however, that the
Company shall not be liable to any such Indemnified Person in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an
omission or alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein or (ii) in the case
of the occurrence of an event of the type specified in Section 3.5, the use by
the Indemnified Person of an outdated or defective Prospectus after the Company
has provided to such Indemnified Person an updated Prospectus correcting the
untrue statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage or liability.
6.2 Notice of Claims, etc. Promptly after receipt by a
party seeking indemnification pursuant to this Section 6 (an "Indemnified
Party") of written notice of any investigation, claim, proceeding or other
action in respect of which indemnification is being sought (each, a "Claim"),
the Indemnified Party promptly shall notify the party against whom
indemnification pursuant to this Section 6 is being sought (the "Indemnifying
Party") of the commencement thereof; but the omission to so notify the
Indemnifying Party shall not relieve it from any liability that it otherwise may
have to the Indemnified Party, except to the extent that the Indemnifying Party
is materially prejudiced and forfeits substantive rights and defenses by reason
of such failure. In connection with any Claim as to which both the Indemnifying
Party and the Indemnified Party are parties, the Indemnifying Party shall be
entitled to assume the defense thereof. Notwithstanding the assumption of the
defense of any Claim by the Indemnifying Party, the Indemnified Party shall have
the right to employ separate legal counsel and to participate in the defense of
such Claim, and the Indemnifying Party shall bear the reasonable fees,
out-of-pocket costs and expenses of such separate legal counsel to the
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Indemnified Party if (and only if): (x) the Indemnifying Party shall have agreed
to pay such fees, costs and expenses, (y) the Indemnified Party and the
Indemnifying Party shall reasonably have concluded that representation of the
Indemnified Party by the Indemnifying Party by the same legal counsel would not
be appropriate due to actual or, as reasonably determined by legal counsel to
the Indemnified Party, potentially differing interests between such parties in
the conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying Party shall not,
in connection with any Claim in the same jurisdiction, be liable for the fees
and expenses of more than one firm of counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnified Party shall not,
without the prior written consent of the Indemnifying Party (which consent shall
not unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnifying Party from all liabilities with respect to such Claim or judgment.
6.3 Contribution. If the indemnification provided for in
this Section 6 is unavailable to or insufficient to hold harmless an Indemnified
Person under Section 6.1 above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), 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 the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such Indemnifying Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6.3 were determined by
pro rata allocation (even if the Investors or any underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 6.3.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. 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 obligations of the Investors and any underwriters in this
Section 6.3 to contribute shall be several in proportion to the percentage of
Registrable Securities registered or underwritten, as the case may be, by them
and not joint.
/s/ AW /s/ RJ
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6.4 Notwithstanding any other provision of this Section
6, in no event shall any (i) Investor be required to undertake liability to any
person under this Section 6 for any amounts in excess of the dollar amount of
the proceeds to be received by such Investor from the sale of such Investor's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act and (ii)
underwriter be required to undertake liability to any Person hereunder for any
amounts in excess of the aggregate discount, commission or other compensation
payable to such underwriter with respect to the Registrable Securities
underwritten by it and distributed pursuant to the Registration Statement.
6.5 The obligations of the Company under this Section 6
shall be in addition to any liability which the Company may otherwise have to
any Indemnified Person and the obligations of any Indemnified Person under this
Section 6 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
7. Exclusive Remedy. If: (i) a Registration Statement is not
filed on or prior to the Filing Date; or (ii) a Registration Statement is not
declared effective by the Effective Date or the Extended Effective Date, as
applicable, 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 "Event
Date," then on the one-month anniversary of each such Event Date, and on each
monthly anniversary thereafter, the Company shall pay to each Holder an amount
in cash, as liquidated damages equal to 2% of the aggregate Investment Amount
paid by such Holder, or in the Company's sole discretion issue shares of common
stock of the Company equal to 4% of each Holder's Investment Amount. The parties
agree that the Company will not be liable for liquidated damages under this
Section in respect of the Warrants. For the purposes of this Section 7, the
value of the common stock to be issued shall be the trading price for such
shares on the OTCBB or other exchange on the Event Date. This shall be Holder's
sole and exclusive remedy for Company's failure to fulfill its registration
obligations under Section 2.1. The liquidated damages 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.
8. Rule 144. With a view to making available to the Investors the
benefits of Rule 144 under the Securities Act or any other similar rule or
regulation of the Commission that may at any time permit the Investors to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to use its best efforts to:
8.1 comply with the provisions of paragraph (c) (1) of
Rule 144; and
8.2 file with the Commission in a timely manner all
reports and other documents required to be filed by the Company pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to or did file
such reports, it will, upon the request of any Investor, make available other
information as required by, and so long as necessary to permit sales of, its
Registrable Securities pursuant to Rule 144.
/s/ AW /s/ RJ
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9. Assignment. The rights to have the Company register
Registrable Securities pursuant to this Agreement shall be automatically
assigned by the Investors to any permitted transferee of all or any portion of
such Registrable Securities (or all or any portion of the Debenture or Warrant
of the Company which is convertible into such securities) only if (a) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities and
(d) at or before the time the Company received the written notice contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein.
10. Amendment and Waiver. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority-in-interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
11. Changes in Common Stock. If, and as often as, there are any
changes in the Common Stock by way of stock split, stock dividend, reverse
split, combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof, as may be required, so that
the rights and privileges granted hereby shall continue with respect to the
Common Stock as so changed.
12. Miscellaneous
12.1 A person or entity shall be deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
12.2 If, after the date hereof and prior to the Commission
declaring the Registration Statement to be filed pursuant to Section 2.1
effective under the Securities Act, the Company grants to any Person any
registration rights with respect to any Company securities which are more
favorable to such other Person than those provided in this Agreement, then the
Company forthwith shall grant (by means of an amendment to this Agreement or
otherwise) identical registration rights to all Investors hereunder.
12.3 Except as may be otherwise provided herein, any
notice or other communication or delivery required or permitted hereunder shall
be in writing and shall be delivered personally, or sent by telecopier machine
or by a nationally recognized overnight courier service, and shall be deemed
given when so delivered personally, or by telecopier machine or overnight
courier service as follows:
/s/ AW /s/ RJ
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If to the Company, to:
Microfield Group, Inc.
0000 XX Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Investor, to:
Energy Fund III, LLC
000 XX Xxxxxxxx, Xxxxx 000
Xxxxxxxx, XX
00000 Telephone: 000-000-0000 Facsimile: 000-000-0000
If to any other Investor, at such address as such Investor shall have
provided in writing to the Company.
The Company, the Holder or any Investor may change the foregoing address by
notice given pursuant to this Section 12.3.
12.4 Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
12.5 This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Oregon. Each of the parties consents
to the jurisdiction of the federal courts whose districts encompass any part of
the City of Portland or the state courts of the State of Oregon sitting in the
County of Multnomah in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions.
12.6 Should any party hereto employ an attorney for the
purpose of enforcing or construing this Agreement, or any judgment based on this
Agreement, in any legal proceeding whatsoever, including insolvency, bankruptcy,
arbitration, declaratory relief or other litigation, the prevailing party shall
be entitled to receive from the other party or parties thereto reimbursement for
all reasonable attorneys' fees and all reasonable costs, including but not
limited to service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees, and the cost of any bonds, whether
taxable or not, and that such reimbursement shall be included in any judgment or
final order issued in that proceeding. The "prevailing party" means the party
determined by the court to most nearly prevail and not necessarily the one in
whose favor a judgment is rendered.
12.7 The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this
/s/ AW /s/ RJ
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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 best 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.
12.8 The Company shall not enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to any
person which conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any Registration Statement
filed pursuant hereto, except for such rights and conflicts as have been
irrevocably waived. Without limiting the generality of the foregoing, without
the written consent of the holders of a majority in interest of the Registrable
Securities, the Company shall not grant to any person the right to request it to
register any of its securities under the Securities Act unless the rights so
granted are subject in all respect to the prior rights of the holders of
Registrable Securities set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement. The restrictions on the
Company's rights to grant registration rights under this paragraph shall
terminate on the date the Registration Statement to be filed pursuant to Section
2.1 is declared effective by the Commission.
12.9 This Agreement, the Securities Purchase Agreement,
the Debenture and the Conversion Warrants Agreement, of even date herewith among
the Company and the Holder constitute the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. These Agreements supersede all prior agreements and undertakings among
the parties hereto with respect to the subject matter hereof.
12.10 Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
12.11 All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
12.12 The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
12.13 The Company acknowledges that any failure by the
Company to perform its obligations under Section 3, or any delay in such
performance, could result in direct damages to the Investors and the Company
agrees that, in addition to any other liability the Company may have by reason
of any such failure or delay, the Company shall be liable for all direct damages
caused by such failure or delay.
/s/ AW /s/ RJ
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14 - REGISTRATION RIGHTS AGREEMENT
PDX/112816/141153/DLH/1398864.1
12.14 This Agreement may be executed in counterparts, each
of which shall be deemed an original but both of which shall constitute one and
the same agreement. A facsimile transmission of this signed Agreement shall be
legal and binding on the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed and delivered on the date first above written.
Microfield Group, Inc.
By: /s/ A. XXXX XXXXXX
--------------------------------------------
Name: A. Xxxx Xxxxxx
------------------------------------------
Title: President
-----------------------------------------
Energy Fund III, LLC
By: Aequitas Capital Managements, Inc., Manager
By: /s/ XXXXXX XXXXXXX
--------------------------------------------
Name: Xxxxxx Xxxxxxx
------------------------------------------
Title: CEO
-----------------------------------------
/s/ AW /s/ RJ
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15 - REGISTRATION RIGHTS AGREEMENT
PDX/112816/141153/DLH/1398864.1
