REGISTRATION RIGHTS AGREEMENT
Exhibit
4.2
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is
made and entered into as of May 24, 2007, by and among Xxxxxxxxxx, a
California corporation (the “Company”),
and
each of the investors identified on the Schedule of Investors attached
hereto as Exhibit A
(individually an “Investor”
and
collectively, the “Investors”).
This
Agreement is being entered into pursuant to the Securities Purchase Agreement,
dated as of the date hereof between the Company and the Investors (the
“Purchase
Agreement”).
The
Company and the Investors hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement. Unless otherwise defined in the
Purchase Agreement, capitalized terms used in this Agreement shall have the
following meanings:
“Additional
Registration Statement”
shall
mean one or more registration statements of the Company filed under the
Securities Act covering any Cut-Back Shares.
“Advice”
shall
have meaning set forth in Section 3(k).
“Closing
Date”
shall
mean the date of the closing under the Purchase Agreement.
“Cut-Back
Shares”
shall
have the meaning set forth in Section 2(a).
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(b).
“Event”
shall
have the meaning set forth in Section 3(a)(iii).
“Event
Date”
shall
have the meaning set forth in Section 3(a)(iii).
“Exchange
Act Registration Statement”
shall
mean a registration statement on Form 8-A under the Exchange
Act.
“Holder”
or
“Holders”
shall
mean the holder or holders, as the case may be, from time to time, whether
direct or beneficially, of Registrable Securities pursuant to this Agreement,
including, without limitation, the Investors and any of their permitted
transferees.
“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”
shall
mean 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.
“Placement
Agent”
shall
mean X. Xxxxx & Co.
“Placement
Warrants”
shall
mean a warrant to acquire up to an aggregate of 385,434 shares of Common Stock
issued to the Placement Agent and/or its Affiliates.
“Placement
Warrant Shares”
shall
mean shares of Common Stock issuable upon exercise of or otherwise pursuant
to
the Placement Warrants.
“Proceeding”
shall
mean an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
shall
mean the final prospectus filed with respect to 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 one or more other final prospectuses filed with respect
to
post-effective amendments, and all material incorporated by reference in such
Prospectus.
“Registrable
Securities”
shall
mean: (i) the Conversion Shares; (ii) Warrant Shares; and (iii) any
securities issued or issuable with respect to such Conversion Shares or Warrant
Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization with respect to any of the securities referenced
above.
“Registration
Statement”
shall
mean the registration statements contemplated by Section 2,
including 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.
“Restriction
Termination Date”
shall
have the meaning set forth in Section 3(a)(iii).
“Rule
144”
shall
mean Rule 144 promulgated by the SEC 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 SEC having substantially the same effect as such
Rule.
“Rule
415”
shall
mean Rule 415 promulgated by the SEC 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 SEC having substantially the same effect as such
Rule.
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2. Mandatory
Registration.
(a) Within
sixty (60) days after the Closing Date, the Company shall prepare and file
with
the SEC (i) a Registration Statement covering all Registrable Securities for
an
offering pursuant to Rule 415, and (ii) the Exchange Act Registration Statement;
provided;
however,
that if
the SEC takes the position that the offering of some or all of the Registrable
Securities in a Registration Statement is not eligible to be made on a delayed
or continuous basis under the provisions of Rule 415, the Company shall amend
the Registration Statement prior to its effectiveness to remove from the
Registration Statement such portion of the Registrable Securities (the
“Cut-Back
Shares”)
and/or
agree to such restrictions and limitations on the registration and resale of
the
Registrable Securities as the SEC may require to assure the Company’s compliance
with the requirements of Rule 415 (collectively, the “SEC
Restrictions”).
Any
cut-back of the Registrable Securities pursuant to this Section
2(a)
shall be
allocated first to the Placement Warrant Shares and if such allocation does
not
result in a sufficient reduction in the amount of Registrable Securities, then
among the Investors on a pro rata basis, unless the SEC Restrictions require
otherwise. In the event that upon effectiveness of the Registration Statement
less than all Registrable Securities are contained therein, upon the request
of
any Holder, the Company will prepare and file with the SEC, at such time or
times as the SEC allows the Company to make such filings, one or more Additional
Registration Statements covering the maximum amount of Cut-Back Shares allowed
by the SEC at the time of such filing until such time as all Registrable
Securities have been registered for resale under the Securities
Act.
(b) The
Registration Statement and any Additional 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). The Company shall use its commercially reasonable
efforts to cause the Registration Statement and any Additional Registration
Statement to be declared effective under the Securities Act and the Exchange
Act
Registration Statement to be declared effective under the Exchange Act, each
as
promptly as reasonably possible after the filing thereof and to keep the
Registration Statement and any Additional Registration Statement continuously
effective under the Securities Act until such date as is the earlier of: (i)
the
date when all Registrable Securities and any Additional Registrable Securities
covered by such Registration Statement and any Additional Registration
Statement, as the case may be, have been sold; and (ii) the date on which all
Registrable Securities may be sold during a period of 90 days without any
restriction pursuant to Rule 144 as determined by counsel to the Company
pursuant to a written opinion letter, addressed to the Company’s transfer agent
to such effect (the “Effectiveness
Period”).
3. Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) (i) Prepare
and file with the SEC within sixty (60) days after the Closing Date, (x) 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 with the method or methods
of distribution thereof as specified in the Purchase Agreement and, (y) the
Exchange Act Registration Statement, and use its commercially reasonable efforts
to cause the Registration Statement and the Exchange Act Registration Statement
to become effective as soon as reasonably possible and to remain effective
as
provided herein. The Company shall provide a copy of the Registration Statement
and the Exchange Act Registration Statement, and any amendments or supplements
thereto, to the Holder by facsimile, e-mail or other method of communication
acceptable to the Holder, at least five (5) Business Days prior to filing the
same with the SEC and shall incorporate into the same any revisions or changes
therein regarding the Holder as the Holder shall reasonably request at least
one
(1) Business Day prior to filing. The Company shall promptly notify the Holders
via facsimile or email of the effectiveness of the Registration Statement and
the Exchange Act Registration Statement by the third Business Day after the
Company receives notification of the effectiveness from the SEC.
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(ii) In
the
event the SEC does not permit the Company to include all Registrable Securities
on the Registration Statement filed pursuant to Section 3(a)(i),
prepare
and file with the SEC at such time or times as the SEC allows the Company to
make such filing or filings, one or more Additional Registration Statements
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 with the method or methods of distribution
thereof as specified by the Holders, and use its commercially reasonable efforts
to cause any Additional Registration Statement to become effective as soon
as
possible and to remain effective as provided herein. The Company shall provide
a
copy of any Additional Registration Statement, and any amendments or supplements
thereto, to the Holder by facsimile, e-mail or other method of communication
acceptable to the Holder, at least five (5) Business Days prior to filing the
same with the SEC and shall incorporate into the same any revisions or changes
therein regarding the Holder as the Holder shall reasonably request at least
one
(1) Business Day prior to filing. The Company shall promptly notify the Holders
via facsimile or email of the effectiveness of any Additional Registration
Statement by the third Business Day after the Company receives notification
of
the effectiveness from the SEC.
(iii) Subject
to the limitations contained in Section 2(a),
if:
(A) the Registration Statement is not filed within sixty (60) days after
the Closing Date, (B) the Company fails to file with the SEC a request for
acceleration in accordance with Rule 461 promulgated under the Securities Act,
within five (5) Business Days after the date that the Company is notified
(orally or in writing, whichever is earlier) by the SEC that the Registration
Statement will not be “reviewed,” or is not subject to further review, or
(C) the Registration Statement filed is not declared effective by the SEC
within ninety (90) days after the Closing Date (one hundred thirty-five (135)
days after the Closing Date if the SEC comments on the Registration Statement)
(any such failure or breach being referred to as an “Event,”
and
for purposes of clause (A) or (C) the Business Day on which such Event occurs,
or for purposes of clause (B), the date on which such five (5) Business Day
period is exceeded being referred to as “Event
Date”),
then
on each such Event Date and on each monthly anniversary of each such Event
Date
(if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as liquidated damages and not as a penalty, equal to 1.0% of the aggregate
amount paid by such Holder for any Registrable Securities then held by such
Holder and requested to be included in such Registration Statement; provided,
however,
that
the total amount of payments pursuant to this Section 3(a)(iii)
shall
not exceed ten percent (10%) of the aggregate amount paid by such Holder under
the Purchase Agreement. The foregoing liquidated damages shall be calculated
as
of each monthly anniversary of each such Event Date if the applicable Event
shall not have been cured by such date. If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven (7)
Business Days after the date payable, the Company will pay interest thereon
at a
rate of 10% per annum (or such lesser maximum amount that is required to comply
with applicable law) to the Holder, accruing daily from the date such liquidated
damages are due until such amounts, plus all such interest thereon, are paid
in
full. The liquidated damages pursuant to the terms hereof shall apply on a
daily
pro rata basis for any portion of a month prior to the cure of an
Event. The
foregoing notwithstanding, no liquidated damages pursuant to this Section 3(a)(iii)
shall
accrue on or as to any Cut-Back Shares until such time as the Company is able
to
effect the registration of some or all of the Cut-Back Shares in accordance
with
any SEC Restrictions (such date, the “Restriction
Termination Date”).
From
and after the Restriction Termination Date, all of the provisions of this
Section
3
(including the liquidated damages provision) shall again be applicable to that
portion of the Cut-Back Shares allowed to be contained on the applicable
Additional Registration Statement; provided,
however,
that
for such purposes the Closing Date shall be deemed to be the Restriction
Termination Date.
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(b) Prepare
and file with the SEC such amendments, including post-effective amendments,
to
the Registration Statement or any Additional Registration Statement as may
be
necessary to keep the Registration Statement or any Additional Registration
Statement continuously effective as to the applicable Registrable Securities
for
the Effectiveness Period; (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
reasonably possible to any comments received from the SEC, and in any event
within fifteen (15) Business Days (except to the extent that the Company
reasonably requires additional time to respond to accounting comments), with
respect to the Registration Statement or any Additional Registration Statement
or any amendments thereto; 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
or any Additional Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Holders thereof
set
forth in the Registration Statement or any Additional Registration Statement,
as
amended, or in such related Prospectus, as supplemented.
(c) Notify
the Holders of Registrable Securities to be sold as promptly as reasonably
possible: (i) of any comments of the SEC with respect to, or any request by
the
SEC or any other federal or state governmental authority for amendments or
supplements to, the Registration Statement and any Additional Registration
Statement or related Prospectus or the Exchange Act Registration Statement;
(ii)
of the issuance by the SEC of any stop order suspending the effectiveness of
the
Registration Statement or any Additional Registration Statement covering any
or
all of the Registrable Securities or the initiation of any Proceedings for
that
purpose; (iii) of the receipt by the Company of any notification with respect
to
the suspension of the qualification or exemption from qualification of any
of
the Registrable Securities for sale in any jurisdiction, or the initiation
or
threatening of any Proceeding for such purpose; and (iv) of the occurrence
of
any event that makes any statement made in the Registration Statement or any
Additional Registration Statement and any related Prospectus, the Exchange
Act
Registration Statement or any document incorporated or deemed to be incorporated
in any of the foregoing by reference untrue in any material respect or that
requires any revisions to the Registration Statement or any Additional
Registration Statement or related Prospectus or other documents so that, in
the
case of the Registration Statement or any Additional Registration Statement
or
the related Prospectus or the Exchange Act Registration Statement, 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.
(d) Use
its
reasonable efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of: (i) any order suspending the effectiveness of the Registration
Statement or any Additional Registration Statement; or (ii) any suspension
of
the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable
moment.
(e) Promptly
deliver to each Holder, without charge, to the extent requested by such Person,
at least one conformed copy of each Registration Statement, any Additional
Registration Statement or Exchange Act 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
(including those previously furnished or incorporated by reference) after the
filing of such documents with the SEC.
(f) On
the
effective date of the Registration Statement or any Additional Registration
Statement (and any post-effective amendment thereto) or Exchange Act
Registration Statement, notify the Holder and promptly, but in any event within
two (2) Business Days, deliver to each Holder, without charge, as many copies
of
the related Prospectus or Prospectuses (including each form of prospectus)
and
each amendment or supplement thereto as such Person may reasonably request;
and
the Company hereby consents to the use of such related Prospectus and each
amendment or supplement thereto, during periods in which such related Prospectus
and each amendment or supplement thereto are effective, by each Holder in
connection with the offering and sale of the Registrable Securities covered
by
such related Prospectus and any amendment or supplement thereto.
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(g) Prior
to
any public offering of Registrable Securities, use its reasonable efforts to
register or qualify or cooperate with the Holders 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 or any Additional 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.
(h) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to the
Registration Statement or any Additional Registration Statement.
(i) Upon
the
occurrence of any event contemplated by Section 3(c),
as
promptly as reasonably possible, prepare a supplement or amendment, including
a
post-effective amendment, to the Registration Statement or any Additional
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, any Additional Registration Statement nor such related
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.
(j)
During
the Effectiveness Period, maintain the listing of such Registrable Securities
on
a Trading Market;
(k) If
the
Registration Statement or any Additional Registration Statement refers to any
Holder by name or otherwise as the holder of any securities of the Company,
then
such Holder shall have the right to require (if such reference to such Holder
by
name or otherwise is not required by the Securities Act or any similar federal
statute then in force) the deletion of the reference to such Holder in any
amendment or supplement to the Registration Statement or any Additional
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
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Each
Holder covenants and agrees that: (i) it will not sell any Registrable
Securities pursuant to the Registration Statement or any Additional Registration
Statement until it has received copies of the related Prospectus as then amended
or supplemented as contemplated in Section 3(f)
and
written notice from the Company that such Registration Statement or any
Additional Registration Statement and any post-effective amendments thereto
have
become effective as contemplated by Section 3(f);
(ii) it
and its officers, directors or Affiliates, if any, will comply with the
prospectus delivery and all other requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement or any Additional Registration Statement; and
(iii) it will 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 or any Additional Registration
Statement, and the Company may exclude from such registration the Registrable
Securities of any such Holder who fails to furnish such information prior to
the
earlier of the time the Registration Statement or any Additional Registration
Statement is filed or a reasonable time after receiving such
request.
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)(i),
3(c)(ii),
3(c)(iii),
or
3(c)(iv),
such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement or any Additional Registration Statement until
such Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or any Additional Registration Statement
contemplated by Section 3(i),
or
until it is advised in writing (the “Advice”)
by the
Company that the use of the related 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 related
Prospectus or Registration Statement or any Additional Registration
Statement.
(l) Not
sell,
offer for sale or solicit offers for sale or to buy, and shall use its best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or
sale of the Registrable Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Holders or that would be integrated with the offer or sale of the Securities
for
purposes of the rules and regulations of any Trading Market.
(m) Not
permit any of its security holders (other than the Holder in such capacity
pursuant hereto and the Placement Agent) to include securities of the Company
in
the Registration Statement other than the Registrable Securities and the
Placement Warrant Shares, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.
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(n) Notwithstanding
anything to the contrary in this Section 3,
if
at
any
time after the date the Registration Statement or
any
Additional Registration Statement is
declared effective the Company furnishes to the Holder a certificate signed
by
the Company’s chief executive officer stating that in the good faith judgment of
the Company’s Board of Directors it would be materially detrimental to the
Company and its shareholders for such Registration Statement or
any
Additional Registration Statement to
remain
effective for as long as such Registration Statement or
any
Additional Registration Statement otherwise
would be required to remain effective, because such action would (i) materially
interfere with a significant acquisition, corporate reorganization, or other
similar transaction involving the Company; (ii) require premature disclosure
of
material non-public information that the Company has a bona fide business
purpose for preserving as confidential; or (iii) render the Company unable
to comply with requirements under the Securities Act or Exchange
Act,
then the
Company shall have the right to suspend
effectiveness of a Registration Statement or any Additional Registration
Statement for a period not to exceed fifteen (15) consecutive Business Days;
provided,
however,
that
the Company may not suspend its obligation under this Section 3(n)
for more
than thirty (30) Business Days in the aggregate during any twelve (12)-month
period; and provided,
further,
that no
such postponement or suspension shall be permitted for consecutive fifteen
(15)
Business 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 this
Section 4,
shall
be borne by the Company whether or not the Registration Statement or any
Additional Registration Statement is filed or becomes effective and whether
or
not any Registrable Securities are sold pursuant to the Registration Statement
or any Additional Registration Statement. The fees and expenses referred to
in
the foregoing sentence shall include, without limitation: (i) all registration
and filing fees; (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
or
any Additional Registration Statement); (iii) messenger, telephone and
delivery expenses; (iv) fees and disbursements of counsel for the Company;
(v) Securities Act liability insurance, if the Company so desires such
insurance; and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement, 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, and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. Except as otherwise expressly
provided in Section 5
below,
any fees or expenses incurred by Holder or its legal counsel or Holder’s other
advisors or consultants in connection with any review of the Registration
Statement or any Additional Registration Statement or with respect to any other
matters related to this Agreement shall be borne solely by Holder; provided,
however,
that
any legal counsel fees incurred by each of the Lead Investors with respect
to
the foregoing shall be paid by the Company up to a maximum amount of $5,000
per
Lead Investor.
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5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless the 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
the
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
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising out of or based upon any untrue
or
alleged untrue statement of a material fact contained in the Registration
Statement or any Additional Registration Statement, any related Prospectus
or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising solely 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 related 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 are based upon information regarding
the Holder furnished in writing to the Company by the Holder expressly for
use
therein. The Company shall notify the Holder 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 Holder.
The
Holder shall indemnify and hold harmless the Company, the 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 determined by a court of competent jurisdiction in a final judgment
not subject to appeal or review), as incurred, arising solely out of or based
solely upon any untrue statement or alleged untrue statement of a material
fact
contained in the Registration Statement or any Additional Registration
Statement, any related Prospectus, or any form of prospectus or form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any related 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 or
alleged untrue statement or omission is contained in information so furnished
by
the Holder in writing to the Company expressly for inclusion in the Registration
Statement or any Additional Registration Statement or such related Prospectus.
In no event shall the liability of any selling Holder hereunder be greater
in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
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(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 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,
however,
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 to the extent 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 Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from
all
liability on claims that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section 5)
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,
however,
that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
-10-
(d) Contribution.
If a
claim for indemnification under Section 5(a)
or
Section 5(b)
is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying, Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c),
any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its
terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d)
were
determined by pro rata allocation or by any other method of allocation that
does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding
the provisions of this Section 5(d),
no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount of the proceeds actually received by such Holder from the sale
of
the Registrable Securities subject to the proceeding. 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 other liability that the Indemnifying Parties may have to the
Indemnified Parties. Notwithstanding the foregoing, the obligations of the
Holders herein shall be the several, and not joint, obligation of each Holder
as
to itself and not as to any other Holder.
6. Miscellaneous.
(a) Remedies.
(i) In
the
event of a breach by the Company or by the Holder, of any of their obligations
under this Agreement, the 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.
(ii) The
Company and the 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.
(iii) The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
-11-
(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 Holder in this
Agreement or otherwise conflicts with the provisions hereof.
(c) 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 each of the Holders.
(d) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement or any Additional Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file
with
the SEC 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 the stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of
such
determination and, if within fifteen (15) days after receipt of such notice,
any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.
(e) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earlier of: (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified for
notice prior to 5:00 p.m., California time, on a Business Day; (ii) the Business
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified for notice later
than
5:00 p.m., California time, on any date and earlier than 11:59 p.m., California
time, on such date; (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service; and (iv) actual receipt
by the party to whom such notice is required to be given. The addresses,
facsimile numbers and email addresses for such notices and communications are
those set forth on the signature page hereof, or such other address or facsimile
number as may be designated in writing hereafter, in the same manner, by any
such Person.
-12-
(f) 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 the
Holder and its successors and permitted assigns. Holder may assign its rights
hereunder in the manner and to the Persons as permitted under this Agreement
and
the Purchase Agreement. The Company may assign its rights and obligations
hereunder in connection with a sale of all or substantially all of its assets
or
in connection with a merger, consolidation or other similar corporate
transaction.
(g) Assignment
of Registration Rights.
The
rights of the 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 the Holder to any Person to
whom
the Holder transfers all or a portion of 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 (x) the name
and
address of such transferee or assignee, and (y) 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 through a joinder agreement or another form
of
agreement reasonably acceptable to the Company; (v) such transfer shall
have been made in accordance with the applicable requirements of the Purchase
Agreement and the Warrants; and, upon the Company’s request, Holder and any
proposed transferee shall provide the Company with such written representations,
warranties, assurances and information requested by the Company so as to allow
the Company to verify compliance with the Securities Act and qualification
under
such exemption in connection with such proposed transfer. 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.
(h) 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.
(i) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California, without regard to principles of conflicts of law
thereof.
-13-
(j) 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.
(k) 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.
(l) Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible
in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at
any
closing, and no action taken by any Holder pursuant hereto or thereto, shall
be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled
to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to
be
joined as an additional party in any proceeding for such purpose.
[SIGNATURE
PAGES TO FOLLOW]
-14-
IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement effective as of the date indicated above.
|
XXXXXXXXXX
|
|
|
By:
/s/ Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
Chief Financial Officer
Address
for Notice:
000
Xxxxxxx Xxxx
Xxx
Xxxx Xxxxxx, XX 00000
Facsimile
No.: (000) 000-0000
Telephone
No.: (000) 000-0000
Attn:
President
|
|
|
With
a copy to:
|
Xxxxx
& Xxxxxx, LLP
|
|
000
Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
Attn:
Xxxxx X. Xxxxxxx, Esq.
|
-15-
Investor
Signature Page
By
its
execution and delivery of this signature page, the undersigned Investor hereby
joins in and agrees to be bound by the terms and conditions of the Registration
Rights Agreement dated as of May __, 2007 (the “Registration
Rights Agreement”)
by and
among Xxxxxxxxxx and the Investors (as defined therein) and authorizes this
signature page to be attached to the Registration Rights Agreement or
counterparts thereof.
|
Name
of Investor:
|
|
|
___________________________________
By:______________________________________
Name:____________________________________
Title:_____________________________________
Address:__________________________________
_________________________________________
_________________________________________
Telephone
No.:_____________________________
Facsimile
No.:______________________________
Email
Address:_____________________________
|
-16-
EXHIBIT
A
SCHEDULE
OF INVESTORS
|
Xxxxx
X. Xxxxxx, III
|
|
Milfam
II X.X.
|
|
Xxxxxx
SMidCap Fund XX
|
|
Xxxxxx
Xxxxx
|
|
The
Xxxxxx X Xxxxxxxxxxxx & Xxxxxxx Xxxxxxxxxxxx Revocable
Trust
|
|
Xxxxx
Xxxxxxxx Capital Income Partners (QP), LP
|
|
Catalysis
Offshore, Ltd.
|
|
PTR
Fund L.P.
|
|
Xxxxxxxx
Xxxxxxx Company
|
|
Palm
Beach Trading
|
|
Newport
Micro Fund II, LLC
|
|
Xxxxxxx
& Bennet Profit Sharing Plan
|
|
Xxxxx
X. Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
|
Xxxx
Xxxxxxxx
|
|
Xxxxxxx
X. Xxxx
|
|
X.
Xxxxx Xxxxxxx
|
|
Xxxxxx
SMidCap Offshore Fund LTD
|
|
Xxxxx
Xxxxxxxx Income Partners, LP
|
|
Xxxxx
Xxxxxxxx Capital Income Fund, Ltd.
|
|
Catalysis
Partners, LLC
|
-1-
