EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of July
11, 2005, is made by and among iCurie, Inc., a Nevada corporation (the
"COMPANY"), the Offering Purchasers, Placement Agents and the Additional
Purchasers (each as defined below).
W I T N E S S E T H:
WHEREAS, the Company is offering (the "OFFERING") an aggregate of up to
17,500,000 shares of the Company's Series A Convertible Preferred Stock, par
value $0.001 per share (the "SERIES A PREFERRED STOCK"), subject to a ten
percent (10%) overallotment option. Each share of the Series A Preferred Stock
shall be initially convertible into 1 share of the Company's common stock, par
value $0.001 per share (the "COMMON STOCK");
WHEREAS, the Company desires to issue and sell to the persons listed on
Schedule A-1 attached hereto (each an "OFFERING PURCHASER," and collectively,
the "OFFERING PURCHASERS"), the shares of Series A Preferred Stock as set forth
in a Preferred Stock Purchase Agreement or Subscription Agreement entered into
or to be entered into by and between the Company and each Offering Purchaser
(the "PREFERRED STOCK PURCHASE AGREEMENT") together with warrants ("Warrants")
to purchase Common Stock, each in such amounts as set forth on Schedule A-1;
WHEREAS, certain information relating to the Offering and related
transactions is contained in that certain Confidential Private Placement
Memorandum regarding the Company dated May, 2005 (as supplemented through the
date hereof, the "PPM"), which PPM has been received by each party hereto, and
all capitalized terms used but not defined herein shall have the meanings given
in the PPM;
WHEREAS, in connection with the Offering, the Company has engaged the
Placement Agents, and shall issue to the Placement Agents warrants ("Placement
Agent Warrants") exercisable to acquire shares of Series A Preferred Stock and
Common Stock (the "Placement Agent Warrant Shares") in the amounts set forth on
Schedule A-2 attached hereto;
WHEREAS, in connection with the Offering, noteholders and cash investors
are getting warrants to pro rata shares of Common Stock equal to twenty-five
percent (25%) of the number of Series A Preferred Stock each received ("Investor
Warrants");
WHEREAS, in connection with the Offering and related transactions,
including, without limitation, the Share Exchange, the parties set forth on
Schedule A-2 other than the Placement Agents (the "Additional Purchasers" and,
together with the Offering Purchasers, the "Purchasers") have received or will
receive shares of Common Stock, shares of Series A Preferred Stock or securities
convertible into Series A Preferred Stock, as further described in the Preferred
Stock Purchase Agreement (collectively, the "Additional Securities");
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Preferred Stock Purchase Agreement and the
Share Exchange Agreement that the Company provide for the rights set forth in
this Agreement; and
WHEREAS, certain terms used in this Agreement are defined in Section 3
hereof.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound, the parties hereto hereby agree as
follows:
1. Registration Rights.
1.1 Required Registration. The Company shall use its reasonable best
efforts to accomplish the following:
(a) prepare and file with the "SEC" (as such term is hereafter
defined) a registration statement on Form SB-2 or a successor small business
form or another small business form selected by the Company that is available to
the Company under the "SECURITIES Act" (as such term is hereafter defined) which
conforms with applicable rules and regulations (a "REQUIRED REGISTRATION
STATEMENT") covering the "REGISTRABLE SECURITIES" (as such term is hereafter
defined), to permit the offer and re-sale from time to time of such Registrable
Securities in accordance with the methods of distribution substantially in the
form set forth on Schedule B hereto, by the date (the "REQUIRED FILING DATE")
which is not more than sixty (60) days after the "CLOSING DATE" (as such term is
defined in the Preferred Stock Purchase Agreement); and
(b) cause either of the following (the "EFFECTIVENESS
ACTIONS") to occur by a date which is not more than one hundred and twenty (120)
days after the Closing Date (the "REQUIRED EFFECTIVENESS DATE"): (A) cause the
SEC to declare the Required Registration Statement to be effective or (B) cause
the SEC to communicate to the Company, orally or in writing, that the Required
Registration Statement will not be reviewed or that the SEC has no further
comments thereupon, whereupon the Company shall cause the Required Registration
Statement to be effective.
The failure of the Company to file a Required Registration Statement prior
to the Required Filing Date, or the failure to cause either of the Effectiveness
Actions to occur prior to the Required Effectiveness Date, shall be deemed to be
a "NON-REGISTRATION EVENT". The Company and the Offering Purchasers agree that
the Offering Purchasers will suffer damages if a Non-Registration Event occurs,
and that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if a Non-Registration Event should occur, then for each
thirty (30) day period during the pendency of such Non-Registration Event, the
Company shall deliver to each Offering Purchaser, as liquidated damages, an
amount equal to one percent (1.0%) of the aggregate purchase price paid by such
Offering Purchaser for Series A Preferred Stock in the Offering (which is $0.88
multiplied by the number of shares so purchased, herein referred to as the
"Purchase Price"). Each such payment is hereinafter referred to as a
"NON-REGISTRATION EVENT PENALTY PAYMENT". Notwithstanding the foregoing, in no
event shall the
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Company be obligated to pay more than one Non-Registration Event Penalty Payment
to the same Offering Purchaser in respect of a substantively concurrent failure
to perform; i.e., if a Non-Registration Event Penalty Payment is accruing due to
failure to file a Required Registration Statement prior to the Required Filing
Date, a separate Non-Registration Event Penalty Payment shall not be due for a
contemporaneous failure to cause an Effectiveness Action to occur prior to the
Required Effectiveness Date. The Company, in its sole discretion, shall pay the
Non-Registration Event Penalty Payment in cash or in shares of its Series A
Preferred Stock (valued at the original Purchase Price of $0.88 per share),
provided, that the Company may not elect to pay some Offering Purchasers in cash
while it pays others in Series A Preferred Stock. The payment of the
Non-Registration Event Penalty Payment shall be the sole damages payable to an
Offering Purchaser in connection with a Non-Registration Event.
The Company shall be required to keep such Required Registration Statement
continuously effective for a period of two years after the Required Registration
Statement first becomes effective (the "EFFECTIVE PERIOD"); provided, however,
that the Company shall be under no obligation to maintain the effectiveness of
the Required Registration Statement after such time as all Registrable
Securities registered under the Required Registration Statement shall have been
sold. The HG Shares and the CHL Shares (as such terms are defined below) shall
not be included in the Required Registration Statement.
Following the conversion of the Series A Preferred Stock by an Offering
Purchaser, the Company agrees to (i) notify the Company's transfer agent that
the restrictions placed on the Offering Purchaser's certificates have been
removed with respect to such Securities and (ii) take all other commercially
reasonable actions necessary or required in connection with the removal of such
limitations, including causing the transfer agent to issue a new certificate or
certificates representing such Securities not bearing such a legend, provided,
based on opinion of counsel for the Company, such restrictions may be removed
under applicable securities laws.
1.2 Demand Registration.
(a) In the event that all Registrable Securities are not
registered pursuant to Section 1.1, Purchasers may request the registration of
the Registrable Securities owned by such Purchasers (provided, that the
Purchasers registering Registrable Securities in such registration (together
with all other holders of Registrable Securities to be included in such
registration) propose to sell their Registrable Securities at an aggregate price
(calculated based upon the Market Price of the Registrable Securities on the
date of filing of the registration statement with respect to such Registrable
Securities) to the public of no less than the lesser of $500,000, or the
remaining Registrable Securities). Upon receiving a request for registration
pursuant to this Section 1.2, the Company shall (i) promptly give written notice
of the proposed registration, and any related qualification or compliance, to
all other holders of Registrable Securities; and (ii) as soon as practicable,
use reasonable best efforts to file and effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of the Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other holder in the group of holders
joining in such request as is specified in a written
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request given within fifteen (15) days after the holder's receipt of such
written notice from the Company. Under no circumstances shall the Company be
required to effectuate more than two (2) registrations pursuant to this Section
1.2(a).
(b) Registrable Securities owned by Xxxxxx Xxxx & Company,
Inc. ("HG" and such Registrable Securities owned by HG, the "HG SHARES") shall
not be registered pursuant to Section 1.1. Beginning on the date that is six (6)
months immediately following the Effectiveness Date and continuing for so long
as HG holds any Common Stock which constitute Registrable Securities (the "HG
COMMON STOCK"), HG may request the registration, once and only once, of the HG
Common Stock (the date of such demand being referred to herein as the "HG DEMAND
DATE"). Upon receiving a request for registration under this Section 1.2(b), the
Company shall (i) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other holders of Registrable
Securities; and (ii) as soon as practicable, use reasonable best efforts to file
and effect such registration and all such qualifications and compliances as may
be so requested and as would permit or facilitate the sale and distribution of
all or such portion of the Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other holder in the group of holders joining in such request as is specified in
a written request given within fifteen (15) days after the holder's receipt of
such written notice from the Company. For purposes of this Agreement, the terms
HG Shares and HG Common Shares shall include the 2,092,694 shares of Common
Stock received pursuant to the Share Exchange by certain of the Additional
Purchasers, as indicated on Schedule A-2.
(c) In addition to the holdback agreements set forth in
Section 1.6, HG hereby (i) agrees that, except in accordance with the
distribution schedule set forth in paragraph (d) below, and as provided herein,
HG will not, directly or indirectly, during the period from the date of this
Agreement through the end of the six (6) month period following the
Effectiveness Date of a Company registration statement including the HG Shares
(the "HG REGISTRATION DATE") or such longer period, if applicable (the "LOCK-UP
Period"), without the prior written consent of the Company, issue, sell, offer
or agree to sell, grant any option for the sale of, pledge, make any short sale
or maintain any short position, establish or maintain a "put equivalent
position" (within the meaning of 16a-1(h) under the Security Exchange Act of
1934), enter into any swap, derivative transaction or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of any Registrable Securities (whether any such transaction is to be
settled by delivery of Registrable Securities, other securities, cash or other
consideration) received or to be received by HG pursuant to the terms of the
Offering documents or otherwise dispose of, any Registrable Securities (or any
securities convertible into, exercisable for or exchangeable for Registrable
Securities) or interest therein of the Company or of any of its subsidiaries,
and (ii) authorizes the Company during the Lock-Up Period to cause the Company's
transfer agent to decline to transfer and/or to note stop transfer restrictions
on the transfer books and records of the Company with respect to any such
Securities and any securities convertible into exercisable or exchangeable for
shares of the Company's Securities.
HG also understands that stop transfer instructions will be given to the
Company's transfer agent with respect to Registrable Securities issued or to be
issued to it and that there will
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be placed on the certificates for such Registrable Securities, or any
substitutions therefor, a legend stating in substance: "THE SECURITIES EVIDENCED
BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED ON OR ABOUT JULY 11, 2005 BETWEEN THE REGISTERED HOLDER HEREOF
AND THE COMPANY, A COPY OF WHICH AGREEMENT IS ON FILE AT THE COMPANY'S PRINCIPAL
OFFICES."
Notwithstanding the foregoing, Company and HG agree that the restrictions
contained in this Section 1.2(c) shall cease to apply with respect to the
Registrable Securities received or to be received by HG in accordance with the
release schedule set forth below in Section 1.2(d). On any date on which any
Registrable Securities held by HG are no longer subject to the restrictions
contained in this Section 1.2(c), the Company agrees to notify the Company's
transfer agent that such restrictions have been removed with respect to such
Securities and to take all other commercially reasonable actions necessary or
required in connection with the removal of such limitations, including causing
the transfer agent to issue a new certificate or certificates representing such
Securities not bearing such a legend. HG further agrees, from the date hereof
until the end of the Lock-up Period, that except as contemplated by the terms of
the Offering documents, HG will not exercise and will waive its rights, if any,
to require the Company to register its Registrable Securities and to receive
notice thereof. HG hereby covenants and agrees that it will not distribute,
dividend or otherwise transfer in any manner any Registrable Securities received
by it to any of its stockholders, members or equity holders or any other person
without first (i) obtaining the prior written consent of the Company, which
consent shall not be unreasonably withheld; and (ii) delivering to the Company
(A) an executed copy of this Agreement from any such proposed transferee, (B) a
written waiver of such proposed transferee's rights under this Agreement or (C)
a document executed by HG certifying that HG, after reasonable efforts, was
unable to locate such transferee and therefore no rights under this Agreement
are assigned to such transferee. Any transfer of Registrable Securities in
violation of this covenant and agreement shall be void and of no force or
effect. HG hereby represents and warrants that HG has full power and authority
to enter into the agreements set forth herein, and that, upon request, HG will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of HG shall be binding upon the successors and assigns
of HG.
(d) HG will sell the HG Common Stock in accordance with the
following volume and time limitations: (i) no more than twenty-five percent
(25%) of the HG Common Stock may be sold within the three (3) month period
immediately following the HG Registration Date, (ii) no more than an additional
twenty-five percent (25%) of the HG Common Stock may be sold within the
six-month period immediately following the HG Registration Date, and (iii) all
remaining HG Common Stock may be sold beginning on the six-month anniversary of
the HG Registration Date.
(e) The failure of the Company to register the HG Common Stock
within one hundred and twenty (120) days after the HG Demand Date shall be
deemed to be a "HG NON-REGISTRATION EVENT". The Company and HG agree that HG
will suffer damages if a HG Non-Registration Event occurs, and that it would not
be feasible to ascertain the extent of
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such damages with precision. Accordingly, if a HG Non-Registration Event should
occur, then for each thirty (30) day period during the pendency of such HG
Non-Registration Event, the Company shall deliver to HG, as liquidated damages,
an amount equal to one percent (1.0%) of the number of shares of HG Common Stock
then unregistered multiplied by $0.88 (the "HG NON-REGISTERED STOCK VALUE"), for
a period not to exceed six such periods (for a maximum penalty equal to six
percent (6%) of the HG Non-Registered Stock Value). Each such payment is
hereinafter referred to as a "HG NON-REGISTRATION EVENT PENALTY PAYMENT". The
Company, in its sole discretion, shall pay the HG Non-Registration Event Penalty
Payment in cash or in shares of its Series A Preferred Stock (valued at $0.88
per share). The payment of the HG Non-Registration Event Penalty Payment shall
be the sole damages payable to HG in connection with a HG Non-Registration
Event.
(f) Registrable Securities owned by CHL Investment Partnership
("CHL" and such Registrable Securities owned by CHL, the "CHL SHARES") shall not
be registered pursuant to Section 1.1. In the event that the CHL Shares shall
not have been previously registered by the Company, then beginning on the date
that is twelve (12) months immediately following the Effectiveness Date and
continuing for so long as CHL holds any Common Stock which constitute
Registrable Securities (the "CHL COMMON STOCK"), CHL may request the
registration, once and only once, of the CHL Common Stock (the date of such
demand being referred to herein as the "CHL DEMAND DATE"). Upon receiving a
request for registration under this Section 1.2(e), the Company shall (i)
promptly give written notice of the proposed registration, and any related
qualification or compliance, to all other holders of Registrable Securities; and
(ii) as soon as practicable, use reasonable best efforts to file and effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of the Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other holder in
the group of holders joining in such request as is specified in a written
request given within fifteen (15) days after the holder's receipt of such
written notice from the Company.
(g) The failure of the Company to register the CHL Common
Stock, within one hundred and twenty (120) days after the CHL Demand Date, shall
be deemed to be a "CHL NON-REGISTRATION EVENT". The Company and CHL agree that
CHL will suffer damages if a CHL Non-Registration Event occurs, and that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if a CHL Non-Registration Event should occur, then for each thirty
(30) day period during the pendency of such CHL Non-Registration Event, the
Company shall deliver to CHL, as liquidated damages, an amount equal to one
percent (1.0%) of the number of shares of CHL Common Stock then unregistered
multiplied by $0.88 (the "CHL NON-REGISTERED STOCK VALUE"), for a period not to
exceed six such periods (for a maximum penalty equal to six percent (6%) of the
CHL Non-Registered Stock Value). Each such payment is hereinafter referred to as
a "CHL NON-REGISTRATION EVENT PENALTY PAYMENT". The Company, in its sole
discretion, shall pay the CHL Non-Registration Event Penalty Payment in cash or
in shares of its Series A Preferred Stock (valued at $0.88 per share). The
payment of the CHL Non-Registration Event Penalty Payment shall be the sole
damages payable to CHL in connection with a CHL Non-Registration Event.
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1.3 Current Public Information. The Company covenants that it will
use reasonable best efforts to file all reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder, to the extent required to enable the holders of Registrable
Securities to sell Registrable Securities pursuant to Rule 144 or Rule 144A
adopted by the SEC under the Securities Act or any similar rule or regulation
hereafter adopted by the SEC. The Company shall, upon the request of a holder of
Registrable Securities (each a "DESIGNATED HOLDER" and collectively, the
"DESIGNATED HOLDERS"), deliver to such Designated Holder a written statement as
to whether it has complied with such requirements.
1.4 Form S-3 Registration. In the event any Registrable Securities
shall not have been registered pursuant to Section 1.1, and if the Company is
eligible to use Form S-3 under the Securities Act (or any similar successor
form) and shall receive from a Purchaser or its permitted transferees (the "S-3
INITIATING HOLDERS") a written request or requests that the Company effect a
registration on such Form S-3, including, without limitation, pursuant to Rule
415 of the Securities Act and any related qualification or compliance with
respect to all or part of the Registrable Securities owned by the S-3 Initiating
Holders or their permitted transferees (provided, that the S-3 Initiating
Holders registering Registrable Securities in such registration (together with
all other holders of Registrable Securities to be included in such registration)
propose to sell their Registrable Securities at an aggregate price (calculated
based upon the Market Price of the Registrable Securities on the date of filing
of the Form S-3 with respect to such Registrable Securities) to the public of no
less than the lesser of $500,000 or the remaining Registrable Securities), the
Company shall (i) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other holders of Registrable
Securities; and (ii) as soon as practicable, use reasonable best efforts to file
and effect such registration and all such qualifications and compliances as may
be so requested and as would permit or facilitate the sale and distribution of
all or such portion of the Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other holder in the group of holders joining in such request as is specified in
a written request given within fifteen (15) days after the holder's receipt of
such written notice from the Company.
1.5 Piggyback Registrations.
(a) Right to Piggyback. In the event any Registrable
Securities shall not have been registered pursuant to Section 1.1, whenever the
Company proposes to register any of its securities under the Securities Act
(other than pursuant to a registration pursuant to Section 1.4 or a registration
on Form S-4 or S-8 or any successor or similar forms) and the registration form
to be used may be used for the registration of Registrable Securities, whether
or not for sale for its own account, the Company will give prompt written notice
(but in no event less than fifteen (15) days before the anticipated filing date)
to all holders of Registrable Securities, and such notice shall describe the
proposed registration and distribution and offer to all holders of Registrable
Securities the opportunity to register the number of Registrable Securities as
each such holder may request. The Company will include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein
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within ten (10) days after the holders' receipt of the Company's notice (a
"PIGGYBACK REGISTRATION").
(b) Reasonable Efforts. The Company shall use all reasonable
best efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggyback Registration to be included on the same terms and
conditions as any similar securities of the Company or any other security holder
included therein and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof.
(c) Withdrawal. Any Designated Holder shall have the right to
withdraw its request for inclusion of its Registrable Securities in any
Registration Statement pursuant to this Section 1.5 by giving written notice to
the Company of its request to withdraw; provided, that in the event of such
withdrawal (other than pursuant to Section 1.5(e) hereof, the Company shall not
be required to reimburse such holder for the fees and expenses referred to in
Section 1.7(t) hereof incurred by or on behalf of such holder prior to such
withdrawal, unless such withdrawal was due to a material adverse change to the
Company. The Company may withdraw a Piggyback Registration at any time prior to
the time it becomes effective.
(d) Priority in Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing (with a copy to each party hereto
requesting registration of Registrable Securities) that in their opinion the
number of Registrable Securities requested to be included on a secondary basis
in such registration exceeds the number which can be sold in such offering
without materially and adversely affecting the marketability of such primary or
secondary offering (the "COMPANY OFFERING QUANTITY"), then the Company will
include in such registration securities in the following priority:
(i) First, the Company will include the securities the
Company proposes to sell.
(ii) Second, the Company will include all Registrable
Securities requested to be included by any Designated Holder, and if
the number of such Designated Holders' securities exceeds the
Company Offering Quantity, then the Company shall include only each
such requesting Designated Holders' pro rata share of the shares
available for registration by the Purchaser, based on the amount of
securities held by such holder, on an as converted basis.
(iii) Third, the Company will include other securities
of the Company proposed to be included in the registration.
(e) Cutback. If, as a result of the proration provisions of
this Section 1.5, any Designated Holders shall not be entitled to include all
Registrable Securities in a Piggyback Registration that such Designated Holders
has requested to be included, such holder may elect to withdraw his request to
include Registrable Securities in such registration but the
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Company shall be required to reimburse such holder for the fees and expenses
referred to in Section 1.7(t) hereof incurred by such holder prior to such
withdrawal.
1.6 Holdback Agreements.
(a) To the extent not inconsistent with applicable law, in
connection with a public offering of securities of the Company, upon the request
of the Company or the underwriter, in the case of an underwritten public
offering, the underwriters managing such underwritten offering of the Company's
securities, each holder of Registrable Securities who owns at least five percent
(5%) of the outstanding capital stock of the Company on an "as-converted" basis
or is an officer or director of the Company will not effect any public sale or
distribution (other than those included in the registration) of any securities
of the Company, or any securities, options or rights convertible into or
exchangeable or exercisable for such securities during the fourteen (14) days
prior to and the one hundred eighty (180) day period beginning on such effective
date, unless (in the case of an underwritten public offering) the managing
underwriters otherwise agree to a shorter period of time.
(b) The Company shall have the right at any time to require
that the Designated Holders of Registrable Securities suspend further open
market offers and sales of Registrable Securities pursuant to a Registration
Statement filed hereunder for a total of no more than sixty (60) calendar days
in any twelve (12) month period, but only if the Company reasonably concludes,
after consultation with outside legal counsel, that failure to suspend the use
of the Registration Statement as such would create a material liability or
violation under applicable securities laws or regulations. The Company will give
the Designated Holders notice of any such suspension and will use all reasonable
best efforts to minimize the length of such suspension. Any suspension of offers
and sales for more than sixty (60) days in total during any twelve (12) month
period shall be deemed a Non-Registration Event and trigger a Non-Registration
Event Penalty Payment beginning on the sixty-first (61st) day in such twelve
(12) month period computed in the manner described in Section 1.1(b).
1.7 Registration Procedures. Whenever any Registrable Securities are
required to be registered pursuant to this Agreement, the Company will use
reasonable best efforts to effect the registration of such Registrable
Securities in accordance with the intended methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC on any small business form,
if not so otherwise provided for, for which the Company qualifies, as soon as
practicable after the end of the period within which requests for registration
may be given to the Company, a Registration Statement with respect to the offer
and sale of such Registrable Securities and thereafter use reasonable best
efforts to cause such Registration Statement to become effective and remain
effective until the completion of the distribution contemplated thereby or the
required time period under this Agreement, whichever is shorter (and before
filing such Registration Statement, the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Securities initiating
such Registration Statement copies of all such documents proposed to be filed);
provided, however, that the Company may postpone for not more than
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sixty (60) calendar days the filing or effectiveness of any registration
statement required pursuant to this Agreement other than a Required Registration
Statement required to be filed pursuant to Section 1.1 of this Agreement, if the
Board of Directors, in its good faith judgment, determines that such
registration could reasonably be expected to have a material adverse effect on
the Company and its stockholders for any reason including, but not limited to,
any proposal or plan by the Company to engage in any acquisition or sale of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or similar transaction then under consideration (in
which event, the Designated Holders shall be entitled to withdraw such request,
and if such request is withdrawn such registration will not count as a
registration statement pursuant to this Agreement) by delivering written notice
to the Designated Holders who requested inclusion of Registrable Securities in
such Registration Statement of its determination to postpone such Registration
Statement; provided, further, that the Company shall not disclose any
information that could be deemed material non-public information to any holder
of Registrable Securities included in a Registration Statement that is subject
to such postponement;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
a period provided for in the applicable Section above, or if not so provided,
for a period of twelve (12) months (for a registration pursuant to Rule 415 of
the Securities Act) or, if such Registration Statement relates to an
underwritten offering, such period as in the opinion of counsel for the
underwriters a prospectus is required by law to be delivered in connection with
sales of Registrable Securities by an underwriter or dealer or such shorter
period as will terminate when all of the securities covered by such Registration
Statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such Registration Statement. In the event the
Company shall give any notice pursuant to Section 1.6(b), the applicable time
period mentioned in this Section 1.7(b) during which a Registration Statement is
to remain effective shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
1.6(b) to and including the date when each seller of a Registrable Security
covered by such Registration Statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 1.7(e);
(c) furnish to each seller of Registrable Securities, prior to
filing a Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto, the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(d) register or qualify such Registrable Securities under such
other securities or blue sky laws of such jurisdictions as any seller reasonably
requests and do any and
10
all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller and to keep each such registration
or qualification (or exemption therefrom) effective during the period which the
Registration Statement is required to be kept effective (provided, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event (a "CHANGING EVENT") as a result
of which, the prospectus included in such Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and, at the request of any such seller, the Company will as soon
as possible prepare and furnish to such seller (a "CORRECTION EVENT") a
reasonable number of copies of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on The Nasdaq Stock Market or the
Nasdaq SmallCap trading system or the Nasdaq OTC Bulletin Board;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such Registration
Statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form with any underwriter, if any is
selected by the Company) and take all such other actions as the holders of a
majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities, including causing its officers to participate in "road
shows" and other information meetings organized by an underwriter, if any,
provided that any underwriter shall have been selected by the Company;
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement;
11
(j) before filing a Registration Statement or prospectus or
any amendments or supplements thereto, the Company shall provide counsel
selected by the Designated Holders holding a majority of the Registrable
Securities being registered in such registration ("HOLDERS' COUNSEL") and any
other Inspector (as defined below) with an adequate and appropriate opportunity
to review and comment on such Registration Statement and each prospectus
included therein (and each amendment or supplement thereto) to be filed with the
SEC, subject to such documents being under the Company's control, and the
Company shall notify the Holders' Counsel and each seller of Registrable
Securities of any stop order issued or threatened by the SEC;
(k) otherwise comply with all applicable rules and regulations
of the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve months
beginning with the first day of the Company's first full calendar quarter after
the effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; (l) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such Registration Statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(m) if required by the Securities Act, the rules promulgated
thereunder, or the SEC, or in the discretion of the Company, obtain one or more
comfort letters, dated the effective date of such Registration Statement (and,
if such registration includes an underwritten offering, dated the date of the
closing under the underwriting agreement), signed by the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by comfort letters;
(n) provide any legal opinions of Company counsel required by
the Securities Act, the rules promulgated thereunder or the SEC, in accordance
with such requirements;
(o) subject to execution and delivery of mutually satisfactory
confidentiality agreements, make available at reasonable times for inspection by
any seller of Registrable Securities, any managing underwriter participating in
any disposition of such Registrable Securities pursuant to a Registration
Statement, Holders' Counsel and any attorney, accountant or other agent retained
by any managing underwriter (each, an "INSPECTOR" and collectively, the
"INSPECTORS"), during normal business hours of Company at Company's corporate
office and without unreasonable disruption of Company's business or unreasonable
expense to Company and solely for the purpose of due diligence with respect to
the registration statement, non-confidential, legally disclosable, financial and
other records and pertinent corporate documents of the Company and its
subsidiaries (collectively, the "RECORDS") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's and its subsidiaries' officers, directors and employees, and the
independent
12
public accountants of the Company, to make available for inspection, at such
parties' offices during their respective normal business hours and without
unreasonable disruption of their business or unreasonable expense to Company and
solely for the purpose of due diligence with respect to a registration statement
covering Registrable Securities pursuant to this Agreement all information
reasonably requested by any such Inspector in connection with such Registration
Statement;
(p) subject to execution and delivery of mutually satisfactory
confidentiality agreements, keep Holders' Counsel advised as to the initiation
and progress of any registration hereunder including, but not limited to,
providing Holders' Counsel with all correspondence with the SEC;
(q) cooperate with each seller of Registrable Securities and
each underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be made
with the NASD; and
(r) take all other steps reasonably necessary to affect the
registration of the Registrable Securities contemplated hereby.
(s) Conditions Precedent to Company's Obligations Pursuant to
this Agreement. It shall be a condition precedent to the obligations of Company
to take any action pursuant to this Agreement that each of the holders whose
Registrable Securities are to be registered pursuant to this Agreement shall
furnish such holder's written agreement to be bound by the terms and conditions
of this Agreement. By executing and delivering this Agreement, each holder
represents and warrants that the information concerning, and representations and
warranties by, such holder, including information concerning the securities of
the Company held, beneficially or of record, by such holder, furnished to the
Company pursuant to the Preferred Stock Purchase Agreement and the Purchasers
Questionnaire delivered pursuant thereto, are true and correct as if the same
were represented and warranted on the date of any registration statement by the
Company pursuant to this Agreement or any amendment thereto, and each holder
covenants to promptly notify the Company in writing of any change in any such
information, representation or warranty and to refrain from offering or
disposing of any securities pursuant to any such registration statement until
the Company has reflected such change in the registration statement. By
executing and delivering this Agreement, each such holder further agrees to
furnish any additional information as the Company may reasonably request in
connection with any action to be taken by the Company pursuant to this
Agreement, and to pay such holder's expenses which are not required to be paid
by the Company pursuant to this Agreement. If the Registrable Securities of a
Purchaser are excluded from the Required Registration Statement due to such
Purchaser's violation of this Section 1.7(s), such Purchaser shall not be
entitled to the rights set forth in Sections 1.2 or 1.4.
(t) Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Agreement including, without
limitation, all registration and filing fees payable by the Company, fees and
expenses of compliance by the Company with securities or blue sky laws, printing
expenses of the Company, messenger and delivery expenses of the Company, and
fees and disbursements of counsel for the Company and all independent
13
certified public accountants of the Company, underwriters (excluding discounts
and commissions, which will be paid by the sellers of Registrable Securities)
and other Persons retained by the Company will be borne by the Company, and the
Company will pay its internal expenses (including, without limitation, all
salaries and expenses of its Employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense of any
liability insurance of the Company and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on The Nasdaq National
Market, Nasdaq SmallCap Market or the OTC Bulletin Board trading system. The
Company shall not pay any underwriting discounts or commissions attributable to
the sale of Registrable Securities and any of the other expenses incurred by any
holder of Registrable Securities, all of which fees and expenses shall be borne
by such holder or holders including, without limitation, underwriting fees,
discounts and expenses, if any, applicable to any holder's Registrable
Securities, selling commissions or stock transfer taxes applicable to the
Registrable Securities registered on behalf of any holder; any other expenses
incurred by or on behalf of such holder in connection with the offer and sale of
such Holder's Registrable Securities other than expenses which the Company is
expressly obligated to pay pursuant to this Agreement. The Company shall pay all
fees and disbursements of one legal counsel to the Holders in connection with
the registration statement filed pursuant to this Agreement, which may be
Holders' Counsel.
1.8 Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the
fullest extent permitted by law, each holder of Registrable Securities and its
general or limited partners, officers, directors, members, managers, employees,
advisors, representatives, agents and Affiliates (collectively, the
"REPRESENTATIVES") from and against any loss, claim, damage, liability,
attorney's fees, cost or expense and costs and expenses of investigating and
defending any such claim (collectively, the "LOSSES"), joint or several, and any
action in respect thereof to which such holder of Registrable Securities or its
Representatives may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or
threatened, in respect thereto) arise out of or are based upon (i) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, prospectus or preliminary or summary prospectus or any amendment or
supplement thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company shall reimburse each such holder of
Registrable Securities and its Representatives for any legal or any other
expenses incurred by them in connection with investigating or defending or
preparing to defend against any such Loss, action or proceeding; provided,
however, that the Company shall not be liable to any such holder or other
indemnitee in any such case to the extent that any such Loss (or action or
proceeding, whether commenced or threatened, in respect thereof) arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission, made in such Registration Statement, any such prospectus or
preliminary or summary prospectus or any amendment or supplement thereto, in
reliance upon, and in conformity with, written information prepared and
furnished to the Company by any holder of Registrable Securities or its
Representatives expressly for use therein or by failure of any holder of
Registrable Securities to
14
deliver a copy of the Registration Statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder of Registrable
Securities with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities. In no
event, however, shall the Company be liable for indirect, incidental or
consequential or special damages.
(b) In connection with any Registration Statement in which the
holders of Registrable Securities are participating pursuant to this Agreement,
the holders of Registrable Securities will furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
any such Registration Statement or prospectus and, to the fullest extent
permitted by law, each such holder of Registrable Securities will indemnify and
hold harmless the Company and its Representatives from and against any Losses,
severally but not jointly, and any action in respect thereof to which the
Company and its Representatives may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon (i) the
purchase or sale of Registrable Securities during a suspension as set forth in
Section 1.6(b) after written receipt of notice of such suspension, (ii) any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, prospectus or preliminary or summary prospectus or any
amendment or supplement thereto, or (iii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but, with respect to clauses (ii) and (iii) above, only
to the extent that such untrue statement or omission is made in such
Registration Statement, any such prospectus or preliminary or summary prospectus
or any amendment or supplement thereto, in reliance upon and in conformity with
written information prepared and furnished to the Company by such holder of
Registrable Securities expressly for use therein or by failure of such holder of
Registrable Securities to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder of Registrable Securities with a sufficient number of
copies of the same, and such holder of Registrable Securities will reimburse the
Company and each Representative for any legal or any other expenses incurred by
them in connection with investigating or defending or preparing to defend
against any such Loss, action or proceeding; provided, however, that such holder
of Registrable Securities shall not be liable in any such case to the extent
that prior to the filing of any such Registration Statement or prospectus or
amendment or supplement thereto, such holder of Registrable Securities has
furnished in writing to the Company information expressly for use in such
Registration Statement or prospectus or any amendment or supplement thereto
which corrected or made not misleading information previously furnished to the
Company; provided, further, however, that the obligation to indemnify will be
individual to each such holder of Registrable Securities and will be limited to
the net amount of proceeds received by such holder of Registrable Securities
from the sale of Registrable Securities pursuant to such Registration Statement.
In no event, however, shall any Purchaser be liable for indirect, incidental or
consequential or special damages.
15
(c) Promptly after receipt by any Person in respect of which
indemnity may be sought pursuant to Section 1.8(a) or 1.8(b) (an "INDEMNIFIED
PARTY") of notice of any claim or the commencement of any action, the
Indemnified Party shall, if a claim in respect thereof is to be made against the
Person against whom such indemnity may be sought (an "INDEMNIFYING PARTY"),
promptly notify the Indemnifying Party in writing of the claim or the
commencement of such action; provided, that the failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
which it may have to an Indemnified Party otherwise than under Section 1.8(a) or
1.8(b) except to the extent of any actual prejudice resulting therefrom. If any
such claim or action shall be brought against an Indemnified Party, and it shall
notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party and
its Representatives who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the written opinion of counsel to such Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party which shall not be unreasonably withheld, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability arising
out of such claim or proceeding other than the payment of monetary damages by
the Indemnifying Party on behalf of the Indemnified Party. Whether or not the
defense of any claim or action is assumed by the Indemnifying Party, such
Indemnifying Party will not be subject to any liability for any settlement made
without its prior written consent, which consent will not be unreasonably
withheld.
(d) If the indemnification provided for in this Section 1.8 is
unavailable to the Indemnified Parties in respect of any Losses referred to
herein, 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 benefits received by the Company on the one hand and the holders of the
Registrable Securities on the other from the offering of the Registrable
Securities,
16
or if such allocation is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits but also the relative
fault of the Company on the one hand and the holders of the Registrable
Securities on the other in connection with the statements or omissions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of each holder of the
Registrable Securities on the other shall be determined by reference to, among
other things, whether any action taken, including any untrue or alleged untrue
statement of a material fact, or the omission or alleged omission to state a
material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the holders of the Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 1.8(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the Losses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 1.8, no holder of the Registrable
Securities shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such holder were
offered to the public exceeds the amount of any Losses which such holder has
otherwise paid by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Each holder's obligations to contribute pursuant to this
Section 1.8 is several in the proportion that the proceeds of the offering
received by such holder of the Registrable Securities bears to the total
proceeds of the offering received by all the holders of the Registrable
Securities and not joint.
1.9 Participation in Underwritten Registrations.
(a) No Person may participate in any registration hereunder
which is underwritten unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved by
the Person or Persons entitled hereunder to approve such arrangements
(including, without limitation, pursuant to the terms of any over-allotment or
"green shoe" option requested by the managing underwriter(s), provided, that
each holder of Registrable Securities shall not be required to sell more than
the number of Registrable Securities that such holder has requested the Company
to include in any registration) and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.
(b) Each Person that is participating in any registration
under this Agreement agrees that, upon receipt of any notice from the Company of
the happening of any
17
event of the kind described in Section 1.7(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
Registration Statement and all use of the Registration Statement or any
prospectus or related document until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section 1.7(e) and,
if so directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in holder's
possession of such documents at the time of receipt of such notice. Furthermore,
each holder agrees that if such holder uses a prospectus in connection with the
offering and sale of any of the Registrable Securities, the holder will use only
the latest version of such prospectus provided by Company.
2. Transfers of Certain Rights.
2.1 Transfer. The rights granted to the Purchaser under this
Agreement are transferable to any permitted transferee of the applicable
securities upon written notice of such transfer to the Company in accordance
with the provisions of this Agreement provided, that any such transfer shall be
subject to the provisions of Sections 2.2 and 2.3; and further provided, that
nothing contained herein shall be deemed to permit an assignment, transfer or
disposition of the Registrable Securities in violation of the terms and
conditions of the Preferred Stock Purchase Agreement or the other agreements and
instruments in connection therewith, the Certificate of Designations of the
Series A Preferred Stock, or applicable law.
2.2 Transferees. Any permitted transferee to whom rights under this
Agreement are transferred shall, as a condition to such transfer, deliver to the
Company a written instrument by which such transferee agrees to be bound by the
obligations imposed upon the Purchaser under this Agreement to the same extent
as if such transferee were a Purchaser hereunder.
2.3 Subsequent Transferees. A transferee to whom rights are
transferred pursuant to this Section 2 may not again transfer such rights to any
other person or entity, other than as provided in Sections 2.1 or 2.2 above.
3. Certain Definitions. The following capitalized terms shall have the
meanings ascribed to them below:
"Affiliate" means any Person that directly or indirectly controls,
or is under control with, or is controlled by such Person. As used in this
definition, "control" (including with its correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).
"Closing Price" means, with respect to the Registrable Securities
(a) if the shares are listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the last reported sales price as reported on such exchange or market; (b) if the
shares are not listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the
18
average of the last reported closing bid and asked quotation for the shares as
reported on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or a similar service if NASDAQ is not reporting such
information; (c) if the shares are not listed or admitted for trading on any
national securities exchange or included in The Nasdaq National Market or Nasdaq
SmallCap Market or quoted by NASDAQ or a similar service, the average of the
last reported bid and asked quotation for the shares as quoted by a market maker
in the shares (or if there is more than one market maker, the bid and asked
quotation shall be obtained from two market makers and the average of the lowest
bid and highest asked quotation). In the absence of any available public
quotations for the Common Stock, the Board and a majority of the Purchasers
shall determine in good faith the fair value of the Common Stock
"Common Stock" means the common stock, par value $0.001 per share,
of the Company.
"Employees" means any current, former, or retired employee, office
consultant, advisor, independent contractor, agent, officer or director of the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Market Price" means, on any date of determination, the average of
the daily Closing Price of the Registrable Securities for the immediately
preceding five (5) on which the national securities exchanges are open for
trading.
"Person" means any individual, company, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
governmental body or other entity.
"Registrable Securities" means, subject to the immediately following
sentence, (i) shares of Common Stock issued or issuable upon the conversion of
Series A Preferred Stock (including any additional shares of Series A Preferred
Stock issued as dividends, penalties or otherwise with respect to the Series A
Preferred Stock), Common Stock payable as dividends on the Series A Preferred
Stock, the Placement Agent Warrant Shares issued or issuable upon the exercise
of the Placement Agent Warrants, the Investor Warrant Shares issued or issuable
upon the exercise of the pro rata Investor Warrants, the Common Stock issuable
upon exercise of the Warrants and the Additional Securities (whether directly or
indirectly convertible into Common Stock, or, to the extent the Additional
Securities constitute Common Stock, such shares of Common Stock), and (ii) any
shares of Common Stock issued or issuable directly or indirectly with respect to
the securities referred to in clause (i) including, without limitation, by way
of dividend, stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization, or
interest, or Registration Event Penalty Payment hereunder. As to any particular
shares of Common Stock constituting Registrable Securities, such shares of
Common Stock will cease to be Registrable Securities when they (x) have been
effectively registered under the Securities Act and disposed of in accordance
with a Registration Statement covering them, (y) have been sold to the public
pursuant to Rule 144 (or by similar provision under the Securities Act), or (z)
are eligible for
19
resale under Rule 144(k) (or by similar provision under the Securities Act)
without any limitation on the amount of securities that may be sold under
paragraph (e) thereof.
"Registration Statement" means any registration statement of the
Company filed under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such registration statement.
"SEC" means the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
4. Miscellaneous.
4.1 Recapitalizations, Exchanges and Additional Issuances. The
provisions of this Agreement shall apply to the full extent set forth herein
with respect to (i) the Registrable Securities, (ii) any and all shares of
Common Stock into which the Registrable Securities are converted, exchanged or
substituted in any recapitalization or other capital reorganization by the
Company and (iii) any and all equity securities of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in conversion of, in exchange for
or in substitution of, the Registrable Securities and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof. The Company
shall cause any successor or assign (whether by merger, consolidation, sale of
assets or otherwise) to enter into a new registration rights agreement with the
Designated Holders on terms substantially the same as this Agreement as a
condition of any such transaction.
4.2 No Inconsistent Agreements. The Company has not and shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Purchasers in this Agreement or grant any
additional registration rights to any Person or with respect to any securities
which are not Registrable Securities which are prior in right to or materially
inconsistent with the rights granted in this Agreement. The Purchasers expressly
acknowledge and agree that the Company has granted registration rights
heretofore and may hereafter grant registration rights to holders of Series A
Preferred Stock, which shall be pari passu with, and substantially the same as,
those granted to the Purchasers in the Offering, that such registration rights
are permitted under this Section 4.2 and shall not be deemed to conflict with
the registration rights of the Purchasers, and that holders of such registration
rights shall be treated pari passu with holders of the registration rights
granted under this Agreement with respect to priority in piggy-back
registrations, and vice versa.
4.3 Amendments and Waivers. The provisions of this Agreement may be
amended and the Company may take action herein prohibited, or omit to perform
any act herein required to be performed by it, if, but only if, the Company has
obtained the written consent of a
20
majority in interest of the Registrable Securities then in existence; provided,
however, that (i) Sections 1.2(b) - 1.2(e) shall not be amended without the
consent of HG or its permitted transferee and (ii) Section 1.2(f) and 1.2(g)
shall not be amended without the consent of CHL or its permitted transferee.
4.4 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
4.5 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.6 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy, telex or similar
writing) and shall be deemed given or made as of the date delivered, if
delivered personally or by telecopy (provided that delivery by telecopy shall be
followed by delivery of an additional copy personally, by mail or overnight
courier), one day after being delivered by overnight courier or four business
days after being mailed by registered or certified mail (postage prepaid for the
most expeditious form of delivery, return receipt requested), to the parties at
the following addresses (or to such other address or telex or telecopy number as
a party may have specified by notice given to the other party pursuant to this
provision):
If to the Company, to:
iCurie, Inc.
Espirito Santo Plaza
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
Facsimile: 305-529-6201
With a copy to:
DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
If to the Purchaser, to:
The address or facsimile number of each Purchaser as
recorded in the stockholders records of the Company.
21
4.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflicts of laws rules or provisions.
4.8 Forum; Service of Process. Any legal suit, action or proceeding
brought by any party or any of its affiliates arising out of or based upon this
Agreement shall be instituted in any federal or state court in New York, and
each party waives any objection which it may now or hereafter have to the laying
of venue or any such proceeding, and irrevocably submits to the jurisdiction of
such courts in any such suit, action or proceeding.
4.9 Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.
4.10 No Prejudice. The terms of this Agreement shall not be
construed in favor of or against any party on account of its participation in
the preparation hereof.
4.11 Words in Singular and Plural Form. Words used in the singular
form in this Agreement shall be deemed to import the plural, and vice versa, as
the sense may require.
4.12 Remedy for Breach. The Company hereby acknowledges that in the
event of any breach or threatened breach by the Company of any of the provisions
of this Agreement, the holders of the Registrable Securities would have no
adequate remedy at law and could suffer substantial and irreparable damage.
Accordingly, the Company hereby agrees that, in such event, the holders of the
Registrable Securities shall be entitled, and notwithstanding any election by
any holder of the Registrable Securities to claim damages, to obtain a temporary
and/or permanent injunction to restrain any such breach or threatened breach or
to obtain specific performance of any such provisions, all without prejudice to
any and all other remedies which any holder of the Registrable Securities may
have at law or in equity.
4.13 Successors and Assigns; Third Party Beneficiaries. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto, each subsequent holder of the Registrable
Securities and their respective permitted successors and assigns and executors,
administrators and heirs. Purchasers of the Registrable Securities are intended
third party beneficiaries of this Agreement and this Agreement may be enforced
by such holders.
4.14 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date and year first written
above.
COMPANY:
ICURIE, INC.
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
PLACEMENT AGENTS:
INDIGO SECURITIES, LLC
By: /s/ Xxxx Xxxxxxxxx
------------------
Name: Xxxx Xxxxxxxxx
Its: Managing Partner
AXIOM CAPITAL MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Its: President
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned Purchaser has caused this Registration
Rights Agreement to be duly executed as of the date and year first above written
and to be bound hereby.
OFFERING PURCHASER: * ADDITIONAL PURCHASER: *
________________________________ __________________________________
By: ____________________________ By: ______________________________
Name: _____________________ Name: ________________________
Its: ______________________ Title: _______________________
XXXXXX XXXX & COMPANY, INC., CHL INVESTMENT PARTNERSHIP
By: /s/ Xxxxx Xxxxxx By: /s/ Jeong Xxxx Xxx, Ph.D.
---------------- -------------------------
Name: Xxxxx Xxxxxx Name: Xx. Xxxxx-Xxxx Xxx, Ph.D.
Its: President Its: General Partner
* Executed by each Offering Purchaser and Additional Purchaser as applicable.
