EXHIBIT 10.9
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT"), dated as of January 18, 2007, by and among Raptor Networks
Technology, Inc., a Colorado corporation, with headquarters located at 0000 Xxxx
Xxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx 00000 (the "COMPANY"), and the
undersigned investors (each, an "INVESTOR", and collectively, the "INVESTORS").
WHEREAS:
A. The Company and the Investors are parties to that certain
Securities Purchase Agreement, dated as of July 30, 2006 (the "EXISTING
SECURITIES PURCHASE AGREEMENT"), pursuant to which, among other things, the
Investors purchased from the Company (i) senior convertible notes (the "EXISTING
NOTES"), which are convertible into shares of the Company's common stock, par
value $0.001 per share (the "COMMON STOCK") (the Existing Notes as converted,
the "EXISTING CONVERSION SHARES"), in accordance with the terms thereof, (ii)
Series L Warrants (the "EXISTING SERIES L WARRANTS"), which are exercisable into
shares of Common Stock (the "EXISTING SERIES L WARRANT SHARES"), and (iii)
Series M Warrants (the "EXISTING SERIES M WARRANTS", and together with the
Existing Series L Warrants, the "EXISTING WARRANTS"), which are exercisable into
shares of Common Stock (the "EXISTING SERIES M WARRANT SHARES", and together
with the Existing Series L Warrant Shares, the "EXISTING WARRANT SHARES").
B. In connection with the Amendment and Exchange Agreements by
and among the Company and each of the Investors, dated as of the date hereof
(the "AMENDMENT AGREEMENTS"), the Company has agreed, among other things, (i) to
amend and restate all of such Investor's Existing Notes for notes in the form
attached thereto as EXHIBIT A (the "AMENDED AND RESTATED NOTES") which shall be
convertible into Common Stock (the "AMENDED AND RESTATED CONVERSION SHARES"),
(ii) to exchange all of such Investor's Existing Series L Warrants for warrants
in the form attached thereto as EXHIBIT B (the "REPLACEMENT SERIES L-1
WARRANTS") which shall be exercisable to acquire shares of Common Stock (the
"REPLACEMENT SERIES L-1 WARRANT SHARES"), and (iii) to exchange all of such
Investor's Existing Series M Warrants for warrants in the form attached thereto
as EXHIBIT C (the "REPLACEMENT SERIES M-1 WARRANTS", and together with the
Replacement Series L-1 Warrants, the "REPLACEMENT WARRANTS") which shall be
exercisable to acquire shares of Common Stock (the "REPLACEMENT SERIES M-1
WARRANT SHARES", and together with the Replacement Series L-1 Warrant Shares,
the "REPLACEMENT WARRANT SHARES").
C. In addition, in connection with the Amendment Agreements,
one Investor has agreed to purchase, and the Company has agreed to sell, (i) an
additional aggregate principal amount of the Notes, in substantially the form
attached thereto as EXHIBIT D (the "ADDITIONAL NOTES", and together with the
Amended and Restated Notes, the "NOTES") which shall be convertible into Common
Stock (as converted, collectively, the "ADDITIONAL CONVERSION SHARES" and
together with the Amended and Restated Conversion Shares, the "CONVERSION
SHARES"), (ii) additional warrants, in substantially the form attached thereto
as EXHIBIT E (the "SERIES L-2 WARRANTS"), to acquire shares of Common Stock (as
exercised, the "SERIES L-2 WARRANT SHARES") and (iii) additional warrants in
substantially the form attached thereto as EXHIBIT F (the "SERIES M-2 WARRANTS"
and together with the Series L-2 Warrants, the "ADDITIONAL WARRANTS" and the
Additional Warrants together with the Replacement Warrants, the "WARRANTS") to
acquire shares of Common Stock (as exercised, the "SERIES M-2 WARRANT SHARES",
and collectively with the Series L-2 Warrant Shares, the "ADDITIONAL WARRANT
SHARES", and together with the Replacement Warrant Shares, the "WARRANT SHARES")
D. To induce the Investors to execute and deliver their
respective Amendment Agreements, the Company has agreed to execute and deliver
this Agreement which amends, restates and consolidates the terms and conditions
of that certain Registration Rights Agreement, by and among the Company and the
Investors, dated as of July 31, 2006, whereby the Company agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute
(collectively, the "1933 ACT"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Investors hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement as amended by the Amendment Agreements. As used in this Agreement, the
following terms shall have the following meanings:
a. "ADDITIONAL EFFECTIVE DATE" means the date that
the applicable Additional Registration Statement is declared effective by
the SEC.
b. "ADDITIONAL EFFECTIVENESS DEADLINE" means the date
which is (i) in the event that an Additional Registration Statement is
not subject to a full review by the SEC, 60 calendar days after the date of its
applicable Investor Demand or (ii) in the event that an Additional Registration
Statement is subject to a full review by the SEC, 90 calendar days after the
date of its applicable Investor Demand.
c. "ADDITIONAL FILING DEADLINE" means 30 calendar
days from the date of the applicable Investor Demand; PROVIDED HOWEVER, that if
such date would otherwise fall between February 11, 2008 and March 14, 2008 and
the Company's most recent 1934 Act (as defined below) reports do not include
financial statements less than 135 days old, such date shall be extended for
that particular Additional Registration Statement to March 15, 2008.
d. "ADDITIONAL REGISTRABLE SECURITIES" means (i) the
Conversion Shares issued or issuable upon conversion of the Notes then
outstanding and not previously registered on a Registration Statement, (ii) the
Warrant Shares issuable upon the exercise of any Warrants then outstanding and
not previously registered on a Registration Statement and (iii) any capital
stock of the Company issued or issuable with respect to the Conversion Shares,
the Notes, the Warrant Shares, or the Warrants as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on conversions of the Notes or exercises of
the Warrants.
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e. "ADDITIONAL REGISTRATION STATEMENT" a registration
statement or registration statements of the Company filed under the
1933 Act covering any Additional Registrable Securities.
f. "ADDITIONAL REQUIRED REGISTRATION AMOUNT" means
the Maximum Allowable Amount of the remaining sum of (i) the number of
previously unregistered Conversion Shares issued and issuable pursuant to the
Notes as of the trading day immediately preceding the applicable date of
determination and (ii) the number of previously unregistered Warrant Shares
issued and issuable pursuant to the Warrants as of the trading day immediately
preceding the applicable date of determination, all subject to adjustment as
provided in Section 2(f) (without regard to any limitations on conversion of the
Notes or exercise of the Warrants). Unless a different priority is specified in
writing to the Company by an Investor at least five (5) Business Days prior to
the applicable Additional Filing Deadline, the Company shall first register (x)
all Conversion Shares, then (y) all Replacement Series L-1 Warrant Shares
together with all Series L-2 Warrant Shares and finally (z) all Replacement
Series M-1 Warrant Shares together with all Series M-2 Warrant Shares.
g. "BUSINESS DAY" means any day other than Saturday,
Sunday or any other day on which commercial banks in the City of New
York are authorized or required by law to remain closed.
h. "CLOSING DATE" shall have the meaning set forth in
the Amendment Agreements.
i. "EFFECTIVE DATE" means the Initial Effective Date
or an Additional Effective Date, as applicable.
j. "EFFECTIVENESS DEADLINE" means the Initial
Effectiveness Deadline or an Additional Effectiveness Deadline, as applicable.
k. "FILING DEADLINE" means the Initial Filing
Deadline or an Additional Filing Deadline, as applicable.
l. "INITIAL EFFECTIVE DATE" means the date that the
Initial Registration Statement is declared effective by the SEC.
m. "INITIAL FILING DEADLINE" means January 23, 2007.
n. "INITIAL EFFECTIVENESS DEADLINE" means the date
which is (i) in the event that the Initial Registration Statement is not subject
to a full review by the SEC, 30 calendar days after the Closing Date or (ii) in
the event that the Initial Registration Statement is subject to a full review by
the SEC, 60 calendar days after the Closing Date; provided however, that if the
Initial Registration Statement is not declared effective by the SEC by February
11, 2007, the Initial Effectiveness Deadline shall be extended to April 15,
2007.
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o. "INITIAL REGISTRABLE SECURITIES" means (i) the
Conversion Shares issued or issuable upon conversion of the Notes, (ii) the
Replacement Warrant Shares issued or issuable upon exercise of the Warrants and
(iii) any capital stock of the Company issued or issuable with respect to the
Conversion Shares, the Notes, the Warrant Shares, or the Warrants as a result of
any stock split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitations on conversions of the Notes or
exercises of the Warrants.
p. "INITIAL REGISTRATION STATEMENT" means a
registration statement or registration statements of the Company filed under the
1933 Act covering the Initial Registrable Securities.
q. "INITIAL REQUIRED REGISTRATION AMOUNT" means the
Maximum Allowable Amount of Conversion Shares issued and issuable pursuant to
the Notes as of the trading day immediately preceding the applicable date of
determination.
r. "INVESTOR" means an Investor or any transferee or
assignee thereof to whom an Investor assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 and any transferee or assignee thereof to whom a transferee or
assignee assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Section 9.
s. "INVESTOR DEMAND" means a written request by an
Investor to the Company that the Company prepare and file an Additional
Registration Statement to register Additional Registrable Securities.
t. "MAXIMUM ALLOWABLE AMOUNT" means a number of
shares of Common Stock equal to 30% (or such greater percentage as is permitted
by the SEC) of the issued and outstanding Common Stock of the Company that is
not beneficially owned by an affiliate of the Company.
u. "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
v. "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
w. "REGISTRABLE SECURITIES" means the Initial
Registrable Securities and the Additional Registrable Securities.
x. "REGISTRATION STATEMENT" means the Initial
Registration Statement or an Additional Registration Statement, as applicable.
y. "REQUIRED HOLDERS" means the holders of at least a
majority of the Registrable Securities.
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z. "REQUIRED REGISTRATION AMOUNT" means with respect
to the Initial Registration Statement, the Initial Required
Registration Amount or with respect to an Additional Registration Statement, the
Additional Required Registration Amount, as applicable.
aa. "RULE 415" means Rule 415 under the 1933 Act or
any successor rule providing for offering securities on a continuous or delayed
basis.
bb. "SEC" means the United States Securities and
Exchange Commission.
2. REGISTRATION.
a. INITIAL MANDATORY REGISTRATION. The Company shall
prepare and as soon as practicable but in no event later than the
Initial Filing Deadline, file with the SEC the Initial Registration Statement on
Form SB-2 covering the resale of the Maximum Allowable Amount of the Initial
Registrable Securities. In the event that Form SB-2 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration on another appropriate form reasonably acceptable to the Required
Holders, subject to the provisions of Section 2(e). The Initial Registration
Statement prepared pursuant hereto shall register for resale at least the number
of shares of Common Stock equal to the Initial Required Registration Amount
determined as of date the Initial Registration Statement is initially filed with
the SEC. The Initial Registration Statement shall contain (except if otherwise
directed by the Required Holders) the "SELLING STOCKHOLDERS" and "PLAN OF
DISTRIBUTION" sections in substantially the form attached hereto as EXHIBIT B.
The Company shall use its best efforts to have the Initial Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the Initial Effectiveness Deadline. By 9:30 am on the Business Day
following the Initial Effective Date, the Company shall file with the SEC in
accordance with Rule 424 under the 1933 Act the final prospectus to be used in
connection with sales pursuant to the Initial Registration Statement.
b. ADDITIONAL MANDATORY REGISTRATION. An Investor
successively may request in writing that the Company prepare and file with
the SEC an Additional Registration Statement to register any Additional
Registrable Securities beginning on the date which is five (5) months following
the Initial Effective Date and thereafter five (5) months following the
Additional Effective Date of the immediately preceding Additional Registration
Statement until the earlier date of when (x) all Additional Registrable
Securities have been registered on Additional Registration Statements and (y)
all Additional Registrable Securities not previously registered on an Additional
Registration Statement may be sold by the Investors without restriction under
Rule 144(k) promulgated under the 1933 Act. Upon receipt of an Investor Demand,
the Company shall (x) promptly send a copy of such Investor Demand to all other
Investors and (y) prepare and as soon as practicable but in no event later than
the Additional Filing Deadline, file with the SEC such Additional Registration
Statement on Form SB-2 covering the resale of the Maximum Allowable Amount of
the Additional Registrable Securities set forth on an Investor Demand and in any
additional Investor Demand received at least five (5) Business Days prior to the
applicable Additional Filing Deadline. In the event that Form SB-2 is
unavailable for such a registration, the Company shall use such other form as is
available for such a registration on another appropriate form reasonably
acceptable to the Required Holders, subject to the provisions of Section 2(e).
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The Additional Registration Statement prepared pursuant hereto shall register
for resale at least the number of shares of Common Stock equal to the Additional
Required Registration Amount determined as of date the Additional Registration
Statement is initially filed with the SEC. The Additional Registration Statement
shall contain (except if otherwise directed by the Required Holders) the
"SELLING STOCKHOLDERS" and "PLAN OF DISTRIBUTION" sections in substantially the
form attached hereto as EXHIBIT B. The Company shall use its best efforts to
have the Additional Registration Statement declared effective by the SEC as soon
as practicable, but in no event later than the Additional Effectiveness
Deadline. By 9:30 am on the Business Day following the Additional Effective Date
of the applicable Additional Registration Statement, the Company shall file with
the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to
be used in connection with sales pursuant to such Additional Registration
Statement.
c. ALLOCATION OF REGISTRABLE SECURITIES. The initial
number of Registrable Securities included in any Registration
Statement and any increase in the number of Registrable Securities included
therein shall be allocated pro rata among the Investors based on the number of
Registrable Securities held by each Investor at the time the Registration
Statement covering such initial number of Registrable Securities or increase
thereof is declared effective by the SEC. In the event that an Investor sells or
otherwise transfers any of such Investor's Registrable Securities, each
transferee shall be allocated a pro rata portion of the then remaining number of
Registrable Securities included in such Registration Statement for such
transferor. Any shares of Common Stock included in a Registration Statement and
which remain allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be allocated to the
remaining Investors, pro rata based on the number of Registrable Securities then
held by such Investors which are covered by such Registration Statement. In no
event shall the Company include any securities other than Registrable Securities
on any Registration Statement without the prior written consent of the Required
Holders; except that the shares of Common Stock underlying the Xxxxxxxxxx
Warrants (as defined in Section 30(u) of the Notes) may be included in one or
more Registration Statements pro rata with the Warrant Shares, but not until
after all of the Conversion Shares issued or issuable upon conversion of all of
the Notes have been included in one or more Registration Statements.
d. LEGAL COUNSEL. Subject to Section 5 hereof, each
Investor shall have the right to select one legal counsel to review and oversee
any registration pursuant to this Section 2 ("LEGAL COUNSEL") The Company and
Legal Counsel shall reasonably cooperate with each other in performing the
Company's obligations under this Agreement.
e. FORM S-3. The Company shall undertake to register
the Registrable Securities on Form S-3 as soon as such form is
available for use by the Company, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.
f. SUFFICIENT NUMBER OF SHARES REGISTERED. In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) or Section 2(b) is insufficient to cover all of the
Registrable Securities required to be covered by such Registration Statement or
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an Investor's allocated portion of the Registrable Securities pursuant to
Section 2(c), the Company shall amend the applicable Registration Statement, or
file a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least the Required Registration Amount
as of the trading day immediately preceding the date of the filing of such
amendment or new Registration Statement, in each case, as soon as practicable,
but in any event not later than fifteen (15) days after the necessity therefor
arises. The Company shall use its best efforts to cause such amendment and/or
new Registration Statement to become effective as soon as practicable following
the filing thereof. For purposes of the foregoing provision, the number of
shares available under a Registration Statement shall be deemed "insufficient to
cover all of the Registrable Securities" if at any time the number of shares of
Common Stock available for resale under the Registration Statement is less than
the product determined by multiplying (i) the Required Registration Amount as of
such time by (ii) 0.80. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on the conversion of the Notes
or the exercise of the Warrants and such calculation shall assume that the Notes
are then convertible into shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Notes) and that the Warrants are then
exercisable for shares of Common Stock at the then prevailing Exercise Price (as
defined in the Warrants).
g. EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN
EFFECTIVENESS OF REGISTRATION STATEMENT. If (i) a Registration
Statement covering all of the Registrable Securities required to be covered
thereby and required to be filed by the Company pursuant to this Agreement is
(A) not filed with the SEC on or before the respective Filing Deadline (a
"FILING FAILURE") or (B) not declared effective by the SEC on or before the
respective Effectiveness Deadline (an "EFFECTIVENESS FAILURE") or (ii) on any
day after the applicable Effective Date sales of all of the Registrable
Securities required to be included on such Registration Statement cannot be made
(other than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement, to register a sufficient number of shares of Common Stock or to
maintain the listing of the Common Stock) (a "MAINTENANCE FAILURE") then, as
partial relief for the damages to any holder by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Registrable Securities relating
to such Registration Statement an amount in cash equal to two percent (2.0%) of
the aggregate Purchase Price (as such term is defined in the Securities Purchase
Agreement) of such Investor's Notes relating to the Registrable Securities
included in such Registration Statement on each of the following dates: (i) the
day of a Filing Failure and on every thirtieth day (pro rated for periods
totaling less than thirty days) after a Filing Failure until such Filing Failure
is cured; (ii) (A) the day of an Effectiveness Failure (except if such
Effectiveness Failure occurs between February 12, 2008 and April 14, 2008 and
the Effectiveness Failure occurs because the Company's most recent 1934 Act
reports do not include financial statements less than 135 days old, the
Registration Delay Payment pursuant to this clause (A) shall not apply) and (B)
on every thirtieth day (pro rated for periods totaling less than thirty days)
after an Effectiveness Failure until such Effectiveness Failure is cured; and
(iii) the initial day of a Maintenance Failure and on every thirtieth day (pro
rated for periods totaling less than thirty days) after a Maintenance Failure
until such Maintenance Failure is cured. The payments to which a holder shall be
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entitled pursuant to this Section 2(f) are referred to herein as "REGISTRATION
DELAY PAYMENTS." Registration Delay Payments shall be paid on the day of the
Filing Failure, Effectiveness Failure and the initial day of a Maintenance
Failure, as applicable, and thereafter on the earlier of (I) the thirtieth day
after the event or failure giving rise to the Registration Delay Payments has
occurred and (II) the third Business Day after the event or failure giving rise
to the Registration Delay Payments is cured. In the event the Company fails to
make Registration Delay Payments in a timely manner, such Registration Delay
Payments shall bear interest at the rate of two percent (2.0%) per month
(prorated for partial months) until paid in full. Notwithstanding anything
herein to the contrary, in no event shall the aggregate Registration Delay
Payments exceed twelve and one-half percent (12.5%) of the aggregate Purchase
Price for all Investors (the "REGISTRATION DELAY PAYMENTS CAP"). Any amount in
excess of the Registration Delay Payments Cap (the "EXCESS REGISTRATION DELAY
PAYMENTS") shall cause the Conversion Price of the Investor's Notes to be
lowered by an amount equal to the quotient of the amount of such Investor's
Excess Registration Delay Payments divided by the then outstanding amount of
such Investor's Notes. Notwithstanding anything to the contrary contained
herein, in no event shall the Company be liable for any damages in connection
with the Warrant or Warrant Shares. In addition, and notwithstanding anything to
the contrary contained herein, in no event shall the Registration Delay Payments
be payable with respect to any Additional Registrable Securities that are not
included on any applicable Additional Registration Statement solely as a result
of a comment received by the SEC requiring a limit on the number of Additional
Registrable Securities included in such Additional Registration Statement in
order for such Additional Registration Statement to be able to avail itself of
Rule 415.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to file a
Registration Statement with the SEC pursuant to Section 2(a), 2((b), 2(e) or
2(f), the Company will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with
the SEC a Registration Statement with respect to the Registrable Securities
and use its best efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as practicable after such
filing (but in no event later than the Effectiveness Deadline). The Company
shall keep each Registration Statement effective pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the Investors may sell all
of the Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the "REGISTRATION
PERIOD"). The Company shall ensure that each Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any 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 case of prospectuses, in the light of the circumstances in which they
were made) not misleading. The term "best efforts" shall mean, among other
things, that the Company shall submit to the SEC, within two (2) Business Days
after the later of the date that (i) the Company learns that no review of a
particular Registration Statement will be made by the staff of the SEC or that
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the staff has no further comments on a particular Registration Statement, as the
case may be, and (ii) the approval of Legal Counsel pursuant to Section 3(c)
(which approval is immediately sought), a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request.
b. The Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and supplements to
a Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company filing a report on Form 10-QSB, Form
10-KSB or any analogous report under the Securities Exchange Act of 1934, as
amended (the "1934 ACT"), the Company shall have incorporated such report by
reference into such Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the 1934 Act
report is filed which created the requirement for the Company to amend or
supplement such Registration Statement.
c. The Company shall (A) permit Legal Counsel to
review and comment upon (i) the Initial Registration Statement at least one
(1) Business Day prior to its filing with the SEC and any Additional
Registration Statement at least five (5) Business Days prior to its filing with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-K and Form 10 KSB, and Reports on Form
10-Q and 10-QSB, Current Reports on Form 8-K (except those that refer to an
Investor or the transactions contemplated hereby, which will be subject to such
review and comment) and any similar or successor reports) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld. The Company shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the staff of
the SEC to the Company or its representatives relating to any Registration
Statement, (ii) promptly after the same is prepared and filed with the SEC, one
copy of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor, and all exhibits and (iii) upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto. The
Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations pursuant to this Section 3.
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d. The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement,
without charge, (i) promptly after the same is prepared and filed with the SEC,
at least one copy of such Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference, if requested by an Investor, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
e. The Company shall use its best efforts to (i)
register and qualify, unless an exemption from registration and
qualification applies, the resale by Investors of the Registrable Securities
covered by a Registration Statement under such other securities or "blue sky"
laws of all applicable jurisdictions in the United States, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of notice of the initiation or threatening of any proceeding for
such purpose.
f. The Company shall notify Legal Counsel and each
Investor in writing of the happening of any event, as promptly as
practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission 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
(provided that in no event shall such notice contain any material, nonpublic
information), and, subject to Section 3(r), promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue statement or
omission, and deliver ten (10) copies of such supplement or amendment to Legal
Counsel and each Investor (or such other number of copies as Legal Counsel or
such Investor may reasonably request). The Company shall also promptly notify
Legal Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by facsimile or e-mail on the same day of such effectiveness and by
overnight mail), (ii) of any request by the SEC for amendments or supplements to
a Registration Statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
-10-
g. The Company shall use its best efforts to prevent
the issuance of any stop order or other suspension of effectiveness of
a Registration Statement, or the suspension or the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of notice of the initiation or threat of any
proceeding for such purpose.
h. If any Investor is deemed to be, alleged to be or
reasonably believes it may be deemed or alleged to be, an underwriter
or is required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request of any
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.
i. Upon the written request of any investor in
connection with such Investor's due diligence requirements, if any, the
Company shall make available for inspection by (i) any Investor, (ii) Legal
Counsel and (iii) one firm of accountants or other agents retained by the
Investors (collectively, the "INSPECTORS"), all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree to hold in strict confidence and shall not make
any disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement or any other Transaction
Document. Each Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors' ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
j. The Company shall hold in confidence and not make
any disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such information is
-11-
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement
or any other agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor's expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
k. The Company shall use its best efforts either to
(i) cause all of the Registrable Securities covered by a Registration
Statement to be listed on each securities exchange on which securities of the
same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange or (ii) secure the inclusion for quotation of all of the Registrable
Securities on The NASDAQ Global Market or (iii) if, despite the Company's best
efforts, the Company is unsuccessful in satisfying the preceding clauses (i) and
(ii), to secure the inclusion for quotation on The NASDAQ Capital Market or the
American Stock Exchange for such Registrable Securities and, without limiting
the generality of the foregoing, to use its best efforts to arrange for at least
two market makers to register with the National Association of Securities
Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The
Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(k).
l. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and, to the extent
applicable, facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such certificates to be
in such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may request.
m. If requested by an Investor, the Company shall (i)
as soon as practicable incorporate in a prospectus supplement or
post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price being
paid therefor and any other terms of the offering of the Registrable Securities
to be sold in such offering; (ii) as soon as practicable make all required
filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) as soon as practicable, supplement or make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.
n. The Company shall use its best efforts to cause
the Registrable Securities covered by a Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.
-12-
o. The Company shall make generally available to its
security holders as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement (in form
complying with, and in the manner provided by, the provisions of Rule 158 under
the 0000 Xxx) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the Effective Date of a
Registration Statement.
p. The Company shall otherwise use its best efforts
to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
q. Within two (2) Business Days after a Registration
Statement which covers Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as EXHIBIT A.
r. Notwithstanding anything to the contrary herein,
at any time after the Effective Date of an applicable Registration
Statement, the Company may (x) delay the disclosure of material, non-public
information concerning the Company the disclosure of which at the time is not,
in the good faith opinion of the Board of Directors of the Company and its
counsel, in the best interest of the Company and, in the opinion of counsel to
the Company otherwise required and (y) file supplements and/or amendments to the
Registration Statement to incorporate filings under the 1934 Act into the
Registration Statement in order to maintain the effectiveness of the
Registration Statement which may cause the Registration Statement to be
ineffective while being reviewed by the SEC (each, a "GRACE PERIOD"); provided,
that the Company shall promptly (i) notify the Investors in writing of the
existence of material, non-public information or other event giving rise to a
Grace Period (provided that in each notice the Company will not disclose the
content of such material, non-public information to the Investors) and the date
on which the Grace Period will begin, and (ii) notify the Investors in writing
of the date on which the Grace Period ends; and, provided further, that no Grace
Period of the type described in clause (x) above shall exceed ten (10)
consecutive days, no Grace Period of the type described in clause (y) above
shall exceed twenty (20) consecutive days and during any three hundred sixty
five (365) day period such Grace Periods shall not exceed an aggregate of sixty
(60) days and the first day of any Grace Period must be at least five (5)
trading days after the last day of any prior Grace Period (each, an "ALLOWABLE
GRACE PERIOD"). For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the Investors are
prohibited from selling Registrable Securities under the Registration Statement
due to the ineffectiveness of the Registration Statement and shall end on and
include the date the effectiveness of the Registration Statement is restored and
the Investors can continue to sell Registrable Securities pursuant to such
Registration Statement. The provisions of Section 3(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material, non-public information is no longer applicable. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
-13-
of Registrable Securities with respect to which an Investor has entered into a
contract for sale and delivered a copy of the prospectus included as part of the
applicable Registration Statement (unless an exemption from such prospectus
delivery requirement exists) the ineffectiveness of the Registration Statement
and for which the Investor has not yet settled.
4. OBLIGATIONS OF THE INVESTORS.
a. At least five (5) Business Days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the effectiveness of the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor, by such Investor's acceptance of
the Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of any Registration Statement hereunder, unless such Investor has
notified the Company in writing of such Investor's election to exclude all of
such Investor's Registrable Securities from such Registration Statement.
c. Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of 3(f) or receipt of notice
that no supplement or amendment is required. Notwithstanding anything to the
contrary, the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which an Investor has entered into a
contract for sale prior to the Investor's receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f) and for which the Investor has not yet settled.
d. Each Investor covenants and agrees that it will
comply with the prospectus delivery requirements of the 1933 Act as applicable
to it or an exemption therefrom in connection with sales of Registrable
Securities pursuant to the Registration Statement.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
-14-
fees and disbursements of counsel for the Company shall be paid by the Company.
The Company shall also reimburse each Investor for the fees and disbursements of
Legal Counsel in connection with registration, filing or qualification pursuant
to Sections 2 and 3 of this Agreement which amount shall be limited to $15,000
per Investor (and limited to a total of $15,000 for each group of affiliated
Investors) for each Registration Statement filed by the Company with the SEC.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend each
Investor, the directors, officers, members, partners, employees, agents,
representatives of, and each Person, if any, who controls any Investor within
the meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several, (collectively, "CLAIMS") incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registrable Securities are offered
("BLUE SKY FILING"), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in the light of the circumstances under which the statements therein
were made, not misleading, (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement or (iv) any violation of this Agreement (the matters in
the foregoing clauses (i) through (iv) being, collectively, "VIOLATIONS").
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
for such Indemnified Person expressly for use in connection with the preparation
-15-
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to
Section 3(d) and (ii) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration Statement and
each Person, if any, who controls the Company within the meaning of the 1933 Act
or the 1934 Act (each, an "INDEMNIFIED PARTY"), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(c),
such Investor will reimburse any legal or other expenses reasonably incurred by
an Indemnified Party in connection with investigating or defending any such
Claim; provided, however, that the indemnity agreement contained in this Section
6(b) and the agreement with respect to contribution contained in Section 7 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent shall
not be unreasonably withheld or delayed; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section
6, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the case of an
-16-
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
d. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or Indemnified
Damages are incurred.
e. The indemnity agreements contained herein shall be
in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no Person involved in the sale of Registrable Securities which Person is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement.
-17-
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits
of Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("RULE 144"), the
Company agrees to:
a. make and keep public information available, as
those terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports
and other documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable provisions of
Rule 144; and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company, if true, that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant to
Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any portion of such
Investor's Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act or applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v)
such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Registrable Securities. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is offered to all
of the parties to this Agreement.
-18-
11. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the such record owner of such Registrable
Securities.
b. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Raptor Networks Technology, Inc.
0000 X. Xxxx Xxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
With a copy to:
Xxxxx & Xxxxxx , LLP
000 Xxxxx Xxxx. 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
If to Legal Counsel:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
-19-
and
Sadis & Xxxxxxxx LLP
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxx, Esq.
If to an Investor, to its address and facsimile number set forth on the Schedule
of Investors attached hereto, with copies to such Investor's representatives as
set forth on the Schedule of Investors, or to such other address and/or
facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days
prior to the effectiveness of such change. Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.
d. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by the internal laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
-20-
e. This Agreement, the other Transaction Documents
(as defined in the Amendment Agreements) and the instruments referenced
herein and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by facsimile transmission of a
copy of this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents and other determinations required to
be made by the Investors pursuant to this Agreement shall be made,
unless otherwise specified in this Agreement, by the Required Holders.
k. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent and
no rules of strict construction will be applied against any party.
l. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.
m. The obligations of each Investor hereunder are
several and not joint with the obligations of any other Investor, and no
provision of this Agreement is intended to confer any obligations on any
Investor vis-a-vis any other Investor. Nothing contained herein, and no action
taken by any Investor pursuant hereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated herein.
[Signature Page Follows]
-21-
IN WITNESS WHEREOF, each Investor and the Company have caused
their respective signature page to this Amended and Restated Registration Rights
Agreement to be duly executed as of the date first written above.
COMPANY:
RAPTOR NETWORKS TECHNOLOGY, INC.
By: /S/ XXXXXX X. XXXXXXXXXXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxxxxx
Title: Chief Executive Officer
IN WITNESS WHEREOF, each Investor and the Company have caused
their respective signature page to this Amended and Restated Registration Rights
Agreement to be duly executed as of the date first written above.
INVESTORS:
CASTLERIGG MASTER INVESTMENTS LTD.
BY: XXXXXXX ASSET MANAGEMENT CORP.
By: /S/ XXXXXXX X'XXXXX
------------------------------
Name: Xxxxxxx X'Xxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, each Investor and the Company have caused
their respective signature page to this Amended and Restated Registration Rights
Agreement to be duly executed as of the date first written above.
INVESTORS:
CEDAR HILL CAPITAL PARTNERS ONSHORE, LP
By: /S/ XXXXXXX XXXXXXXXXX
--------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Principal
IN WITNESS WHEREOF, each Investor and the Company have caused
their respective signature page to this Amended and Restated Registration Rights
Agreement to be duly executed as of the date first written above.
INVESTORS:
CEDAR HILL CAPITAL PARTNERS OFFSHORE, LTD.
By: /S/ XXXXXXX XXXXXXXXXX
-----------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Principal
SCHEDULE OF INVESTORS
INVESTOR'S ADDRESS INVESTOR'S REPRESENTATIVE'S
INVESTOR AND FACSIMILE NUMBER ADDRESS
-------- -------------------- AND FACSIMILE NUMBER
--------------------
CASTLERIGG MASTER INVESTMENTS LTD c/o Sandell Asset Management Corp. Xxxxxxx Xxxx & Xxxxx LLP
00 Xxxx 00xx Xxxxxx 000 Xxxxx Xxxxxx
00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000 Attn: Xxxxxxx Xxxxx, Esq.
Attention: Cem Hacioglu/Xxxxxxx Xxxxxxx Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000
CEDAR HILL CAPITAL PARTNERS 000 Xxxxx Xxxxxx, 00xx Floor Sadis & Xxxxxxxx LLP
ONSHORE, LP Xxx Xxxx, XX 00000 000 0xx Xxxxxx
Attention: Xxxxxxx Xxxxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000 Attention: Xxx Xxxxxxx, Esq.
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Residence: New York Telephone: (000) 000-0000
CEDAR HILL CAPITAL PARTNERS 000 Xxxxx Xxxxxx, 00xx Floor Sadis & Xxxxxxxx LLP
OFFSHORE. LTD Xxx Xxxx, XX 00000 000 0xx Xxxxxx
Attention: Xxxxxxx Xxxxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000 Attention: Xxx Xxxxxxx, Esq.
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Residence: Cayman Islands Telephone: (000) 000-0000
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
-------------------------------
OF REGISTRATION STATEMENT
-------------------------
First American Stock Transfer
000 X. Xxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Re: RAPTOR NETWORKS TECHNOLOGY, INC.
Ladies and Gentlemen:
[We are][I am] counsel to Raptor Networks Technology, Inc., a
Colorado corporation (the "COMPANY"), and have represented the Company in
connection with that certain Securities Purchase Agreement as amended by a
certain Amendment Agreement (the "PURCHASE AGREEMENT") entered into by and among
the Company and the investors named therein (collectively, the "HOLDERS")
pursuant to which the Company issued to the Holders convertible notes (the
"NOTES") convertible into the Company's common stock, $0.001 par value per share
(the "COMMON STOCK") and two series of warrants exercisable for shares of Common
Stock (the "WARRANTS"). Pursuant to the Purchase Agreement, the Company also has
entered into an Amended and Restated Registration Rights Agreement with the
Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the shares of Common Stock
issuable upon conversion of the Notes and the shares of Common Stock issuable
upon exercise of the Warrants, under the Securities Act of 1933, as amended (the
"1933 ACT"). In connection with the Company's obligations under the Registration
Rights Agreement, on ____________ ___, 200_, the Company filed a Registration
Statement on Form SB-2 (File No. 333-_____________) (the "REGISTRATION
Statement") with the Securities and Exchange Commission (the "SEC") relating to
the Registrable Securities which names each of the Holders as a selling
stockholder thereunder.
In connection with the foregoing, [we][I] advise you that a
member of the SEC's staff has advised [us][me] by telephone that the SEC has
entered an order declaring the Registration Statement effective under the 1933
Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and
[we][I] have no knowledge, after telephonic inquiry of a member of the SEC's
staff, that any stop order suspending its effectiveness has been issued or that
any proceedings for that purpose are pending before, or threatened by, the SEC
and the Registrable Securities are available for resale under the 1933 Act
pursuant to the Registration Statement.
This letter shall serve as our standing instruction to you
that the shares of Common Stock are freely transferable by the Holders pursuant
to the Registration Statement. You need not require further letters from us to
effect any future legend-free issuance or reissuance of shares of Common Stock
to the Holders as contemplated by the Company's Irrevocable Transfer Agent
Instructions dated _____________, 2007.
Very truly yours,
[ISSUER'S COUNSEL]
By:______________________________
CC: [LIST NAMES OF HOLDERS]
EXHIBIT B
SELLING STOCKHOLDERS
The shares of Common Stock being offered by the selling stockholders
are issuable upon conversion of the convertible notes and upon exercise of the
warrants. For additional information regarding the issuance of those convertible
notes and warrants, see "Private Placement of Convertible Notes and Warrants"
above. We are registering the shares of Common Stock in order to permit the
selling stockholders to offer the shares for resale from time to time. Except
for the ownership of the Convertible Notes and the Warrants issued pursuant to
the Securities Purchase Agreement, the selling stockholders have not had any
material relationship with us within the past three years.
The table below lists the selling stockholders and other information
regarding the beneficial ownership of the shares of Common Stock by each of the
selling stockholders. The second column lists the number of shares of Common
Stock beneficially owned by each selling stockholder, based on its ownership of
the convertible notes and warrants, as of ________, 200_, assuming conversion of
all convertible notes and exercise of the warrants held by the selling
stockholders on that date, without regard to any limitations on conversions or
exercise.
The third column lists the shares of Common Stock being offered by this
prospectus by the selling stockholders.
In accordance with the terms of registration rights agreement among the
Company and the selling stockholders, this prospectus covers the resale of (i) [
] shares of Common Stock issuable upon conversion of the convertible notes as of
the trading day immediately preceding the date the registration statement is
initially filed with the SEC and (ii) [ ] shares of Common Stock issuable upon
exercise of the related warrants as of the trading day immediately preceding the
date the registration statement is initially filed with the SEC. Because the
conversion price of the convertible notes and the exercise price of the warrants
may be adjusted, the number of shares that will actually be issued may be more
or less than the number of shares being offered by this prospectus. The fourth
column assumes the sale of all of the shares offered by the selling stockholders
pursuant to this prospectus.
Under the terms of the convertible notes and the warrants, a selling
stockholder may not convert the convertible notes or exercise the warrants to
the extent such conversion or exercise would cause such selling stockholder,
together with its affiliates, to beneficially own a number of shares of Common
Stock which would exceed 4.99% of our then outstanding shares of Common Stock
following such conversion or exercise, excluding for purposes of such
determination shares of Common Stock issuable upon conversion of the convertible
notes which have not been converted and upon exercise of the warrants which have
not been exercised. The number of shares in the second column does not reflect
this limitation. The selling stockholders may sell all, some or none of their
shares in this offering. See "Plan of Distribution."
MAXIMUM NUMBER OF SHARES
NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES
NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING
--------------------------- ----------------- --------------- --------------------
CASTLERIGG MASTER INVESTMENTS (1) 0
(1) Xxxxxxx Asset Management Corp. ("SAMC") is the investment manager
of Castlerigg Master Investments Ltd. ("Master"). Xxxxxx Xxxxxxx is the
sole-shareholder of SAMC and may be deemed to have voting and dispositive power
over the shares beneficially owned by Master. No other natural person has voting
or dispositive power over the shares being registered on behalf of Master.
Castlerigg International Ltd. ("Castlerigg International") is the controlling
shareholder of Castlerigg International Holdings Limited ("Holdings"). Holdings
is the controlling shareholder of Master. Each of Holdings and Castlerigg
International may be deemed to share beneficial ownership of the shares
beneficially owned by Castlerigg Master Investments. SAMC, Xx. Xxxxxxx, Holdings
and Castlerigg International each disclaims beneficial ownership of the
securities with respect to which indirect beneficial ownership is described.
PLAN OF DISTRIBUTION
We are registering the shares of Common Stock issuable upon conversion
of the convertible notes and upon exercise of the warrants to permit the resale
of these shares of Common Stock by the holders of the convertible notes and
warrants from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares of Common Stock. We will bear all fees and expenses incident to our
obligation to register the shares of Common Stock.
The selling stockholders may sell all or a portion of the shares of
Common Stock beneficially owned by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the
shares of Common Stock are sold through underwriters or broker-dealers, the
selling stockholders will be responsible for underwriting discounts or
commissions or agent's commissions. The shares of Common Stock may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions,
o on any national securities exchange or quotation service on
which the securities may be listed or quoted at the time of
sale;
o in the over-the-counter market;
o in transactions otherwise than on these exchanges or systems
or in the over-the-counter market;
o through the writing of options, whether such options are
listed on an options exchange or otherwise;
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o sales pursuant to Rule 144;
o broker-dealers may agree with the selling securityholders to
sell a specified number of such shares at a stipulated price
per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
If the selling stockholders effect such transactions by selling shares
of Common Stock to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling stockholders or
commissions from purchasers of the shares of Common Stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the shares of Common Stock or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of Common Stock in the course of hedging in
positions they assume. The selling stockholders may also sell shares of Common
Stock short and deliver shares of Common Stock covered by this prospectus to
close out short positions and to return borrowed shares in connection with such
short sales. The selling stockholders may also loan or pledge shares of Common
Stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge or grant a security interest in
some or all of the convertible notes, warrants or shares of Common Stock owned
by them and, if they default in the performance of their secured obligations,
the pledgees or secured parties may offer and sell the shares of Common Stock
from time to time pursuant to this prospectus or any amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933, as amended, amending, if necessary, the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also may
transfer and donate the shares of Common Stock in other circumstances in which
case the transferees, donees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus.
The selling stockholders and any broker-dealer participating in the
distribution of the shares of Common Stock may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of Common Stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount of shares of Common Stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
Under the securities laws of some states, the shares of Common Stock
may be sold in such states only through registered or licensed brokers or
dealers. In addition, in some states the shares of Common Stock may not be sold
unless such shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling stockholder will sell any or
all of the shares of Common Stock registered pursuant to the registration
statement, of which this prospectus forms a part.
The selling stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the shares of Common Stock by the selling
stockholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of Common
Stock to engage in market-making activities with respect to the shares of Common
Stock. All of the foregoing may affect the marketability of the shares of Common
Stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of Common Stock.
We will pay all expenses of the registration of the shares of Common
Stock pursuant to the registration rights agreement, estimated to be $125,000 in
total, including, without limitation, Securities and Exchange Commission filing
fees and expenses of compliance with state securities or "blue sky" laws;
provided, however, that a selling stockholder will pay all underwriting
discounts and selling commissions, if any. We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution. We may be indemnified by
the selling stockholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to us
by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreement, or we may be entitled
to contribution.
Once sold under the registration statement, of which this prospectus
forms a part, the shares of Common Stock will be freely tradable in the hands of
persons other than our affiliates.
