REGISTRATION RIGHTS AGREEMENT
Exhibit 10.2
Registration
Rights Agreement (the
“Agreement”), dated as of December 17, 2007, by and between Auriga
Laboratories, Inc., a corporation organized under the laws
of State of Delaware, with its principal executive office at 00000 Xxxxx Xxxxxx
Xxxx., Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the “Company”), and
Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted company, with
its principal office at 00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 0, Xxxxxx, XX 00000 (the
“Holder”).
Whereas, in
connection with the Investment Agreement by and between the Company and the
Investor of this date (the “Investment Agreement”), the Company has
agreed to issue and sell to the Investor an indeterminate number of shares
of
the Company’s Common Stock, $.001 par value per share (the “Common
Stock”), to be purchased pursuant to the terms and subject to the conditions
set forth in the Investment Agreement; and
Whereas, to
induce the Investor to execute and deliver the Investment Agreement, the Company
has 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, with respect to the shares of Common Stock issuable pursuant
to
the Investment Agreement.
Now
therefore, in consideration of the
foregoing promises and the mutual covenants contained hereinafter and other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Investor hereby agree as
follows:
Section
1. DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Execution
Date” means the date of this Agreement set forth above.
“Investor”
means Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted
company.
“Person”
means a corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
“Potential
Material Event” means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in
the
Registration Statement, which shall be evidenced by determinations in good
faith
by the Board of Directors of the Company that disclosure of such information
in
the Registration Statement would be detrimental to the business and affairs
of
the Company, or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in the Registration
Statement at such time, which determination shall be accompanied by a good
faith
determination by the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information.
“Principal
Market” shall mean The American Stock Exchange, National Association of
Securities Dealer’s, Inc., Over-the-Counter electronic bulletin board, the
Nasdaq National Market or The Nasdaq SmallCap Market whichever is the principal
market on which the Common Stock of the Company is listed.
“Register,”
“Registered,” and “Registration” refer to the Registration
effected by preparing and filing one (1) or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or
any
successor rule providing for offering securities on a continuous basis (“Rule
415”), and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the
“SEC”).
“Registrable
Securities” means (i) the shares of Common Stock issued or
issuable pursuant to the Investment Agreement, and (ii) any
shares of capital stock issued or issuable with respect to such shares of Common
Stock, if any, as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, which have not been (x)
included in the Registration Statement that has been declared effective by
the
SEC, or (y) sold under circumstances meeting all of the
applicable conditions of Rule 144 (or any similar provision then in force)
under
the 1933 Act.
“Registration
Statement” means the registration statement of the Company filed under the
1933 Act covering the Registrable Securities.
All
capitalized terms used in this Agreement and not otherwise defined herein shall
have the same meaning ascribed to them as in the Investment
Agreement.
Section
2. REGISTRATION.
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(a) The
Company shall, within fifteen (15) days of the date of this Agreement, file
with
the SEC the Registration Statement or Registration Statements (as is necessary)
on Form SB-2 (or, if such form is unavailable for such a registration, on such
other form as is available for such registration), covering the resale of all
of
the Registrable Securities, which Registration Statement(s) shall state that,
in
accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon stock splits, stock dividends or similar
transactions. The Company shall initially register for resale
15,000,000 shares of Common Stock which would be issuable on the date preceding
the filing of the Registration Statement based on the closing bid price of
the
Company’s Common Stock on such date and the amount reasonably calculated that
represents Common Stock issuable to other parties as set forth in the Investment
Agreement except to the extent that the SEC requires the share amount to be
reduced as a condition of effectiveness.
(b) The
Company shall use all commercially reasonable efforts to have the Registration
Statement(s) declared effective by the SEC within ninety (90) calendar days
after the Execution Date.
(c) The
Company agrees not to include any other securities in the Registration Statement
covering the Registrable Securities without Investor’s prior written consent
which Investor may withhold in its sole discretion. Furthermore, the Company
agrees that it will not file any other Registration Statement for other
securities, until thirty calendar days after the Registration Statement for
the
Registrable Securities is declared effective by the SEC.
Section
3. RELATED
OBLIGATIONS.
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At
such time as the Company is
obligated to prepare and file the Registration Statement with the SEC pursuant
to Section 2(a), the Company will effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
with respect thereto, the Company shall have the following
obligations:
(a) The
Company shall use all commercially reasonable efforts to cause such Registration
Statement relating to the Registrable Securities to become effective within
ninety (90) days after the Execution Date and shall keep such Registration
Statement effective until the earlier to occur of the date on which
(A) the Investor shall have sold all the Registrable
Securities; or (B) the Investor has no right to acquire any
additional shares of Common Stock under the Investment Agreement (the
“Registration Period”). The 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 light of the circumstances in which they were made, not misleading. The
Company shall use all commercially reasonable efforts to respond to all SEC
comments within seven (7) business days from receipt of such comments by the
Company. The Company shall use all commercially reasonable efforts to cause
the
Registration Statement relating to the Registrable Securities to become
effective no later than five (5) business days after
notice from the SEC that the Registration Statement may be declared
effective. The Investor agrees to provide all information which it is
required by law to provide to the Company, including the intended method of
disposition of the Registrable Securities, and the Company’s obligations set
forth above shall be conditioned on the receipt of such
information.
(b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the 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 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 Investor thereof as set forth in such Registration
Statement. In the event the number of shares of Common Stock covered
by the Registration Statement filed pursuant to this Agreement is at any time
insufficient to cover all of the Registrable Securities, the Company shall
amend
such Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30) calendar days after the necessity therefor arises (based
on
the then Purchase Price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely), assuming the Company has sufficient
authorized shares at that time, and if it does not, within thirty (30) calendar
days after such shares are authorized. The Company shall use
commercially reasonable efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof.
(c) The
Company shall make available to the Investor whose Registrable Securities are
included in any Registration Statement and its legal counsel without charge
(i) promptly after the same is prepared and filed with the SEC
at least one (1) copy of such Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, the prospectus included
in
such Registration Statement (including each preliminary prospectus) and, with
regards to such Registration Statement(s), any correspondence by or on behalf
of
the Company to the SEC or the staff of the SEC and any correspondence from
the
SEC or the staff of the SEC to the Company or its representatives;
(ii) upon the effectiveness of any Registration Statement, the
Company shall make available copies of the prospectus, via XXXXX, included
in
such Registration Statement and all amendments and supplements thereto; and
(iii) such other documents, including copies of any preliminary
or final prospectus, as the Investor may reasonably request from time to time
in
order to facilitate the disposition of the Registrable Securities.
(d) The
Company shall use commercially reasonable efforts to (i)
register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or “blue sky” laws of such states in the
United States as the Investor reasonably requests; (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(d), or
(y) subject itself to general taxation in any such
jurisdiction. The Company shall promptly notify the 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 actual notice of the
initiation or threatening of any proceeding for such purpose.
(e) As
promptly as practicable after becoming aware of such event, the Company shall
notify Investor in writing of the happening of any event as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(“Registration Default”) and use all diligent efforts to promptly prepare
a supplement or amendment to such Registration Statement and take any other
necessary steps to cure the Registration Default (which, if such Registration
Statement is on Form S-3, may consist of a document to be filed by the Company
with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act
(as
defined below) and to be incorporated by reference in the prospectus) to correct
such untrue statement or omission, and make available copies of such supplement
or amendment to the Investor. The Company shall also promptly notify the
Investor (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when the Registration Statement
or
any post-effective amendment has become effective (the Company will prepare
notification of such effectiveness which shall be delivered to the Investor
on
the same day of such effectiveness and by overnight mail), additionally, the
Company will promptly provide to the Investor, a copy of the effectiveness
order
prepared by the SEC once it is received by the Company; (ii) of
any request by the SEC for amendments or supplements to the Registration
Statement or related prospectus or related information, (iii)
of the Company’s reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate,
(iv) in the event the Registration Statement is no longer
effective, or (v) if the Registration Statement is stale as a
result of the Company’s failure to timely file its financials or otherwise. The
Company acknowledges that its failure to cure the Registration Default within
ten (10) business days will cause the Investor to suffer damages in an amount
that will be difficult to ascertain. Accordingly, the parties agree
that it is appropriate to include a provision for liquidated
damages. The parties acknowledge and agree that the liquidated
damages provision set forth in this section represents the parties’ good faith
effort to quantify such damages and, as such, agree that the form and amount
of
such liquidated damages are reasonable and will not constitute a
penalty. It is the intention of the parties that interest payable
under any of the terms of this Agreement shall not exceed the maximum amount
permitted under any applicable law. If a law, which applies to this Agreement,
which sets the maximum interest amount, is finally interpreted so that the
interest in connection with this Agreement exceeds the permitted limits, then:
(1) any such interest shall be reduced by the amount necessary
to reduce the interest to the permitted limit; and (2) any sums
already collected (if any) from the Company which exceed the permitted limits
will be refunded to the Company. The Investor may choose to make this
refund by reducing the amount that the Company owes under this Agreement or
by
making a direct payment to the Company. If a refund reduces the
amount that the Company owes the Investor, the reduction will be treated as
a
partial payment.
(f) The
Company shall use all commercially reasonable efforts to prevent the issuance
of
any stop order or other suspension of effectiveness of the
Registration Statement, or the suspension of 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 the Investor holding
Registrable Securities being sold of the issuance of such order and
the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding concerning the effectiveness of the
registration statement.
(g) The
Company shall permit the Investor and one (1) legal counsel, designated by
the
Investor, to review and comment upon the Registration Statement and all
amendments and supplements thereto at least one (1) calendar day prior to their
filing with the SEC. However, any postponement of a filing of a
Registration Statement or any postponement of a request for acceleration or
any
postponement of the effective date or effectiveness of a Registration Statement
by written request of the Investor (collectively, the "Investor's Delay") shall
not act to trigger any penalty of any kind, or any cash amount due or any
in-kind amount due the Investor from the Company under any and all agreements
of
any nature or kind between the Company and the Investor. The event(s)
of an Investor's Delay shall act to suspend all obligations of any kind or
nature of the Company under any and all agreements of any nature or kind between
the Company and the Investor.
(h) At
the request of the Investor, the Company's counsel shall furnish to the Investor
an opinion letter confirming the effectiveness of the registration
statement. Such opinion letter shall be issued as of the date of the
effectiveness of the registration statement and be in a form suitable to the
Investor.
(i) The
Company shall hold in confidence and not make any disclosure of information
concerning the Investor unless (i) disclosure of such
information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is 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 the Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to the Investor and allow the
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order covering such
information.
(j) The
Company shall use all commercially reasonable efforts to maintain designation
and quotation of all the Registrable Securities covered by any Registration
Statement on the Principal Market. If, despite the Company’s
commercially reasonable efforts, the Company is unsuccessful in satisfying
the
preceding sentence, it shall use commercially reasonable efforts to cause all
the Registrable Securities covered by any Registration Statement to be listed
on
each other national securities exchange and automated quotation system, if
any,
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 system. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).
(k) The
Company shall cooperate with the Investor to facilitate the prompt preparation
and delivery of certificates representing the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates
to
be in such denominations or amounts, as the case may be, as the Investor may
reasonably request (and after any sales of such Registrable Securities by the
Investor, such certificates not bearing any restrictive legend).
(l) The
Company shall provide a transfer agent for all the Registrable Securities not
later than the effective date of the first Registration Statement filed pursuant
hereto.
(m) If
requested by the Investor, the Company shall (i) as soon as
reasonably practical incorporate in a prospectus supplement or post-effective
amendment such information as the Investor reasonably determines should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement
or
post-effective amendment as soon as reasonably possible after being notified
of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by the Investor.
(n) The
Company shall use all commercially reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be
necessary to facilitate the disposition of such Registrable
Securities.
(o) The
Company shall otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.
(p) Within
one (1) business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver to the
transfer agent for such Registrable Securities, with copies to the Investor,
confirmation that such Registration Statement has been declared effective by
the
SEC.
(q) The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Securities pursuant to
the
Registration Statement.
Section
4. OBLIGATIONS OF THE INVESTOR.
(a) At
least five (5) calendar days prior to the first anticipated filing date of
the
Registration Statement the Company shall notify the Investor in
writing of the information the Company requires from the Investor for the
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 and the Investor agrees
to
furnish to the Company that information regarding itself, the Registrable
Securities and the intended method of disposition of the Registrable Securities
as shall reasonably be required to effect the registration of such Registrable
Securities and the Investor shall execute such documents in connection with
such
registration as the Company may reasonably request. The Investor
covenants and agrees that, in connection with any sale of Registrable Securities
by it pursuant to the Registration Statement, it shall comply with the “Plan of
Distribution” section of the then current prospectus relating to such
Registration Statement.
(b) The
Investor, by its 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 the
Investor has notified the Company in writing of an election to exclude all
of
the Investor’s Registrable Securities from such Registration
Statement.
(c) The
Investor agrees that, upon receipt of written notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until the Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e).
Section
5. EXPENSES OF
REGISTRATION.
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All
expenses, other than underwriting
discounts and commissions and other than as set forth in the Investment
Agreement, incurred in connection with registrations including comments, filings
or qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printing and accounting
fees,
and fees and disbursements of counsel for the Company or for the Investor shall
be paid by the Company.
Section
6. INDEMNIFICATION.
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In
the event any Registrable Securities
are included in the Registration Statement under this Agreement:
(a) To
the
fullest extent permitted by law, the Company, under this Agreement, will, and
hereby does, indemnify, hold harmless and defend the Investor who holds
Registrable Securities, the directors, officers, partners, employees, counsel,
agents, representatives of, and each Person, if any, who controls, any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of 1934,
as
amended (the “1934 Act”) (each, an “Indemnified Person”), against
any losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, 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 the 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 the Investor has requested in
writing that the Company register or qualify the Shares (“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,
in
light of the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue
statement of a material fact 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 light of the
circumstances under which the statements therein were made, not misleading,
or
(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 the Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”). Subject to the restrictions set forth in
Section 6(c) the Company shall reimburse the Investor and each such controlling
person, promptly as such expenses are incurred and are due and payable, for
any
reasonable 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
arising out of or based upon a Violation which is due to the inclusion in the
Registration Statement of the information furnished to the Company by any
Indemnified Person expressly for use in connection with the preparation of
the
Registration Statement or any such amendment thereof or supplement thereto;
(ii) shall not be available to the extent such Claim is based
on (a) a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company or (b)
the Indemnified Person’s use of an incorrect prospectus despite being promptly
advised in advance by the Company in writing not to use such incorrect
prospectus; (iii) any claims based on the manner of
sale of the Registrable Securities by the Investor or of the Investor’s failure
to register as a dealer under applicable securities laws; (iv)
any omission of the Investor to notify the Company of any material fact that
should be stated in the Registration Statement or prospectus relating to the
Investor or the manner of sale; and (v) any 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. 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 resale of the Registrable Securities by the
Investor pursuant to the Registration Statement.
(b) In
connection with any Registration Statement in which Investor is participating,
the Investor agrees to severally and 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, each Person, if any, who controls
the Company within the meaning of the 1933 Act or the 1934 Act and the Company’s
agents (collectively and together with an Indemnified Person, 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 is due
to
the inclusion in the Registration Statement of the written information furnished
to the Company by the Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(c), the Investor will
reimburse any legal or other expenses reasonably incurred by them 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 the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall only be liable
under this Section 6(b) for 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 resale of the Registrable Securities by the Investor
pursuant to the Registration Statement. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of
any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus were corrected on a timely basis in the
prospectus, as then amended or supplemented. This indemnification
provision shall apply separately to each Investor and liability hereunder shall
not be joint and several.
(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 to
be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the Indemnified Person or Indemnified Party, the representation
by
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. The indemnifying
party shall pay for only one (1) separate legal counsel for the Indemnified
Persons or the Indemnified Parties, as applicable, and such counsel shall be
selected by the Investor, if the Investor is entitled to indemnification
hereunder, or the Company, if the Company is entitled to indemnification
hereunder, as applicable. 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 fully 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
affected without its written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the 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. 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
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.
Section
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 contribution
shall be made under circumstances where the maker would not have been liable
for
indemnification under the fault standards set forth in Section 6;
(ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall
be
entitled to contribution from any seller of Registrable Securities who was
not
guilty of fraudulent misrepresentation; and (iii) 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.
Section
8.
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REPORTS
UNDER THE 1934 ACT.
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With
a view to making available to the
Investor 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 Investor
to sell securities of the Company to the public without registration (“Rule
144”), provided that the Investor holds any Registrable Securities are
eligible for resale under Rule 144 (k), 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 (it being understood that nothing herein shall
limit the Company’s obligations under Section 5(c) of the Investment Agreement)
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
(c) furnish
to the Investor, promptly upon request, (i) a written statement
by the Company 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 Investor to sell such securities
pursuant to Rule 144 without registration.
Section
9. NO ASSIGNMENT OF REGISTRATION RIGHTS.
The
rights and obligations under this
Agreement shall not be assignable.
Section
10. AMENDMENT OF REGISTRATION RIGHTS.
The
provisions of this Agreement may be
amended only with the written consent of the Company and Investor.
Section
11. MISCELLANEOUS.
(a) Any
notices or other communications required or permitted to be given under the
terms of this Agreement that must be in writing will be deemed to have been
delivered (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided
a
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) 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:
00000
Xxxxx Xxxxxx Xxxx.
Xxxxx
000
Xxx
Xxxxxxx, XX
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If
to the
Investor:
Dutchess
Private Equities Fund,
Ltd.
00
Xxxxxxxxxxxx Xxx, Xxxxx
0
Xxxxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
Each
party shall provide five (5)
business days prior notice to the other party of any change in address, phone
number or facsimile number.
(b) 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.
(c) This
Agreement and the Transaction Documents 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.
(d) This
Agreement and the Transaction Documents supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(e)
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof. Whenever
required by the context of this Agreement, the singular shall include the plural
and masculine shall include the feminine. This Agreement shall not be
construed as if it had been prepared by one of the parties, but rather as if
all
the parties had prepared the same.
(f) This
Agreement may be executed in two or more 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.
(g) 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 the 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.
(h)
In case any provision of this Agreement is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it
is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Agreement will not in any way be affected
or
impaired thereby.
Section
12. DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS
LAW
All
disputes arising under this
agreement shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, without regard to principles of conflict
of
laws. The parties to this agreement will submit all disputes arising
under this agreement to arbitration in Boston, Massachusetts before a single
arbitrator of the American Arbitration Association (“AAA”). The
arbitrator shall be selected by application of the rules of the AAA, or by
mutual agreement of the parties, except that such arbitrator shall be an
attorney admitted to practice law in the Commonwealth of
Massachusetts. No party to this agreement will challenge the
jurisdiction or venue provisions as provided in this section. Nothing
contained herein shall prevent the party from obtaining an
injunction.
*.*.*
SIGNATURE
PAGE OF REGISTRATION RIGHTS AGREEMENT
Your
signature on this Signature Page evidences your agreement to be bound by the
terms and conditions of the Investment Agreement and the Registration Rights
Agreement as of the date first written above.
The
undersigned signatory hereby certifies that he has read and understands the
Registration Rights Agreement, and the representations made by the undersigned
in this Registration Rights Agreement are true and accurate, and agrees to
be
bound by its terms.
DUTCHESS
PRIVATE EQUITIES FUND,
LTD.,
By:
_________________________________
Xxxxxxx
X. Xxxxxxxx, Director
By:
__________________________________
Xxxxxx
X. Xxxxx, CEO
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