Contract
Exhibit 10.15
This
Registration Rights Agreement (this “Agreement”) is made
and entered into as of December 22, 2008, among Balqon Corporation, a Nevada
corporation (the “Company”), and the
purchasers signatory hereto (each such purchaser is a “Purchaser” and
collectively, the “Purchasers”).
This
Agreement is made in connection with the issuance of Shares and Warrants
pursuant to that certain Securities Purchase Agreement by and between the
Company and the Purchasers dated as of the date hereof (the “Securities Purchase
Agreement”).
The
Company and the Purchasers hereby agree as follows:
1.
Definitions. Capitalized
terms used and not otherwise defined herein that are defined in the Securities
Purchase Agreement shall have the meanings given such terms in the Securities
Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
“Advice” shall have
the meaning set forth in Section 6(d).
“Commission” means the
Securities and Exchange Commission.
“Cut-back” and “Cut-back Shares”
shall have the meanings set forth in Section 2(a).
“Effectiveness Period”
shall have the meaning set forth in Section 2(a).
“Filing Date” means,
with respect to the Registration Statement required hereunder, December 23,
2008.
“Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified Party”
shall have the meaning set forth in Section 5(c).
“Indemnifying Party”
shall have the meaning set forth in Section 5(c).
“Losses” shall have
the meaning set forth in Section 5(a).
“Merger” means that
certain merger transaction contemplated by the Merger Agreement.
“Plan of Distribution”
shall have the meaning set forth in Section 2(a).
“Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
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“Prospectus” means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities” means all of (i) the Shares, (ii) the Warrant Shares, and
(iii) any shares of Common Stock issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to the foregoing.
“Registration
Statement” means the registration statements required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration
statement.
“Rule 415” means Rule
415 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such rule.
“Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such rule.
“Selling Shareholder
Questionnaire” shall have the meaning set forth in
Section 3(a).
2.
Registration
Statement.
(a) On
or prior to the Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of 100% of the
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415; provided, however, that if the Commission takes the position that
the offering of some or all of the securities included in the Registration
Statement are not eligible to be made on a delayed or continuous basis under the
provisions of Rule 415, the Company shall amend the Registration Statement prior
to its effectiveness to remove from the Registration Statement such portion of
the Registrable Securities (the “Cut-back Shares”) and/or agree to such
restrictions and limitations on the registration and resale of the Registrable
Securities as the Commission may require to assure the Company’s compliance with
the requirements of Rule 415 (collectively, the “SEC
Restrictions”). In the event of a cut-back pursuant to this Section
2(a) (a “Cut Back”) and unless the SEC Restrictions require otherwise, the
registration of the Registrable Securities shall be subject to the priority of
registration of the securities covered by that certain Registration Rights
Agreement dated July 11, 2008, as amended (the “Priority Shares”), that certain
Registration Rights Agreement dated September 15, 2008 (the “Note Shares”), that
certain Registration Rights Agreements dated October 24, 2008 (the “Private
Placement Shares”), that certain Registration Rights Agreement dated October 24,
2008 (the “BMR Shares”) such that securities that are entitled to be included in
the registration shall first be allocated to the Priority Shares, second to the
Note Shares, third to the Private Placement Shares, fourth to the BMR Shares,
and fifth to the Registrable Securities. Any Cut-Back shall be
allocated among the Holders of Registrable Securities on a pro rata basis,
unless the SEC Restrictions require otherwise. In the event that
holders of securities, other than the Registrable Securities, the Priority
Shares, the Note Shares and the Private Placement Shares, are entitled to
registration rights (“Other Shares”), the securities that are entitled to be
included in the registration shall first be allocated to the Priority Shares,
second to the Note Shares, third to the Private Placement Shares, fourth to the
Registrable Securities on a pro rata basis and, thereafter, to the Other Shares,
subject to such allocation priorities as set forth in the registration rights
agreements for such Other Shares. The Registration Statement
shall contain the “Plan of Distribution”
section substantially in the form attached hereto as Annex A, with such
changes as are reasonably required to respond to any comments to such section by
the Commission and to comply with then applicable securities
laws. Subject to the terms of this Agreement, the Company shall use
its commercially reasonable efforts to cause such Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, and shall use its commercially reasonable efforts to keep such
Registration Statement continuously effective under the Securities Act until the
earlier of (A) the date that is two years after the date on which all the Shares
are issued to the Holders, (B) the date on which there ceases to be outstanding
any Registrable Securities, and (C) the date on which the Company receives an
opinion from its legal counsel to the effect that all Registrable Securities can
be freely traded without the continued effectiveness of a Registration Statement
(the “Effectiveness
Period”).
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(b) The
parties hereto agree that the Company will not be required to use a Registration
Statement for any registration in which securities of the Company are sold to an
underwriter for reoffering to the public, and the Company will in no event be
required to cooperate with or pay for any such underwritten
offering.
3.
Registration
Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:
(a) Not
less than three trading days prior to the filing of each Registration Statement
or any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall, (i) furnish to each Holder copies of the
“Principal and Selling Stockholders” and “Plan of Distribution” sections of such
Registration Statement, if such sections have been revised since the previous
filing of such Registration Statement or any amendment or supplement thereto,
which sections will be subject to the review of such Holders, and (ii) cause its
officers and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act. The Company shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities included in such
Registration Statement shall reasonably object in good faith, provided that, the
Company is notified of such objection in writing no later than two trading days
after the Holders have been so furnished copies of such documents. In
order to be included in such registration, each Holder agrees to furnish to the
Company a completed questionnaire substantially in the form attached to this
Agreement as Annex
B (a “Questionnaire”) not
less than three calendar days after written request therefore has been made by
the Company. The securities owned by any Holder who fails to timely
forward to the Company the completed Questionnaire shall be excluded from the
registration.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the Registrable Securities not subject to the Cut-Back for the
Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to a Registration Statement or any amendment thereto
and, upon written request by the Holders of at least 25% of the Registrable
Securities included in such Registration Statement, as promptly as reasonably
possible provide such Holders with true and complete copies of all material
written correspondence from and to the Commission relating to a Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during the applicable
period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Use
its commercially reasonable efforts to notify the Holders (which notice shall,
pursuant to clauses (ii) through (vi) hereof, be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible and (if requested by any Holder of at least
25% of the Registrable Securities included in a Registration Statement) confirm
such notice in writing (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement has been filed; (B) when
the Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus; provided that any and all of such information shall be
kept confidential by each Holder until such information otherwise becomes
public, unless disclosure by a Holder is required by law; provided, further,
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.
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(d) Use
its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Furnish
to each Holder, without charge, to the extent requested in writing by such
Holder, at least one conformed copy of each such Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to such Registration Statement (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(f) Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Holder may reasonably request in writing in
connection with resales by such Holder. Subject to the terms of this
Agreement, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving on any notice
pursuant to Section 3(c).
(g) Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.
(h) If
requested by a selling Holder, cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by applicable law, of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holder may
request.
(i)
Upon the occurrence of any event contemplated by this Section 3, as
promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and
its stockholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance
with clauses (ii) through (vi) of Section 3(c) above to suspend the use of any
Prospectus until the requisite changes to such Prospectus have been made, then
the Holders shall suspend use of such Prospectus. The Company will
use its commercially reasonable efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable. The Company shall be
entitled to exercise its right under this Section 3(i) to suspend the
availability of a Registration Statement and Prospectus for a period not to
exceed 40 trading days (which need not be consecutive days) in any 12 month
period.
(j)
Comply with all applicable rules and regulations of the Commission until the end
of the Effectiveness Period.
(k) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and the person who has voting and dispositive control over the such
shares. The Company shall have no obligation to keep a Prospectus
usable or to give notice that a Prospectus is not usable by a particular Holder,
and the Company will have no liability for, to the extent such Prospectus is not
usable by such Holder because current information with respect to such Holder is
not included therein because such Holder has not provided information to the
Company in accordance with Section 3(a) or this Section
3(k).
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(l)
Notwithstanding any provision of this Agreement to the contrary, it
shall not be a breach or violation of any obligation of the Company hereunder if
the Company fails to take any action otherwise required hereunder because, in
its reasonable determination, such action would require the Company to disclose
material, non-public information that the Company has a bona fide business or legal
reason for not disclosing regardless of whether the Company caused such
material, non-public information to exist.
4.
Registration
Expenses. All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the trading market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws reasonably agreed to by the Company in writing (including without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested in writing by the Holders),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the Holders of a majority of
the Registrable Securities included in a Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any trading market as required hereunder. In no event
shall the Company be responsible for any broker or similar commissions or,
except to the extent provided for in the Transaction Documents, any legal fees
or other costs of the Holders.
5.
Indemnification
(a) Indemnification by the
Company. The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (i) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved or was not objected to in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
each Holder has expressly approved Annex A hereto for this purpose) or (ii) in
the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d). The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding arising from
or in connection with the transactions contemplated by this Agreement of which
the Company is aware.
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(b) Indemnification by
Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless each other Holder, the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with the prospectus delivery requirements of the Securities
Act, or (y) in the case of an occurrence of an event of the type specified in
Section 3(c)(ii)-(vi), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(d) or (z) any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or such Prospectus or (ii) to the
extent that such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates
to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved or was not objected to in
writing by such Holder expressly for use in a Registration Statement (it being
understood that each Holder has expressly approved Annex A hereto for this
purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall reasonably believe that a material conflict of interest is likely to exist
if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such
Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten trading days following written notice thereof to
the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined based
upon the relative faults of the parties.
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(d) Contribution. If
the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount
of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, except
in the case of fraud by such Holder.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6.
Miscellaneous
(a) Remedies. In
the event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Piggyback on
Registrations. Neither the Company nor any of its security
holders may include securities of the Company in the initial Registration
Statement other than the Priority Shares, the Note Shares, the Registrable
Securities and the Other Shares.
(c) Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement.
(d) Discontinued
Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c), such Holder will
forthwith discontinue disposition of such Registrable Securities under a
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as
promptly as it practicable. The Company agrees and acknowledges that
any periods during which the Holder is required to discontinue the disposition
of the Registrable Securities hereunder shall be subject to the provisions of
Section 2(b).
7
(e) Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.
(f)
Notices. All notices
and other communications required or permitted to be provided to a party
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) or e-mail prior to 5:00 p.m. (Los
Angeles, California time) on a business day, (ii) the next business day after
the date of transmission, if such notice or communication is delivered via
facsimile or e-mail on a day that is not a business day or later than 4:59 p.m.
(Los Angeles, California time) on any business day, (iii) the business day
following the date of mailing, if sent overnight by an overnight courier service
nationally recognized in the United States, or (iv) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications for a party shall be as set forth on the signature pages to
the Securities Purchase Agreement or such other address as may be designated in
writing hereafter, in the same manner, by such party.
(g) Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign its rights or
obligations hereunder without the prior written consent of all of the Holders of
the then-outstanding Registrable Securities except in the case of a merger (or
similar transaction) in which case the surviving entity shall succeed to the
rights and obligations of the Company.
(h) No Inconsistent
Agreements. Neither the Company nor any of its subsidiaries
has entered, as of the date hereof, nor shall the Company or any of its
subsidiaries, during the period beginning on or after the date of this Agreement
and ending at the end of the Effectiveness Period, enter into any agreement with
respect to its securities without the prior written consent of all of the
Holders of the then-outstanding Registrable Securities, that would have the
effect of impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except for the
Registration Rights Agreement dated July 11, 2008, as amended, that certain
Registration Rights Agreement dated September 15, 2008 and that certain
Registration Rights Agreement between BMR and certain of its stockholders to be
consummated pursuant to the Merger Agreement, neither the Company nor any of its
subsidiaries has previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that have not been
satisfied in full.
(i)
Execution and
Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(j)
Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to
principles of conflicts of law thereof.
8
(k)
Cumulative
Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(l)
Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
(n) Independent Nature of
Holders’ Obligations and Rights. The obligations of each
Holder hereunder are several and not joint with the obligations of any other
Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any Proceeding for such purpose.
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.
| BALQON CORPORATION | ||||
|
|
By:
/s/ X. Xxxxx
|
|||
|
|
Name:
X. Xxxxx
Title:
President
|
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
9
[SIGNATURE
PAGE OF HOLDERS]
| Name of Holder: |
| Signature of Authorized Signatory of Holder: |
| Name of Authorized Signatory: |
| Title of Authorized Signatory: |
10
ANNEX
A
Plan of
Distribution
The
selling security holders may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or quoted in private transactions. These sales may
be at prevailing market prices at the time of sale, or at privately negotiated
prices. The selling security holders may use any one or more of the
following methods when selling shares of our common stock:
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
|
·
|
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;
|
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
·
|
privately
negotiated transactions;
|
|
|
·
|
short
sales;
|
|
|
·
|
broker-dealers
may agree with the selling security holders to sell a specified number of
such shares at a stipulated price per
share;
|
|
|
·
|
a
combination of any such methods of sale;
and
|
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling security holders may also sell shares of our common stock under Rule 144
under the Securities Act, if available, rather than under this
prospectus.
Broker-dealers
engaged by the selling security holders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or
discounts from the selling security holders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling security holders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved. Any profits on the resale of shares of common
stock by a broker-dealer acting as principal might be deemed to be underwriting
discounts or commissions under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, attributable to
the sale of shares will be borne by a selling security holder. The
selling security holders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares if
liabilities are imposed on that person under the Securities Act.
11
The
selling security holders may from time to time pledge or grant a security
interest in some or all of the 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 under
this prospectus after we have filed a supplement to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act supplementing or
amending the list of selling security holders to include the pledgee, transferee
or other successors in interest as selling stockholders under this
prospectus.
The
selling security holders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed a supplement to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act supplementing or amending the
list of selling security holders to include the pledgee, transferee or other
successors in interest as selling security holders under this
prospectus.
The
selling security holders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares of common stock purchased by them may be deemed to
be underwriting commissions or discounts under the Securities Act.
We are
required to pay all fees and expenses incident to the registration of the shares
of common stock. We have agreed to indemnify the selling security
holders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The
selling security holders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling security holder. If we are
notified by any selling security holder that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock, if
required, we will file a supplement to this prospectus. If the
selling security holders use this prospectus for any sale of the shares of
common stock, they will be subject to the prospectus delivery requirements of
the Securities Act.
The
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of our common stock and activities of the selling security
holders.
12
Annex
B
Selling
Securityholder Questionnaire
(attached
hereto)
YOU
MUST COMPLETE AND RETURN THE ATTACHED QUESTIONNAIRE TO
THE
COMPANY IN ORDER FOR YOUR REGISTRABLE SECURITIES TO BE
INCLUDED
IN THE REGISTRATION STATEMENT.
