ADDENDUM TO REGISTRATION RIGHTS AGREEMENT
ADDENDUM
TO REGISTRATION RIGHTS AGREEMENT
Reference
is made to that certain Registration Rights Agreement, dated as of May _, 2007
(the “Registration
Rights Agreement”),
among
MSTI Holdings, Inc., a Delaware corporation (the “Company”),
and
each of purchaser (each a “Purchaser”
and
collectively, the “Purchasers”)
of
Units (as defined in the Company’s Confidential Private Placement Memorandum
(the “PPM”)
dated
May 7, 2007, as supplemented to date). The Company hereby provides the following
Addendum (this “Addendum”)
to the
Registration Rights Agreement for the benefit of each Purchaser. Capitalized
terms used herein but not otherwise defined shall have the meanings ascribed
to
them in the Registration Rights Agreement or the PPM.
The
Company hereby covenants and agrees that notwithstanding anything to the
contrary contained in the Registration Rights Agreement, the Registration Rights
Agreement shall be, without any further action by the Purchasers or the Company,
amended such that the Purchasers shall receive the benefit of any more favorable
terms contained in that certain Registration Rights Agreement, dated as of
May
__, 2007, by and among the Company and the purchasers of the Company’s 8%
Secured Convertible Debentures due April 30, 2010, provided the Purchasers
shall
also agree to any further terms or conditions of such more favorable terms
as a
condition thereof. For the absence of doubt, the Registration Rights Agreement
shall provide the following further terms and provisions:
1. The
definition of “Effectiveness
Date”
is
hereby deleted and replaced with the following:
“Effectiveness
Date”
means,
with respect to the registration statement required to be filed hereunder,
the
120th calendar day following the date hereof; provided, however, that in the
event the Company is notified by the Commission that the registration statement
will not be reviewed or is no longer subject to further review and comments,
the
Effectiveness Date shall be the fifth Trading Day following the date on which
the Company is so notified if such date precedes the dates otherwise required
above.
2. The
definition of “Filing
Date”
is
hereby deleted and replaced with the following:
“Filing
Date”
means,
with respect to the initial registration statement required hereunder, the
60th
calendar day following the date hereof and, with respect to any additional
registration statements which may be required, the earliest practical date
on
which the Company is permitted by the Commission to file such additional
registration statement related to the Registrable Securities.
3. The
definition of “Registrable
Securities”
is
hereby deleted and replaced with the following:
“Registrable
Securities”
means (i)
all
of the shares of Common Stock issuable upon purchase of the Units, (ii) all
shares of Common Stock issuable upon exercise of the Warrants issued to a
purchaser of Units, (iii) any additional shares of Common Stock issuable in
connection with any anti-dilution provisions in the Addendum of Subscription
Agreement dated May __, 2007 or the Warrants (in each case, without giving
effect to any limitations on conversion set forth in the Warrants or limitations
on exercise set forth in the Warrants), and (iv) any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing.
4. The
liquidated damages provision set forth in Section 1.2(b) of the Registration
Rights Agreement is hereby deleted and replaced with the following:
Except
in
accordance with Section 1.9, if: (i) the registration statement is not filed
on
or prior to the Filing Date, or (ii) the Company fails to file with the
Commission a request for acceleration of the registration statement in
accordance with Rule 461 promulgated by the Commission pursuant to the
Securities Act, within five Trading Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that
such Registration Statement will not be “reviewed” or will not be subject to
further review, or (iii) prior to the effective date of the registration
statement, the Company fails to file a pre-effective amendment and otherwise
respond in writing to comments made by the Commission in respect of such
registration statement within 10 Trading Days after the receipt of comments
by
or notice from the Commission that such amendment is required in order for
the
registration statement to be declared effective, or (iv) as to, in the aggregate
among all Purchasers on a pro-rata basis based on their purchase of the
Registrable Securities pursuant to the Subscription Agreements, the registration
statement registering for resale all of the Registrable Securities is not
declared effective by the Commission by the Effectiveness Date, or (v) all
of
the Registrable Securities are not registered for resale pursuant to one or
more
effective registration statements on or before May ___, 2008, or (vi) after
the
effective date of the registration statement, the registration statement ceases
for any reason to remain continuously effective as to all Registrable Securities
included in the registration statement, or the Purchasers are otherwise not
permitted to utilize the prospectus therein to resell such Registrable
Securities, for more than 10 consecutive calendar days or more than an aggregate
of 15 calendar days (which need not be consecutive calendar days) during any
12-month period (any such failure or breach being referred to as an
“Event”,
and
for purposes of clause (i), (iv) and (v) the date on which such Event occurs,
and for purpose of clause (ii) the date on which such five Trading Day period
is
exceeded, and for purpose of clause (iii) the date which such 10 Trading Day
period is exceeded, and for purpose of clause (vi) the date on which such 10
or
15 calendar day period, as applicable, is exceeded being referred to as
“Event
Date”),
then,
in addition to any other rights the Purchasers may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of
each
such Event Date (if the applicable Event shall not have been cured by such
date)
until the applicable Event is cured, the Company shall pay to each Purchaser
an
amount in cash, as partial liquidated damages and not as a penalty, equal to
1.0% of the aggregate purchase price paid by such Purchaser pursuant to the
Subscription Agreements for any unregistered Registrable Securities then held
by
such Purchaser. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven days after the date payable,
the
Company will pay interest thereon at a rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the
Purchasers, accruing daily from the date such partial liquidated damages are
due
until such amounts, plus all such interest thereon, are paid in full. The
partial liquidated damages pursuant to the terms hereof shall apply on a daily
pro rata basis for any portion of a month prior to the cure of an
Event.
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5. The
following provision is hereby incorporated into the Registration Rights
Agreement:
Not
less
than five Trading Days prior to the filing of the registration statement and
not
less than one Trading Day prior to the filing of the 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 Purchaser copies of all such documents proposed to
be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of the Purchasers
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 each Purchaser, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the registration statement or any such prospectus or any
amendments or supplements thereto to which all of the Purchasers shall
reasonably object in good faith, provided that the Company is notified of such
objection in writing no later than 5 Trading Days after the Purchasers have
been
so furnished copies of the registration statement or 1 Trading Day after the
Purchasers have been so furnished copies of any related prospectus or amendments
or supplements thereto.
In
the
event of 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 the registration statement or any
prospectus, and the Company is required to provide such development or
information to any Purchaser, it shall do so provided that any and all of such
information shall remain confidential to each recipient thereof until such
information otherwise becomes public, unless disclosure by such person is
required by law; provided, further, that notwithstanding each agreement to
keep
such information confidential, the Purchasers make no acknowledgement that
any
such information is material, non-public information.
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6. The
following provision is hereby incorporated into the Registration Rights
Agreement:
If
during
the Effectiveness Period, the number of Registrable Securities at any time
exceeds 100% of the number of shares of Common Stock then registered in the
registration statement, then the Company shall file as soon as reasonably
practicable, but in any case prior to the applicable Filing Date, an additional
registration statement covering the resale by the Purchasers of not less than
the number of such Registrable Securities.
7. The
following provision is hereby incorporated into the Registration Rights
Agreement:
If,
at
any time during the Effectiveness Period, there is not an effective registration
statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans, then
the Company shall deliver to each Purchaser a written notice of such
determination and, if within fifteen days after the date of the delivery of
such
notice, any such Purchaser shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Purchaser requests to be registered; provided, however, that
the
Company shall not be required to register any Registrable Securities that are
eligible for resale pursuant to Rule 144(k) promulgated by the Commission
pursuant to the Securities Act or that are the subject of a then effective
registration statement.
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8. In
addition to the terms defined elsewhere in this Addendum, the following terms
shall have the meanings set forth in this Paragraph 8:
(a) “Trading
Day”
means
a
day on which the Common Stock is traded on the following markets or exchanges
on
which the Common Stock is listed or quoted for trading: the American Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin
Board.
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IN
WITNESS WHEREOF, the Company has executed this Addendum as of the __ day of
May
2007.
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MSTI
HOLDINGS, INC.
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| By: | ||
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Name:
Xxxxx Xxxxxxxxx
Title:
Chief Executive Officer
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