REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.1
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of January 30, 2007, by and between American Telecom
Services, Inc., (the “Company”),
and
each purchaser of securities of the Company pursuant to a Subscription Agreement
(as defined below) (each a “Purchaser”
and
collectively, the “Purchasers”),
a
list of which is attached hereto as Annex
A.
This
Agreement is made pursuant to Subscription Agreements by and between the Company
and each Purchaser (the “Subscription
Agreement”),
submitted in accordance with and subject to the terms and conditions described
in the Subscription Agreement, including all documents incorporated by reference
therein and all attachments, schedules and exhibits thereto, relating to the
offering (the “Offering”)
by the
Company (i)
of
its 8% Series A Cumulative Convertible Preferred Stock, par value $0.001 per
share (the “Preferred
Stock”)
and
(ii) warrants (each a “Warrant”
and
collectively the “Warrants”)
to
purchase shares of the Company’s common stock, par value $0.001 (the
“Common
Stock”).
The
Conversion Shares and the Warrant Shares have the registration rights as set
forth herein.
The
Company and the Purchasers hereby agree as follows:
1. Definitions. Capitalized
terms used but not otherwise defined in this Agreement shall have the meanings
assigned to such terms in the Certificate of Designation (as defined below).
As
used in this Agreement, the following terms shall
have the following meanings:
“Agreement”
shall
have the meaning set forth in the preamble.
“Certificate
of Designation”
means
the Certificate of Designation heretofore filed by the Company with the
Secretary of State of the State of Delaware setting forth the designations
and
the powers, preferences and rights, and the qualifications, limitations and
restrictions, of the Preferred Stock.
“Closing
Date”
shall
mean the initial closing of the Offering.
“Commission”
means
the United States Securities and Exchange Commission.
“Common
Stock”
shall
have the meaning set forth in the preamble.
“Company”
shall
have the meaning set forth in the preamble.
“Conversion
Shares”
means
shares of Common Stock issuable upon conversion of the Preferred Stock,
including any such shares issued in respect of accumulated but unpaid dividends
on the Preferred Stock.
“Effective
Date”
shall
mean the date on which the Shelf Registration Statement shall have been declared
effective by the Commission.
“Effectiveness
Period”
shall
have the meaning set forth in Section
2(a).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Filing
Date”
shall
mean no later than sixty (60) days after the Closing Date.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities (including any permitted assignee).
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Lockup
Commencement Date”
means
the Effective Date.
“Lockup
Period”
means
the period commencing on the Lockup Commencement Date and ending at the Lockup
Termination Time.
“Lockup
Termination Time”
means
4:00 pm, New York City time, on the 90th
day
following the Lockup Commencement Date.
“Losses”
shall
have the meaning set forth in Section 5(a).
“Offering”
shall
have the meaning set forth in the preamble.
“Person”
shall
mean an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Piggyback
Registration”
shall
have the meaning set forth in Section
2(b).
“Placement
Agent”
shall
mean Northeast Securities, Inc.
“Placement
Agent’s Warrants”
shall
mean those warrants issuable to the Placement Agent in connection with the
Offering.
“Preferred
Stock”
shall
have the meaning set forth in the preamble.
“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.
“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 the 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.
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“Purchaser”
shall
have the meaning set forth in the preamble.
“Registrable
Securities”
means
(i) the Conversion Shares, (ii) the Warrant Shares and (iii) any shares of
Common Stock or other capital stock issued or issuable upon any stock split,
dividend or other distribution, recapitalization, share exchange, anti-dilution
adjustment or similar event with respect to the foregoing or otherwise issuable
in respect of the Preferred Stock and/or the Warrants pursuant to any provisions
of the Warrants and/or the Certificate of Designation.
“Registration
Statement”
means
any registration statement required to be filed hereunder (which, at the
Company's option, may be an existing registration statement of the Company
previously filed with the Commission, but not declared effective), including
(in
each case) the Prospectus, amendments and supplements to the 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 the registration statement.
“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
effect as such Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Shelf
Registration Statement”
shall
have the meaning set forth in Section
2(a).
“Subscription
Agreement”
shall
have the meaning set forth in the preamble.
“Underwritten
Secondary Offering”
shall
have the meaning set forth in Section
2(c).
“Warrants”
shall
have the meaning set forth in the preamble.
“Warrant
Shares”
means
all
shares of Common Stock issuable upon exercise of the Warrants and the Placement
Agent’s Warrants, respectively.
2. Registration.
(a) Mandatory
Registration.
No later
than the Filing Date, the Company shall prepare and file with the Commission
a
Registration Statement covering the resale of all of the Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415 (a
“Shelf
Registration Statement”).
The
Shelf Registration Statement required hereunder shall be on Form S-1 or Form
S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-1 or Form S-3, in which case the Shelf
Registration Statement shall be on another appropriate form in accordance
herewith). The Shelf Registration Statement required hereunder shall contain
the
Plan of Distribution, attached hereto as Annex
B
(which
may be modified to respond to comments, if any, received by the Commission).
The
Company shall use its best efforts to cause the Shelf Registration Statement
to
be declared effective one hundred twenty
(120)
days following the Closing Date.
The
Company shall use its best efforts to keep the Shelf Registration Statement
continuously effective under the Securities Act until the
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earlier
date when all Registrable Securities (i) have been sold pursuant to the Shelf
Registration Statement or an exemption from the registration requirements of
the
Securities Act and (ii) five (5) years from the Effective Date (the
“Effectiveness
Period”).
If the
Shelf Registration Statement does not become effective within 180 days following
the Closing Date or, once it becomes effective, such effectiveness is thereafter
suspended at any time, the Effectiveness Period shall be increased by the number
of days during which the Shelf Registration Statement is not effective. Other
than Registrable Securities held by a Holder, no other securities of the Company
may be included in the Shelf Registration Statement, without the prior written
consent of Holders of a majority in interest of Registrable
Securities.
(b) Piggyback
Registrations Rights.
If 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 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 stock option or other employee benefit
plans) (a “Piggyback
Registration”)
at a
time when no Shelf Registration Statement is effective (whether during or after
the Effectiveness Period), then the Company shall send to each Holder a written
notice of such determination at least twenty (20) days prior to the filing
of
any such Registration Statement and shall include in such Registration Statement
all Registrable Securities; provided,
however,
that
(i) if, at any time after giving written notice of is intention to register
any
securities and prior to the effective date of the Registration Statement filed
in connection with such Piggyback Registration, the Company determines for
any
reason not to proceed with such Piggyback Registration, the Company will be
relieved of its obligation to register any Registrable Securities in connection
with such Piggyback Registration and (ii) in case of a determination by the
Company to delay such Piggyback Registration, the Company will be permitted
to
delay the registration of Registrable Securities for the same period as the
delay in registering the other securities to be registered in such Piggyback
Registration. If the Piggyback Registration involves an underwritten offering
of
securities and the underwriters advise the Company in writing (with a copy
to
each Holder of Registrable Securities who has requested to the inclusion of
such
securities in such offering) that, in its opinion, the amount of Registrable
Securities requested to be included in such Piggyback Registration would
materially adversely affect such offering, or the timing thereof, then the
Company will include in such registration, to the extent of the amount and
class
which the Company is so advised can be sold without such material adverse effect
in such offering: First, all securities proposed to be sold by the Company
for
its own account; second, the Registrable Securities requested to be included
in
such registration pursuant to this Section 2(b) and all other securities being
registered pursuant to the exercise of contractual rights comparable to the
rights granted in this Section 2(b), pro rata based on the estimated gross
proceeds from the sale thereof; and third all other securities requested to
be
included in such registration. Each Holder of Registrable Securities shall
be
entitled to have its Registrable Securities included in an unlimited number
of
Piggyback Registrations pursuant to this Section 2(b).
(c) If
the
Holders of Registrable Securities notify the Company that they intend to effect
an underwritten offering of Registrable Securities pursuant to the Shelf
Registration Statement (an “Underwritten
Secondary Offering”),
the
Company shall not file or
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cause
to
be effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of 90 days has elapsed from the commencement of such underwritten
offering.
3. Registration
Procedures.
Whenever
required under Section 2 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as practicable:
(a) Not
less
than five (5) business days prior to the filing of the Registration Statement
or
any related Prospectus or any amendment or supplement thereto, furnish to each
Holder, a draft of the Registration Statement, or any related Prospectus or
any
amendment or supplement thereto.
(b) (i)
Use
its best efforts to prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith continuously effective during the
applicable offering period (and, in the case of the Shelf Registration Statement
as may be necessary to keep the Registration Statement continuously effective
as
to the applicable Registrable Securities during the Effectiveness Period);
(ii)
use its best efforts to cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; and (iii) respond to any comments
received from the Commission with respect to the Registration Statement or
any
amendment thereto.
(c) Notify
as
promptly as reasonably possible, but no later than one (1) business day, each
Holder of Registrable Securities included in the Registration Statement: (i)
(A)
when a Prospectus or any Prospectus supplement or post-effective amendment
to
the Registration Statement has been filed, provided
such
Holder has previously requested in writing to receive notice of such filing;
(B)
when the Commission notifies the Company whether there will be a “review” of the
Registration Statement and whenever the Commission comments in writing on the
Registration Statement, provided
such
Holder has previously requested in writing to receive notice of such
notification (and the Company shall upon written request from any Holder,
provide to such Holder, true and complete copies of such comments and all
written responses thereto, subject, if appropriate, to the execution by such
Holder of a confidentiality agreement in form acceptable to the Company); and
(C) when the Registration Statement or any post-effective amendment has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the 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 the 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
of
any Proceeding for such purpose; and (v) of the occurrence of any event or
passage of time that makes the financial statements included in the Registration
Statement ineligible for inclusion therein or any statement made in
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the
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 the Registration Statement, Prospectus or other
documents so that, in the case of the 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.
(d) Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of
(i) any order suspending the effectiveness of the 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) Promptly
deliver to each Holder no later than five (5) business days after the Effective
Date, without charge, two (2) copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto
(and, upon the request of the Holder such additional copies as such Persons
may
reasonably request in connection with resales by the Holder of Registrable
Securities). The Company hereby consents to the use of such Prospectus and
each
amendment or supplement thereto by the Holder 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 of any notice pursuant
to Section 3(c).
(f) Prior
to
any resale of Registrable Securities by a Holder, use its best 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 the State of New York and such additional
jurisdictions within the United States as such Holder may reasonably request,
to
use its best efforts to keep such registration or qualification (or exemption
therefrom) effective during the applicable offering period (or, in the case
of
the Shelf Registration Statement, during the Effectiveness Period) and to use
its best efforts to do any and all other acts or things reasonably necessary
to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided,
however,
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.
(g) Upon
the
occurrence of any event contemplated by Section 3(c)(v),
as
promptly as reasonably possible, use its best efforts to prepare a supplement
or
amendment, including a post-effective amendment, to the 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 the 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.
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(h) Use
its
best efforts to comply with all applicable rules and regulations of the
Commission relating to the registration of the Registrable Securities pursuant
to the Registration Statement or otherwise.
(i) The
Company shall either (a) use its best efforts to cause all the Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (b) use its best efforts to
secure designation and quotation of all the Registrable Securities covered
by
the Registration Statement on the Nasdaq National Market or the Nasdaq SmallCap
Market, or, (c) if the Company is unsuccessful in satisfying the preceding
clauses (a) or (b), the Company shall use its best efforts to secure the
inclusion for quotation on The American Stock Exchange, Inc. or if it is unable
to, to use best efforts to provide for the Registrable Securities to trade
on
the OTC Bulletin Board, without limiting the generality of the foregoing, to
use
best efforts to secure at least two (2) market makers to register with the
National Association of Securities Dealers, Inc. (“NASD”)
as
such with respect to such Registrable Securities. The Company shall pay all
fees
and expenses in connection with satisfying its obligation under this
Section 3(h).
(j) The
Company covenants that it shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder so long as the Holder owns any Registrable
Securities, but in no event longer than two (2) years; provided,
however,
the
Company may delay any such filing but only pursuant to Rule 12b-25 under
the Exchange Act, and the Company shall take such further reasonable action
as
the Holder may reasonably request (including, without limitation, promptly
obtaining any required legal opinions from Company counsel necessary to effect
the sale of Registrable Securities under Rule 144 and paying the related
fees and expenses of such counsel), all to the extent required from time to
time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder of Registrable
Securities, the Company will deliver to such Holder a written statement as
to
whether it has complied with such requirements.
(k) In
the
event of any underwritten or agented offering, enter into and perform the
Company’s obligations under an underwriting or agency agreement (including
indemnification and contribution obligations of underwriters or agents), in
usual and customary form, with the managing underwriter or underwriters of
or
agents for such offering. The Company shall also cooperate with the selling
Holders and the underwriters or placement agent for such offering in the
marketing of the Registrable Securities, including making available the
Company’s officers, accountants, counsel, premises, books and records for such
purpose, but the Company shall not be required to incur any material
out-of-pocket expense pursuant to this sentence.
(l) Make
available for inspection by any selling Holder, any underwriter or placement
agent participating in such offering and the representatives of such selling
Holder and underwriter or placement agent (but not more than one firm of counsel
to such selling Holders),
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all
financial and other information as shall be reasonably requested by them, and
provide the selling Holder, any underwriter or placement agent participating
in
such offering and the representatives of such selling Holder and underwriter
or
placement agent the opportunity to discuss the business affairs of the Company
with its principal executives and independent public accountants who have
certified the audited financial statements included in such registration
statement, in each case all as necessary to enable them to exercise their due
diligence responsibility under the Securities Act; provided, however, that
information that the Company determines, in good faith, to be confidential
and
which the Company advises such Person in writing, is confidential shall not
be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company or the related selling Holder of Registrable
Securities agrees to be responsible for such Person’s breach of confidentiality
on terms reasonably satisfactory to the Company.
(m) If
so
requested by a majority in interest of the selling Holders, use the Company’s
best efforts to obtain a so-called “comfort letter” from its independent public
accountants, and legal opinions of counsel to the Company addressed to the
selling Holders, in customary form and covering such matters of the type
customarily covered by such letters, and in a form that shall be reasonably
satisfactory to the selling Holders. The Company shall furnish to each selling
Holder a signed counterpart of any such comfort letter or legal opinion.
Delivery of any such opinion or comfort letter shall be subject to the recipient
furnishing such written representations or acknowledgements as are customarily
provided by selling shareholders who receive such comfort letters or opinions.
(n) Take
such
other actions as are reasonably required in order to expedite or facilitate
the
disposition of Registrable Securities included in each such
registration.
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 the Registration
Statement, other discounts and commissions with respect to the sale of any
Registrable Securities by the Holders. 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), (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 the
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv)
fees and disbursements of (A) counsel for the Company and (B) one counsel for
the selling Holders, (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.
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless the Holder, the officers,
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directors,
agents and employees of it, each Person who controls the 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 (including the
cost
(including without limitation, reasonable attorneys’ fees) and expenses relating
to an Indemnified Party’s actions to enforce the provisions of this Section
5)
(collectively, “Losses”),
as
incurred, to the extent arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the 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 (1) 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 in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form
of
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has approved Annex A hereto for this purpose), (2) in the case of
an
occurrence of an event of the type specified in Section 3(c)(ii)-(v),
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
7(a),
(3) the
failure of the Holder to deliver a prospectus prior to the confirmation of
a
sale, or (4) caused by actions of or due to statements provided by the Holder’s
broker, underwriter or other adviser engaged by Holder. The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions contemplated
by this Agreement.
(b) Indemnification
by Holder.
The
Holder shall indemnify and hold harmless 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 upon 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 to
the
extent, but only to the extent, that (1) such untrue statement or omission
is
contained in any information so furnished in writing by or on behalf of such
Holder to the Company specifically for inclusion in the Registration Statement
or such Prospectus or (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v),
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 7(a).
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(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 such failure shall have materially
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 have been advised
by counsel that a 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 for all Indemnified
Parties in any matters related on a factual basis shall be at the expense of
the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding affected 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.
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 no later than
ten
(10) business days of written notice thereof to the Indemnifying
Party.
(d) Contribution.
If a
claim for indemnification under Section 5(a)
or
Section
5(b)
is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative 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
-10-
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 Section 5(c),
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.
6. Lock-Up
Agreements.
The
Company hereby covenants and agrees that it shall, no later than the Effective
Date, cause each of its officers and directors (and each Person that
beneficially owns 5% or more of the outstanding Common Stock of the Company,
to
the extent that such Person is an Affiliate of any such officer or director)
(collectively, the “Insiders”) to enter into a “lock-up letter” (a “Lockup
Letter”) pursuant to which each such Insider shall undertake not to offer to
sell, contract to sell, or otherwise sell or dispose of (collectively, a
“Disposition”) any shares of Common Stock during the Lockup Period; provided,
however, notwithstanding the foregoing, during the Lockup Period, the Insiders
(on a collective basis) shall be permitted to effect Dispositions involving
up
to an aggregate of two percent (2%) of the number of shares of Common Stock
issued and outstanding on the Lockup Commencement Date, and the Lockup Letter
shall contain language to this effect. Each Lockup Letter shall be for the
benefit of the Purchasers and the Purchasers shall be deemed to be third-party
beneficiaries of each Lockup Letter.
7. Miscellaneous.
(a) Discontinued
Disposition.
The
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 the 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 may provide appropriate stop orders to
enforce the provisions of this paragraph.
(b) 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 each Holder of the then outstanding Registrable
Securities.
(c) Notices.
Any
and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the Trading Day following the date of delivery to the
courier service, if sent by nationally recognized overnight courier service,
(ii) the third Trading Day
-11-
following
the date of mailing, if sent by first-class, registered or certified mail,
postage prepaid, (iii) the Trading Day following transmission by electronic
mail
with receipt confirmed or acknowledged, or (iv) upon actual receipt by the
party
to whom such notice is required to be given. The address for such notices and
communications shall be delivered and addressed as set forth in the Subscription
Agreement or to such other address as shall be designated in writing from time
to time by a party hereto.
(d) 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
the
Holder. Any Holder may assign its rights under this Agreement in whole or in
part to any transferee of any Registrable Securities held by such
Holder.
(e) 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.
(f) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without regard to the conflicts of laws principles
thereof. The parties hereto hereby irrevocably agree that any suit or proceeding
arising directly and/or indirectly pursuant to or under this Agreement shall
be
brought solely in a federal or state court located in the City, County and
State
of New York. By its execution hereof, the parties hereby covenant and
irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect
as
if personally served upon them in New York City. The parties hereto waive any
claim that any such jurisdiction is not a convenient forum for any such suit
or
proceeding and any defense or lack of in
personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from
the
other party hereto of its reasonable counsel fees and
disbursements.
(g) 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 best 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.
(h) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
-12-
IN
WITNESS WHEREOF,
the
Company and each of the Purchasers have become parties to this Registration
Rights Agreement as of the date first written above by execution of the
applicable omnibus signature pages attached to the Subscription
Agreements.
-13-
ANNEX
A
List
of Purchasers
ANNEX
B
Plan
of Distribution
The
Holders of Registrable Securities and any of their pledgees, assignees and
successors-in-interest 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 in private transactions. These sales may be at fixed or
negotiated prices. The selling Holders may use any one or more of the following
methods when selling shares:
| · |
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;
|
| · |
settlement
of short sales;
|
| · |
broker/dealers
may agree with the selling 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 Holders may also sell shares under Rule 144 under the Securities
Act, if available, rather than pursuant to the Shelf Registration
Statement.
Broker/dealers
engaged by the selling Holders may arrange for other brokers/dealers to
participate in sales. Broker/dealers may receive commissions from the selling
Holders (or, if any broker/dealer acts as agent for the purchaser of shares,
from the purchaser) in amounts to be negotiated. The selling Holders do not
expect these commissions to exceed what is customary in the types of
transactions involved.
The
selling Holders may from time to time pledge or grant a security interest in
some or all of the Registrable Securities owned by them and, if they default
in
the performance of their
secured
obligations, the pledgees or secured parties may offer and sell the Registrable
Securities from time to time under the Shelf Registration Statement, or under
an
amendment to the Prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933 amending the list of selling Holders
to
include the pledgee, transferee or other successors in interest as selling
Holders thereunder.
