REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS
AGREEMENT
This
Registration Rights Agreement (the “Agreement”) is
made and entered into as of the 4th day of February, 2005 (the “Effective
Date”)
between MRU Holdings, Inc., a Delaware corporation (the “Company”), and
the parties set forth on the signature page and Exhibit A hereto (each, a
“Purchaser” and
collectively, the “Purchasers”).
R
E C I T A L S:
A. The
Purchasers have purchased shares of the Company’s Preferred Stock (as defined
below) pursuant to Subscription Agreements (each, a “Subscription
Agreement” and
collectively, the “Subscription
Agreements”) by and
between the Company and each Purchaser.
B. The
Company issued warrants (the “Warrants”) to
purchase shares of the Company’s Common Stock to Xxxxxxx Xxxxxx Xxxxxx Inc., a
Texas corporation (“SMH”) and
Xxxxx Xxxxxx & Co., Inc., a Delaware corporation (“BMUR”) (each
of SMH and BMUR are individually referred to as a “Placement Agent” and
collectively the “Placement Agents”).
C. The
Company, the Purchasers, and the Placement Agents desire to set forth the
registration rights to be granted by the Company to the Purchasers and the
Placement Agents.
Now,
Therefore, in
consideration of the mutual promises, representations, warranties, covenants,
and conditions set forth herein and in the Subscription Agreements, the parties
mutually agree as follows:
A
G R E E M E N T:
1. Certain
Definitions. As used
in this Agreement, the following terms shall have the following respective
meanings:
“Approved
Market” means
the NASD OTC Bulletin Board, Nasdaq National Market, the Nasdaq SmallCap Market,
the New York Stock Exchange, Inc., or the American Stock Exchange,
Inc.
“Blackout
Period” means,
with respect to a registration, a period in each case commencing on the day
immediately after the Company notifies the Purchasers and the Placement Agents
that they are required, pursuant to Section 4(f), to suspend offers and sales of
Registrable Securities during which the Company, in the good faith judgment of
its Board of Directors, determines (because of the existence of, or in
anticipation of, any acquisition, financing activity, or other transaction
involving the Company, or the unavailability for reasons beyond the Company’s
control of any required financial statements, disclosure of information which is
in its best interest not to publicly disclose, or any other event or condition
of similar significance to the Company) that the registration and distribution
of the Registrable Securities to be covered by such registration statement, if
any, would be seriously detrimental to the Company and its stockholders and
ending on the earlier of (1) the date upon which the material non-public
information commencing the Blackout Period is disclosed to the public or ceases
to be material and (2) such time as the Company notifies the selling Holders
that the Company will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement effective, or allow
sales pursuant to such Registration Statement to resume; provided,
however, that (a)
the Company shall limit its use of Blackout Periods, in the aggregate, to 30
Trading Days in any 12-month period and (b) no Blackout Period may commence
sooner than 60 days after the end of a prior Blackout Period.
“Business
Day” means
any day of the year, other than a Saturday, Sunday, or other day on which the
Commission is required or authorized to close.
“Closing
Date” means
December 17, 2004, or such other time as is mutually agreed between the Company
and the Purchasers for the closing of the sale referred to in Recital A
above.
“Commission” means
the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
“Common
Stock” means
the common stock, par value $.001 per share, of the Company and any and all
shares of capital stock or other equity securities of: (i) the Company which are
added to or exchanged or substituted for the Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of any
distribution or the reclassification, readjustment, recapitalization or other
such modification of the capital structure of the Company; and (ii) any other
corporation, now or hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, which results from any
consolidation or reorganization to which the Company is a party, or to which is
sold all or substantially all of the shares or assets of the Company, if
immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other
corporation.
“Exchange
Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder.
“Family
Member” means
(a) with respect to any individual, such individual’s spouse, any descendants
(whether natural or adopted), any trust all of the beneficial interests of which
are owned by any of such individuals or by any of such individuals together with
any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
“Holder” means
each Purchaser, the Placement Agents, or any of such Purchaser’s respective
successors and Permitted Assigns who acquire rights in accordance with this
Agreement with respect to the Registrable Securities directly or indirectly from
a Purchaser or the Placement Agents, including from any Permitted
Assignee.
“Inspector” means
any attorney, accountant, or other agent retained by a Purchaser for the
purposes provided in Section 4(j).
“Majority
Holders” means
at any time Holders of a majority of the Registrable Securities.
“Offering
Price” means
the Offering Price set forth in the Placement Agent Agreement dated November
[__], 2004, between the Company and the Placement Agents.
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“Permitted
Assignee” means
(a) with respect to a partnership, its partners or former partners in
accordance with their partnership interests, (b) with respect to a
corporation, its stockholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company, its members
or former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such
party, (e) an entity that is controlled by, controls, or is under common control
with a transferor, or (f) a party to this Agreement.
“Preferred
Stock” means
the Series A Convertible Preferred Stock, par value $.001 per share, of the
Company.
The terms
“register,”
“registered,” and
“registration” refers
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
“Registrable
Securities” means
shares of Common Stock issued or issuable to each Purchaser upon conversion of
the Preferred Stock issued to each pursuant to the Subscription Agreements or
issued or to be issued to the Placement Agents pursuant to the Warrant including
shares of Common Stock into which shares of Preferred Stock issued or issuable
in payment of dividends on such Preferred Stock are convertible, excluding (i) any
Registrable Securities that have been publicly sold or may be sold immediately
without registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person in
a transaction pursuant to a registration statement filed under the Securities
Act or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act.
“Registration
Default Date” means
the date which is 120 days following the Closing Date; provided,
however, if the
Registration Statement is subject to review by the SEC staff, the Registration
Default Date shall be the date which is 150 days following the Closing Date.
“Registration
Default Period” means
the period following the Registration Default Date during which any Registration
Event occurs and is continuing.
“Registration
Event” means
the occurrence of any of the following events:
(a) the
Company fails to file with the SEC the Registration Statement on or before the
Registration Filing Date pursuant to Section 3(a),
(b) the
Registration Statement covering Registrable Securities is not declared effective
by the Commission on or before the Registration Default Date,
(c) after the
SEC Effective Date, sales cannot be made pursuant to the Registration Statement
for any reason (including without limitation by reason of a stop order, or the
Company’s failure to update the Registration Statement) but except as excused
pursuant to Section 3(a) or for the reasons specified in clause (d),
or
(d) the
Common Stock generally or the Registrable Securities specifically are not listed
or included for quotation on an Approved Market, or trading of the Common Stock
is suspended or halted on the Approved Market, which at the time constitutes the
principal market for the Common Stock, for more than two full, consecutive
Trading Days; provided,
however, a
Registration Event shall not be deemed to occur if all or substantially all
trading in equity securities (including the Common Stock) is suspended or halted
on the Approved Market for any length of time.
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“Registration
Statement” means
the registration statement required to be filed by the Company pursuant to
Section 3(a).
“Securities
Act” means
the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
“SEC
Effective Date” means
the date the Registration Statement is declared effective by the
Commission.
“Trading
Day” means a
day on whichever (a) the national securities exchange, (b) the Nasdaq Stock
Market, or (c) such other securities market, in any such case which at the time
constitutes the principal securities market for the Common Stock, is open for
general trading of securities.
2. Term. This
Agreement shall continue in full force and effect for a period of three (3)
years from the Effective Date, unless terminated sooner hereunder.
3. Registration.
(a) Registration
on Form SB-2. As
promptly as reasonably practicable after the date hereof, but in any event not
later than 45 days after the Closing Date (the “Registration
Filing Date”), the
Company shall file with the Commission a shelf registration statement on Form
SB-2 relating to the resale by the Holders of all of the Registrable Securities,
and the Company shall use its commercially reasonable best efforts to cause such
registration statement to be declared effective within 90 days after the Closing
Date; provided,
however, that
the Company shall not be obligated to effect any such registration,
qualification, or compliance pursuant to this Section 3(a), or keep such
registration effective pursuant to Section 4: (i) in any particular jurisdiction
in which the Company would be required to qualify to do business as a foreign
corporation or as a dealer in securities under the securities or blue sky laws
of such jurisdiction or to execute a general consent to service of process in
effecting such registration, qualification or compliance, in each case where it
has not already done so; or (ii) during any Blackout Period, in which case the
Registration Filing Date shall be extended to the date immediately following the
last day of such Blackout Period.
(b) Piggyback
Registration. If the
Company shall determine to register for sale for cash any of its Common Stock,
for its own account or for the account of others (other than the Holders), other
than (i) a registration relating solely to employee benefit plans or securities
issued or issuable to employees, consultants (to the extent the securities owned
or to be owned by such consultants could be registered on Form S-8) or any of
their Family Members (including a registration on Form S-8) or (ii) a
registration relating solely to a Commission Rule 145 transaction, a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, or similar event, the Company shall promptly give to the Holders
written notice thereof (and in no event shall such notice be given less than 20
calendar days prior to the filing of such registration statement), and shall,
subject to Section 3(c), include in such registration (and any related
qualification under blue sky laws or other compliance) (a “Piggyback
Registration”), all
of the Registrable Securities specified in a written request or requests, made
within 10 calendar days after receipt of such written notice from the Company,
by any Holder or Holders. However, the Company may, without the consent of the
Holders, withdraw such registration statement prior to its becoming effective if
the Company or such other stockholders have elected to abandon the proposal to
register the securities proposed to be registered thereby.
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(c) Underwriting. If a
Piggyback Registration is for a registered public offering involving an
underwriting, the Company shall so advise the Holders in writing or as a part of
the written notice given pursuant to Section 3(b). In such event the right of
any Holder to registration pursuant to Section 3(b) shall be conditioned upon
such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any other stockholders of the
Company distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company or selling stockholders, as
applicable. Notwithstanding any other provision of this Section 3(c), if the
underwriter or the Company determines that marketing factors require a
limitation of the number of shares to be underwritten, the underwriter may
exclude some or all Registrable Securities from such registration and
underwriting. The Company shall so advise all Holders (except those Holders who
failed to timely elect to distribute their Registrable Securities through such
underwriting or have indicated to the Company their decision not to do so), and
the number of shares of Registrable Securities that may be included in the
registration and underwriting, if any, shall be allocated among such Holders as
follows:
(i) In the
event of a Piggyback Registration that is initiated by the Company, the number
of shares that may be included in the registration and underwriting shall be
allocated first to the Company and then, subject to obligations and commitments
existing as of the date hereof, to all selling stockholders, including the
Holders, who have requested to sell in the registration on a pro rata basis
according to the number of shares requested to be included; and
(ii) In the
event of a Piggyback Registration that is initiated by the exercise of demand
registration rights by a shareholder or stockholders of the Company (other than
the Holders), then the number of shares that may be included in the registration
and underwriting shall be allocated first to such selling stockholders who
exercised such demand and then, subject to obligations and commitments existing
as of the date hereof, to all other selling stockholders, including the Holders,
who have requested to sell in the registration, on a pro rata basis according to
the number of shares requested to be included.
No
Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration;
provided,
however, that,
if by the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities pursuant to the terms and limitations set forth herein in the same
proportion used above in determining the underwriter limitation.
(d) Other
Registrations. Prior
to the SEC Effective Date the Company will not, without the prior written
consent of the Majority Holders, file or request the acceleration of any other
registration statement filed with the Commission, and during any time subsequent
to the SEC Effective Date when the Registration Statement for any reason is not
available for use by any Holder for the resale of any Registrable Securities,
the Company shall not, without the prior written consent of the Majority
Holders, file any other registration statement or any amendment thereto with the
Commission under the Securities Act or request the acceleration of the
effectiveness of any other registration statement previously filed with the
Commission, other than (A) any registration statement on Form S-8 or Form S-4
and (B) any registration statement or amendment which the Company is required to
file or as to which the Company is required to request acceleration pursuant to
any obligation in effect on the date of execution and delivery of this
Agreement.
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(e) Failure
to File Registration Statement. If a
Registration Event occurs, then the Company will make payments to each Purchaser
(a “Qualified Purchaser”), as partial liquidated damages for the minimum amount
of damages to the Qualified Purchaser by reason thereof, and not as a penalty,
at a rate equal to one percent (1%) of the Offering Price per share of Preferred
Stock held by such Qualified Purchaser per month, for each calendar month of the
Registration Default Period (pro rated for any period less than 30 days);
provided, however, if a Registration Event occurs (or is continuing) on a date
more than one-year after the Qualified Purchaser acquired the Registrable
Securities (and thus the one-year holding period under Rule 144(d) has elapsed),
liquidated damages shall be paid only with respect to that portion of a
Qualified Purchaser’s Registrable Securities that cannot then be immediately
resold in reliance on Rule 144. Each such payment shall be due and payable
within five days after the end of each calendar month of the Registration
Default Period until the termination of the Registration Default Period and
within five days after such termination. Such payments shall be in partial
compensation to the Qualified Purchaser, and shall not constitute the Qualified
Purchaser’s exclusive remedy for such events. The Registration Default Period
shall terminate upon (i) the filing of the Registration Statement in the case of
clause (a) of the definition of “Registration Event,” (ii) the SEC Effective
Date in the case of clause (b) of the definition of “Registration Event,” (iii)
the ability of the Qualified Purchaser to effect sales pursuant to the
Registration Statement in the case of clause (c) of the definition of
“Registration Event,” (iv) the listing or inclusion and/or trading of the Common
Stock on an Approved Market, as the case may be, in the case of clause (d) of
the definition of “Registration Event,” and (v) in the case of the events
described in clauses (b) and (c) of the definition of “Registration Event,” the
earlier termination of the Registration Default Period. The amounts payable as
partial liquidated damages pursuant to this paragraph shall be payable in lawful
money of the United States. Amounts payable as partial liquidated damages to
each Qualified Purchaser hereunder with respect to each share of Registrable
Securities shall cease when the Qualified Purchaser no longer holds such share
of Registrable Securities or such share of Registrable Securities can be
immediately sold by the Qualified Purchaser in reliance on Rule 144.
4. Registration
Procedures. In the
case of each registration, qualification, or compliance effected by the Company
pursuant to Section 3 hereof, the Company will keep each Holder reasonably
advised in writing (which may include e-mail) as to the initiation of each
registration, qualification, and compliance and as to the completion thereof. At
its expense with respect to any registration statement filed pursuant to Section
3, the Company will:
(a) prepare
and file with the Commission with respect to such Registrable Securities, a
registration statement on Form SB-2 or any other form for which the Company then
qualifies or which counsel for the Company shall deem appropriate, and which
form shall be available for the sale of the Registrable Securities in accordance
with the intended method(s) of distribution thereof, and use its commercially
reasonable efforts to cause such registration statement to become and remain
effective at least for a period ending with the first to occur of (i) the sale
of all Registrable Securities covered by the registration statement, and (ii)
the availability under Rule 144 for the Holder to immediately, freely resell
without restriction all Registrable Securities covered by the registration
statement, (in either case, the
“Effectiveness Period”);
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(b) if a
registration statement is subject to review by the Commission, promptly respond
to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission;
(c) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective during the Effectiveness
Period;
(d) furnish,
without charge, to each Holder of Registrable Securities covered by such
registration statement (i) a reasonable number of copies of such registration
statement (including any exhibits thereto other than exhibits incorporated by
reference), each amendment and supplement thereto as such Holder may reasonably
request, (ii) such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 under the Securities Act) as such Holders may
reasonably request, in conformity with the requirements of the Securities Act,
and (iii) such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder,
but only during the Effectiveness Period;
(e) use its
commercially reasonable best efforts to register or qualify such Registrable
Securities under such other applicable securities or blue sky laws of such
jurisdictions as any Holder of Registrable Securities covered by such
registration statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be made by the time
the applicable registration statement is deemed effective by the Commission) and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such
jurisdiction;
(f) as
promptly as practicable after becoming aware of such event, notify each Holder
of such Registrable Securities at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
which comes to the Company’s attention if as a result of such event the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Company shall promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate reports under the
Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an 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 not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of an
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;
(g) comply,
and continue to comply during the period that such registration statement is
effective under the Securities Act, in all material respects with the Securities
Act and the Exchange Act and with all applicable rules and regulations of the
Commission with respect to the disposition of all securities covered by such
registration statement;
(h) as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement at the earliest
possible time;
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(i) use its
best efforts to cause all the Registrable Securities covered by the Registration
Statement to be quoted on the NASD OTC Bulletin Board or such other principal
securities market on which securities of the same class or series issued by the
Company are then listed or traded;
(j) provide a
transfer agent and registrar, which may be a single entity, for the Registrable
Securities at all times;
(k) cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to issue and deliver certificates (not bearing any
restrictive legends) representing Registrable Securities to be offered pursuant
to the Registration Statement within five Trading Days after delivery of
certificates to the Company and enable such certificates to be in such
denominations or amounts as the Holders may reasonably request and registered in
such names as the Holders may request;
(l) during
the Effectiveness Period, refrain from bidding for or purchasing any Common
Stock or any right to purchase Common Stock or attempting to induce any Person
to purchase any such security or right if such bid, purchase or attempt would in
any way limit the right of the Holders to sell Registrable Securities by reason
of the limitations set forth in Regulation M under the 1934 Act;
and
(m) take all
other reasonable actions necessary to expedite and facilitate disposition by the
Holders of the Registrable Securities pursuant to the Registration
Statement.
5. Suspension
of Offers and Sales. Each
Holder of Registrable Securities agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 4(f)
hereof or of the commencement of an Blackout Period, such Holder shall
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder’s receipt of
the copies of the supplemented or amended prospectus contemplated by Section
4(f) hereof or notice of the end of the Blackout Period, and, if so directed by
the Company, such Holder shall deliver to the Company (at the Company’s expense)
all copies (including, without limitation, any and all drafts), other than
permanent file copies, then in such Holder’s possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 4(a)(iii) hereof shall be extended by the greater of (i)
ten business days or (ii) the number of days during the period from and
including the date of the giving of such notice pursuant to Section 4(f) hereof
to and including the date when each Holder of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 4(f) hereof.
6. Registration
Expenses. The
Company shall pay all expenses in connection with any registration, including,
without limitation, all registration, filing, stock exchange fees, printing
expenses, all fees and expenses of complying with securities or blue sky laws,
and the fees and disbursements of counsel for the Company and of its independent
accountants; provided that, in any underwritten registration, each party shall
pay for its own underwriting discounts and commissions and transfer taxes.
Except as provided above in this Section 6 and Section 9, the Company shall not
be responsible for the expenses of any attorney or other advisor employed by a
Holder of Registrable Securities.
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7. Assignment
of Rights. No
Holder may assign its rights under this Agreement to any party without the prior
written consent of the Company; provided,
however, that a
Holder may assign its rights under this Agreement without such restrictions to a
Permitted Assignee as long as (a) such transfer or assignment is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c) the
Company is given written notice by such Holder of such transfer or assignment,
stating the name and address of the transferee or assignee and identifying the
Registrable Securities with respect to which such rights are being transferred
or assigned.
8. Information
by Holder. The
Holder or Holders of Registrable Securities included in any registration shall
furnish to the Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may request in
writing.
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9. Indemnification.
(a) In the
event of the offer and sale of Registrable Securities held by Holders under the
Securities Act, the Company shall, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by law, each Holder, its directors, officers,
partners, each other person who participates as an underwriter in the offering
or sale of such securities, and each other person, if any, who controls or is
under common control with such Holder or any such underwriter within the meaning
of Section 15 of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, and expenses to which the Holder or any such
director, officer, partner or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such shares were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of such
Holder specifically stating that it is for use in the preparation thereof or
(ii) if the person asserting any such loss, claim, damage, liability (or action
or proceeding in respect thereof) who purchased the Registrable Securities that
are the subject thereof did not receive a copy of an amended preliminary
prospectus or the final prospectus (or the final prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Registrable Securities to such person because of the failure of such Holder or
underwriter to so provide such amended preliminary or final prospectus and the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact made in such preliminary prospectus was corrected in the amended
preliminary or final prospectus (or the final prospectus as amended or
supplemented). Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Holders, or any such director,
officer, partner, underwriter or controlling person and shall survive the
transfer of such shares by the Holder.
(b) As a
condition to including any Registrable Securities to be offered by a Holder in
any registration statement filed pursuant to this Agreement, each such Holder
agrees to be bound by the terms of this Section 9 and to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its directors and
officers, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which the Company or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information about such Holder as a Holder of the Company furnished to
the Company, and such Holder shall reimburse the Company, and each such
director, officer, and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating, defending, or
settling and such loss, claim, damage, liability, action, or proceeding;
provided,
however, that
such indemnity agreement found in this Section 9(b) shall in no event exceed the
gross proceeds from the offering received by such Holder. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person and
shall survive the transfer by any Holder of such shares.
10
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in Section 9(a) or (b) hereof
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the indemnifying party of the commencement of such action; provided that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Section 9(a) or (b)
hereof, except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a
claim.
(d) In the
event that an indemnifying party does or is not permitted to assume the defense
of an action pursuant to Section 9(c) or in the case of the expense
reimbursement obligation set forth in Section 9(a) and (b), the indemnification
required by Section 9(a) and (b) hereof shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are
incurred.
(e) If the
indemnification provided for in this Section 9 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to herein, the indemnifying party,
in lieu of indemnifying such indemnified party hereunder, shall (i) contribute
to the amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage or expense as is appropriate to reflect the
proportionate relative fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
relates to information supplied by the indemnifying party or the indemnified
party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or provides a lesser sum to the indemnified party than the amount hereinafter
calculated, not only the proportionate relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.
11
(f) Other
Indemnification.
Indemnification similar to that specified in the preceding subsections of this
Section 9 (with appropriate modifications) shall be given by the Company and
each Holder of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act.
10. Rule
144.
For a
period of at least 24 months following the Closing Date, the
Company will use its commercially reasonable best efforts (a) to timely file all
reports required to be filed by the Company after the date hereof under the
Securities Act and the Exchange Act (including the reports pursuant to Section
13(a) or 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule
144) and the rules and regulations adopted by the Commission thereunder), (b) if
the Company is not required to file reports pursuant to such sections, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell
shares of Common Stock under Rule 144, and (c) to take such further action as
any holder of shares of Common Stock may reasonably request, all to the extent
required from time to time to enable the Purchasers to sell shares of Common
Stock without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144, including causing its attorneys to issue and
deliver any appropriate legal opinion required to permit a Purchaser to sell
shares of Common Stock under Rule 144 upon receipt of appropriate documentation
relating to such sale.
11. Independent
Nature of Each Purchaser’s Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to purchase
Preferred Stock and enter into this Agreement has been made by each Purchaser
independently of any other Purchaser. Nothing contained herein and no action
taken by any Purchaser pursuant hereto, shall be deemed to constitute such
Purchasers as a partnership, an association, a joint venture, or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser acknowledges that no other
Purchaser has acted as agent for the Purchaser in connection with making its
investment in Preferred Stock and that no other Purchaser will be acting as
agent of the Purchaser in connection with monitoring its investment in the
Preferred Stock or enforcing its rights under this Agreement. Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
12. Miscellaneous
(a) Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware and the United States of America, both substantive and
remedial. Any
judicial proceeding brought against either of the parties to this agreement or
any dispute arising out of this Agreement or any matter related hereto shall be
brought in the courts of the State of New York, New York County, or in the
United States District Court for the Southern District of New York and, by its
execution and delivery of this agreement, each party to this Agreement accepts
the jurisdiction of such courts. The foregoing consent to jurisdiction shall not
be deemed to confer rights on any person other than the parties to this
Agreement.
12
(b) Successors
and Assigns. Except
as otherwise provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, Permitted Assigns, executors and
administrators of the parties hereto. In the event the Company merges with, or
is otherwise acquired by, a direct or indirect subsidiary of a publicly traded
company, the Company shall condition the merger or acquisition on the assumption
by such parent company of the Company’s obligations under this Agreement.
(c) Entire
Agreement. This
Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subjects hereof.
(d) Notices,
etc.
All
notices or other communications which are required or permitted under this
Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic
mail, or by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so delivered:
|
If
to the Company: |
MRU
Holdings, Inc. |
|
000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx | |
|
Xxx
Xxxx, XX 00000 | |
|
Attention:
Chief Executive Officer | |
|
Facsimile:
(000) 000-0000 | |
|
e-mail:
xxxxxxxx@xxxxxxxxxxx.xxx | |
|
with
a copy to: |
McGuireWoods
LLP |
|
0000
Xxxxxx xx xxx Xxxxxxxx | |
|
Xxx
Xxxx, Xxx Xxxx 00000 | |
|
Attention:
Xxxxx X. Xxxxx, Esq. | |
|
Facsimile:
(000) 000-0000 | |
|
Email:
xxxxxx@xxxxxxxxxxxx.xxx | |
|
If
to the Purchasers: |
To
each Purchaser at the address |
|
set
forth on Exhibit A | |
|
with
a copy to: |
Xxxxxxx
Xxxxxx Xxxxxx Inc. |
|
000
X. Xxxx Xx., 00xx Xxxxx | |
|
Xxx
Xxxxxxx, XX 00000 | |
|
Attention:
Xxxxx Xxxxxxxxxxx, Managing Director | |
|
Facsimile:
( 000) 000-0000 | |
|
e-mail:
xxxxx.xxxxxxxxxxx@xxxxxxxx.xxx |
or at
such other address as any party shall have furnished to the other parties in
writing.
13
(e) Delays
or Omissions. No
delay or omission to exercise any right, power or remedy accruing to any Holder
of any Registrable Securities, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such Holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereunder
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
Holder of any breach or default under this Agreement, or any waiver on the part
of any Holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
(f) Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.
(g) Severability. In the
case any provision of this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
(h) Amendments. The
provisions of this Agreement may be amended at any time and from time to time,
and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the holders of an
80% majority of the number of shares of Registrable Securities outstanding as of
the date of such amendment or waiver. The Purchasers acknowledge that by the
operation of this Section 12(h), the holders of an 80% majority of the
outstanding Registrable Securities may have the right and power to diminish or
eliminate all rights of the Purchasers under this Agreement.
(i) Limitation
on Subsequent Registration Rights. After
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company that would grant such holder registration rights
senior to those granted to the Holders hereunder.
[Signatures
on following page]
14
This
Registration Rights Agreement is hereby executed as of the date first above
written.
| COMPANY: | |
| MRU Holdings, Inc. | |
| By:________________________________ | |
| Name:______________________________ | |
| Its:________________________________ | |
| PURCHASER: | |
|
(Print
Name) | |
|
By: |
|
|
Name: |
|
|
Its: |
|
15
Exhibit
A
Purchaser
Information
|
Name |
Address |
Number
of Shares |
16
