REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is
entered into as of July 2, 2010, by and among STEELCLOUD, INC., a Virginia
corporation (the “Company”), CLIPPER
INVESTORS LLC, an Illinois limited liability company (“Clipper”), and
CALEDONIA CAPITAL CORPORATION, a Delaware corporation (“Caledonia” and,
together with Clipper, the “Investors”).
The
Company and Clipper are parties to (a) a Preferred Stock and Warrant Purchase
Agreement (the “Preferred Stock and Warrant
Purchase Agreement”) and (b) a Note Purchase Agreement (the “Note Purchase
Agreement” and, together with the Preferred Stock and Warrant Purchase
Agreement, the “Purchase
Agreements”), each dated as of July 2, 2010. The Company and
Caledonia are parties to (i) an Exchange Agreement dated as of July 2, 2010
pursuant to which Caledonia was issued shares of the Company’s Preferred Stock
in exchange for certain shares of the Company’s Common Stock (the “Exchange Agreement”),
and (ii) a Consolidated, Amended and Restated Promissory Note dated July 2,
2010, made by the Company to the order of Caledonia in the original principal
amount of $570,000 (the “Caledonia
Note”). In order to induce Clipper to enter into the Purchase
Agreements and Caledonia to enter into the Exchange Agreement, the Company has
agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreements, the Exchange Agreement and the Caledonia Note. Unless
otherwise provided in this Agreement, capitalized terms used herein shall have
the meanings set forth in Section 8
hereof.
The
parties hereto agree as follows:
1.
Demand
Registrations.
(a) Requests for
Registration. Each of Clipper and Caledonia may request
registration under the Securities Act of all or any portion of their Investor
Registrable Securities on Form S-1 or any similar long-form registration (“Long-Form
Registrations”) or, if then available, on Form S-2 or S-3 (including
pursuant to Rule 415 under the Securities Act) or any similar short-form
registration (“Short-Form
Registrations”). All registrations requested pursuant to this
Section 1(a)
are referred to herein as “Demand
Registrations.” Demand Registrations shall be Short-Form
Registrations whenever the Company is permitted to use any applicable short
form. Each request for a Demand Registration shall specify the
approximate number of Investor Registrable Securities requested to be registered
and the anticipated per share price range for such offering. Within
five (5) business days after receipt of any such request, the Company shall give
written notice of such requested registration to all other holders of Investor
Registrable Securities and, subject to Section 1(d) below,
shall include in such registration all Investor Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within thirty (30) days after the receipt of the Company’s
notice.
(b) Investor Long-Form
Registrations. Each of Clipper and Caledonia shall be entitled
to request not more than one (1) Long-Form Registration pursuant to Section 1(a) for
which the Company shall pay all Registration Expenses (as defined in Section 5), whether
or not such registration is consummated. All Long-Form Registrations
shall be underwritten registrations. The selling stockholders and the
Company shall bear the expenses of the underwriter and placement agent, if any,
pro rata in proportion
to the respective number of shares each is selling in such
offering.
(c) Investor Short-Form
Registrations. In addition to the Long-Form Registrations
provided pursuant to Section 1(b), each of
Clipper and Caledonia shall be entitled to request an unlimited number of
Short-Form Registrations pursuant to Section 1(a) for
which the Company shall pay all Registration Expenses, whether or not such
registration is consummated. The selling stockholders and the Company
shall bear the expenses of the underwriter and placement agent, if any, pro rata in proportion to the
respective number of shares each is selling in such offering. The
Company shall use its best efforts to make Short-Form Registrations on Form S-3
available for the sale of Investor Registrable Securities and to maintain such
S-3 eligibility thereafter. If the Company, pursuant to the request
of the holder(s) of a majority of Investor Registrable Securities, is qualified
to and has filed with the Securities Exchange Commission a registration
statement under the Securities Act on Form S-3 pursuant to Rule 415 under the
Securities Act (the “Required
Registration”), then the Company shall use its best efforts to cause the
Required Registration to be declared effective under the Securities Act as soon
as practicable after filing, and, once effective, the Company shall cause such
Required Registration to remain effective for a period ending on the earlier of
(i) the date on which all Investor Registrable Securities included in such
registration have been sold pursuant to the Required Registration, or (ii) the
date as of which the holder(s) of the Investor Registrable Securities included
in such registration (assuming such holder(s) are affiliates of the Company) are
able to sell all of the Investor Registrable Securities included in such
registration within a ninety (90) day period in compliance with Rule 144 under
the Securities Act.
(d) Priority on Demand
Registrations. The Company shall not include in any Demand
Registration any securities that are not Investor Registrable Securities without
the prior written consent of the holder(s) of a majority of the Investor
Registrable Securities to be included in such registration. If a
Demand Registration is an underwritten offering and the managing underwriters
advise the Company in writing that, in their opinion, the number of Investor
Registrable Securities and, if permitted hereunder, other securities requested
to be included in such offering exceeds the number of Investor Registrable
Securities and other securities, if any, that can be sold in an orderly manner
in such offering within a price range acceptable to the holder(s) of a majority
of the Investor Registrable Securities to be included in such registration, then
the Company shall include in such registration, prior to the inclusion of any
securities that are not Investor Registrable Securities, the maximum number of
Investor Registrable Securities requested to be included that, in the opinion of
such underwriters, can be sold in an orderly manner within the price range of
such offering, allocated pro
rata among the respective holders thereof on the basis of the amount of
Investor Registrable Securities owned by each such holder.
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(e) Restrictions on Demand
Registrations. The Company shall not be obligated to effect
any Demand Registration within 180 days after the effective date of a previous
Demand Registration. The Company may postpone for up to 180 days the
filing or the effectiveness of a registration statement for a Demand
Registration if such registration would, in the good faith judgment of the
Company’s board of directors, substantially interfere with any material
transaction being considered at the time of receipt of the request for such
Demand Registration, including any proposal or plan by the Company to acquire
financing, engage in any acquisition of assets (other than in the ordinary
course of business), or engage in any merger, consolidation, tender offer,
reorganization, or similar transaction; provided that, in such event, the
holder(s) of Investor Registrable Securities initially requesting such Demand
Registration shall be entitled to withdraw such request and the Company shall
pay all Registration Expenses in connection with such
registration. The Company may delay a Demand Registration hereunder
only once in any twelve (12) month period.
(f)
Selection of
Underwriters. The Company in its reasonable discretion shall
have the right to select the investment banker(s) and manager(s) to administer
any underwritten offering hereunder.
(g) Other Registration
Rights. Except as provided in this Agreement, the Purchase
Agreements, the Exchange Agreement, and the documents contemplated thereby, the
Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities, options or
rights convertible or exchangeable into or exercisable for such securities,
without the prior written consent of the holder(s) of a majority of
the Investor Registrable Securities.
2.
Piggyback
Registrations.
(a) Right to
Piggyback. Whenever the Company proposes to register any of
its securities (including any proposed registration of the Company’s securities
by any third party) under the Securities Act (other than (i) pursuant to a
Demand Registration, which is addressed by Section 1, or (ii) in
connection with registrations on Form X-0, X-0 or any successor or similar forms
for transactions as to which no cash proceeds are attributable to the Company)
and the registration form to be used may be used for the registration of
Investor Registrable Securities (a “Piggyback
Registration”), the Company shall give prompt written notice (and in any
event within three (3) business days after its receipt of notice of any exercise
of demand registration rights other than under this Agreement) to all holders of
Investor Registrable Securities of its intention to effect such a registration
and shall include in such registration all Investor Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within thirty (30) days after the receipt of the Company’s notice.
(b) Piggyback
Expenses. The Registration Expenses of the holders of Investor
Registrable Securities shall be paid by the Company in all Piggyback
Registrations, whether or not such registration is consummated.
(c) Priority on Primary
Registrations. If a Piggyback Registration is an underwritten
primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing that, in their opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in an orderly manner in such offering within a price range acceptable to
the Company, then the Company shall include in such registration the maximum
number of securities that, in the opinion of such underwriters, can be sold in
an orderly manner within the price range of such offering, giving priority (i)
first, to the securities the Company proposes to sell, (ii) second, to the
Investor Registrable Securities requested to be included in such registration
(if any), allocated pro
rata among the respective holders thereof on the basis of the amount of
Investor Registrable Securities owned by each such holder, and (iii) third, to
the other securities requested to be included in such registration (if
any).
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(d) Priority on Secondary
Registrations. If a Piggyback Registration is an underwritten
secondary registration on behalf of holders of the Company’s securities other
than holders of Investor Registrable Securities (it being understood that
secondary registrations on behalf of holders of Investor Registrable Securities
are addressed in Section 1 above
rather than this Section 2(d)), and
the managing underwriters advise the Company in writing that, in their opinion,
the number of securities requested to be included in such registration exceeds
the number which can be sold in an orderly manner in such offering within a
price range acceptable to the holder(s) of a majority of the Investor
Registrable Securities to be included in such registration, then the Company
shall include in such registration, (i) first, the securities requested to be
included therein by the holders requesting such registration and the Investor
Registrable Securities requested to be included in such registration, in each
case that, in the opinion of such underwriters, can be sold in an orderly manner
within the price range of such offering (if any), pro rata among the holders of
such securities and the holders of such Investor Registrable Securities on the
basis of the number of shares of Common Stock owned by each such holder, and
(ii) second, the other securities requested to be included in such registration
that, in the opinion of such underwriters, can be sold in an orderly manner
within the price range of such offering (if any).
(e) Other
Registrations. If the Company has previously filed a
registration statement with respect to Investor Registrable Securities pursuant
to Section 1 or
pursuant to this Section 2, and if
such previous registration has not been withdrawn or abandoned, then, unless
such previous registration is a Required Registration, the Company shall not
file or 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 at least 180 days has elapsed from the
effective date of such previous registration.
3.
Lockup
Agreements
(a) Each
holder of Investor Registrable Securities shall not effect any public sale or
distribution (including sales pursuant to Rule 144 under the Securities Act) of
equity securities of the Company, or any securities, options or rights
convertible into or exchangeable or exercisable for such securities, during the
seven (7) days prior to and the 180-day period beginning on the effective date
of any underwritten Demand Registration or any underwritten Piggyback
Registration (except as part of such underwritten registration or pursuant to
registrations on Form S-8 or any successor form), unless the underwriters
managing the registered public offering otherwise agree.
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(b) The
Company (i) shall not effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven (7) days prior to and during the 180-day
period beginning on the effective date of any underwritten Demand Registration
or any underwritten Piggyback Registration in which Investor Registrable
Securities are included (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form), unless the
underwriters managing the registered public offering otherwise agree, and (ii)
shall cause each holder of its equity securities, or any securities convertible
into or exchangeable or exercisable for equity securities, purchased from the
Company at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any public sale or distribution
(including sales pursuant to Rule 144 under the Securities Act) of any such
securities during such period (except as part of such underwritten registration,
if otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
4.
Registration
Procedures. Whenever the holders of Investor Registrable
Securities have requested that any Investor Registrable Securities be registered
pursuant to this Agreement (subject to Section 1(e)), the
Company shall use its best efforts to effect the registration and the sale of
such Investor Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare
and, within sixty (60) days after the receipt of a request for registration,
file with the Securities and Exchange Commission a registration statement with
respect to such Investor Registrable Securities and use its best efforts to
cause such registration statement to become effective as soon as practicable
thereafter (provided that, before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to the counsel selected by the holder(s) of a
majority of the Investor Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which documents
shall be subject to the review and comment of such counsel);
(b) notify
in writing each holder of Investor Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange 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 for a period of not less
than 180 days (or, if such registration statement relates to an underwritten
offering, such longer period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales of
Investor Registrable Securities by an underwriter or dealer) and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish
to each seller of Investor Registrable Securities such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Investor Registrable Securities owned by such
seller;
(d) use
its best efforts to register or qualify such Investor Registrable Securities
under such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller of Investor Registrable
Securities to consummate the disposition in such jurisdictions of the Investor
Registrable Securities owned by such seller of Investor Registrable Securities
(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 Section
4(d), (ii) subject itself to taxation in any such jurisdiction, or (iii)
consent to general service of process in any such
jurisdiction);
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(e) promptly
notify in writing each seller of such Investor 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 as a result of which the
prospectus included in such registration statement (i) contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading in light of the circumstances under which they were made
or (ii) is otherwise not legally available to support sales of Investor
Registrable Securities, and the Company shall promptly prepare and furnish to
each such seller a reasonable number of copies of a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Investor Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause
all such Investor Registrable Securities to be listed on a national securities
exchange or trading system and each securities exchange and trading system (if
any) on which similar securities issued by the Company are then
listed;
(g) provide
a transfer agent and registrar for all such Investor Registrable Securities not
later than the effective date of such registration statement;
(h) enter
into such customary agreements (including underwriting agreements in customary
form) and take all such other actions as the holder(s) of a majority of the
Investor Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
Investor Registrable Securities (including effecting a stock split or a
combination or shares);
(i)
make available for inspection by any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant, or other agent retained by any such
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company’s officers, directors,
employees, and independent accountants to supply all information reasonably
requested by any such underwriter, attorney, accountant, or agent in connection
with such registration statement and assist and, at the request of any
participating underwriter, use its best efforts to cause such officers or
directors to participate in presentations to prospective
purchasers;
(j)
otherwise use its best efforts to comply
with all applicable rules and regulations of the Securities and Exchange
Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve (12)
months beginning with the first day of the Company’s first full calendar quarter
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
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(k) in
the event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any equity securities
included in such registration statement for sale in any jurisdiction, the
Company shall use its best efforts promptly to obtain the withdrawal of such
order;
(l)
use its best efforts to cause
such Investor Registrable Securities covered by such registration statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the sellers thereof to consummate the
disposition of such Investor Registrable Securities;
(m) obtain
one or more cold comfort letters, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
dated the date of the closing under the underwriting agreement), from the
Company’s independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters as the holder(s)
of a majority of the Investor Registrable Securities being sold in such
registered offering reasonably request; and
(n) provide
a legal opinion of the Company’s outside counsel, dated the effective date of
such registration statement (or, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), with respect to the registration statement, each amendment and
supplement thereto, the prospectus included therein (including the preliminary
prospectus) and such other documents relating thereto in customary form and
covering such matters of the type customarily covered by legal opinions of such
nature.
5.
Registration
Expenses.
(a) Subject
to Section 5(b)
below, all expenses incident to the Company’s performance of or compliance with
this Agreement, including all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses, travel expenses,
filing expenses, messenger and delivery expenses, fees and disbursements of
custodians, and fees and disbursements of counsel for the Company, and fees and
disbursements of all independent certified public accountants, underwriters
including, if necessary, a “qualified independent underwriter” within the
meaning of the rules of the National Association of Securities Dealers, Inc. (in
each case, excluding discounts and commissions), and other Persons retained by
the Company or by holders of Investor Registrable Securities or their affiliates
on behalf of the Company (all such expenses being herein called “Registration
Expenses”), shall be borne as provided in this Agreement, except that the
Company shall, in any event, pay its internal expenses (including all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review, the expense of any
liability insurance, and the expenses and fees for listing the securities to be
registered in accordance with Section
4(f). The Company shall have no obligation to pay any
underwriting discounts attributable to the Investor Restristrable Securities
being sold by the holder thereof, which underwriting discounts shall be borne by
such holders.
(b) In
connection with each Demand Registration and each Piggyback Registration, the
Company shall reimburse the holders of Investor Registrable Securities included
in such registration for the reasonable fees and disbursements of one (1)
counsel chosen by the holder(s) of a majority of the Investor Registrable
Securities included in such registration.
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(c) To
the extent Registration Expenses are not required to be paid by the Company,
each holder of securities included in any registration hereunder shall pay those
Registration Expenses allocable to the registration of such holder’s securities
so included, and any Registration Expenses not so allocable shall be borne by
all sellers of securities included in such registration in proportion to the
aggregate selling price of the securities to be so registered.
6. Indemnification.
(a) The
Company agrees to indemnify and hold harmless, to the fullest extent permitted
by law, each holder of Investor Registrable Securities, its officers, directors,
agents, and employees, and each Person who controls such holder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities,
and expenses (or actions or proceedings, whether commenced or threatened, in
respect thereof), whether joint and several or several, together with reasonable
costs and expenses (including reasonable attorney’s fees) to which any such
indemnified party may become subject under the Securities Act or otherwise
(collectively, “Losses”) caused by,
resulting from, arising out of, based upon, or relating to (i) any untrue or
alleged untrue statement of material fact contained in (A) any registration
statement, prospectus or preliminary prospectus, or any amendment thereof or
supplement thereto or (B) any application or other document or communication (in
this Section 6,
collectively called an “application”)
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify any securities covered by such registration under the blue sky or
securities laws thereof or (ii) any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse such holder and each such
director, officer, and controlling Person for any legal or any other expenses
incurred by them in connection with investigating or defending any such Losses;
provided that the Company shall not be liable to any holder in any such case to
the extent that any such Losses result from, arise out of, are based upon, or
relate to an untrue statement or alleged untrue statement, or omission or
alleged omission, made in such registration statement, any such prospectus, or
preliminary prospectus or any amendment or supplement thereto, or in any
application, in each case, in reliance upon, and in conformity with, written
information prepared and furnished in writing to the Company by such holder
expressly for use therein or by such holder’s failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company
shall indemnify such underwriters, their officers and directors, and each Person
who controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Investor Registrable Securities.
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(b) In
connection with any registration statement in which a holder of Investor
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify and hold
harmless the Company and its officers, directors, agents, and employees, and
each other Person who controls the Company (within the meaning of the Securities
Act) against any Losses to the extent caused by, resulting from, arising out of,
based upon, or relating to (i) any untrue or alleged untrue statement of
material fact contained in the registration statement, prospectus or preliminary
prospectus, or any amendment thereof or supplement thereto or in any
application, or (ii) any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
made in such registration statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, or in any application, in
each case, in reliance upon and in conformity with written information prepared
and furnished to the Company by such holder expressly for use therein, and such
holder will reimburse the Company and each such other indemnified party for any
legal or any other expenses incurred by them in connection with investigating or
defending any such Losses; provided that the obligation to indemnify will be
individual, not joint and several, for each holder and shall be limited to the
net amount of proceeds received by such holder from the sale of Investor
Registrable Securities pursuant to such registration statement.
(c) Any
Person entitled to indemnification hereunder will (i) give prompt written notice
to the indemnifying party of any claim with respect to which it seeks
indemnification (provided that the failure to give prompt notice shall not
impair any Person’s right to indemnification hereunder to the extent such
failure has not materially and actually prejudiced the indemnifying party) and
(ii) unless in such indemnified party’s reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, then (x) the indemnifying party
will not be subject to any liability for any settlement made by the indemnified
party without the indemnifying party’s consent (but such consent will not be
unreasonably withheld) and (y) the indemnifying party will not enter into any
settlement agreement with respect to such claim unless there is no finding or
admission of liability by the indemnified party in such settlement
agreement. An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The
indemnification provided for under this Agreement shall be in addition to any
other rights to indemnification or contribution which any indemnified party may
have pursuant to law or contract, and will remain in full force and effect
regardless of any investigation made or omitted by or on behalf of the
indemnified party or any officer, director, or controlling Person of such
indemnified party and shall survive the transfer of securities.
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(e) If
the indemnification provided for in this Section 6 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other hand in
connection with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations; provided that the maximum amount of liability in respect of such
contribution shall be limited, in the case of each seller of Investor
Registrable Securities, to an amount equal to the net proceeds actually received
by such seller from the sale of Investor Registrable Securities effected
pursuant to such registration. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
7. Participation in
Underwritten Registrations. No Person may participate in any
underwritten registration hereunder unless such Person (i) agrees to sell such
Person’s securities on the basis provided in any underwriting arrangements
approved by the Person or Persons entitled hereunder to approve such
arrangements, and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, and other documents reasonably
required under the terms of such underwriting arrangements; provided that no
holder of Investor Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the
Company or the underwriters (other than representations and warranties regarding
such holder and such holder’s intended method of distribution) or to undertake
any indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in Section 6
hereof.
8. Definitions.
(a) “Common Stock” means
the Company’s $0.001 par value common stock.
(b) “Investor Registrable
Securities” means, (i) the shares of Common Stock issuable upon
conversion of the Preferred Shares, the shares of Common Stock issuable upon the
exercise of the Warrants (all as defined in the Preferred Stock and Warrant
Purchase Agreement), and the shares of Common Stock issuable upon conversion of
the Note (as defined in the Note Purchase Agreement), (ii) the shares of Common
Stock issuable upon conversion of the Preferred Shares issued to Caledonia
pursuant to the Exchange Agreement and the shares of Common Stock issuable upon
conversion of the Caledonia Note, and (iii) shares of Common Stock issued or
issuable with respect to the securities referred to in clauses (i) or (ii) above
by way of dividend, distribution, split or combination of securities, or any
recapitalization, merger, consolidation or other reorganization. As
to any particular Investor Registrable Securities, such securities shall cease
to be Investor Registrable Securities when they (A) have been distributed to the
public pursuant to an offering registered under the Securities Act or sold to
the public through a broker, dealer, or market maker in compliance with Rule 144
under the Securities Act (or any similar rule then in force), (B) have been
effectively registered under a registration statement including, without
limitation, a registration statement on Form S-8 (or any successor form), or (C)
have been repurchased by the Company. For purposes of this Agreement,
a Person shall be deemed to be a holder of Investor Registrable Securities
whenever such Person has the right to acquire such Investor Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected.
10
(c) “Person” means an
individual, a partnership, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, an investment fund, any other business entity and a governmental
entity or any department, agency or political subdivision thereof.
(d) “Securities Act” means
the Securities Act of 1933, as amended, or any successor federal law then in
force, together with all rules and regulations promulgated
thereunder.
(e) “Securities Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor federal law then in force, together with all rules and regulations
promulgated thereunder.
9. Miscellaneous.
(a) No Inconsistent Agreements;
Entire Agreement. The Company will not enter into any
agreement with respect to its securities that is inconsistent with or violates
the rights granted to the holders of Investor Registrable Securities in this
Agreement. This Agreement, those documents expressly referred to
herein and other documents of even date herewith embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, that may have related to the subject matter hereof in any
way.
(b) Adjustments Affecting
Investor Registrable Securities. The Company shall not take
any action, or permit any change to occur, with respect to its securities that
would adversely affect the ability of the holders of Investor Registrable
Securities to include such Investor Registrable Securities in a registration
undertaken pursuant to this Agreement or that would adversely affect the
marketability of such Investor Registrable Securities in any such registration
(including effecting a share or unit split or a combination of shares or
units).
(c) Remedies. Any
Person having rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that, in addition
to any other rights and remedies existing in its favor, any party shall be
entitled to specific performance and/or other injunctive relief from any court
of law or equity of competent jurisdiction (without posting any bond or other
security) in order to enforce or prevent violation of the provisions of this
Agreement.
(d) Amendments and
Waivers. Except as otherwise provided herein, no modification,
amendment, or waiver of any provision of this Agreement shall be effective
against the Company or the holders of Investor Registrable Securities unless
such modification, amendment, or waiver is approved in writing by the Company,
Clipper and Caledonia. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement, or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or any other covenant, duty,
agreement, or condition.
11
(e) Successors and
Assigns. All covenants and agreements in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether so expressed
or not. In addition, whether or not any express assignment has been
made, the provisions of this Agreement which are for the benefit of holders of
Investor Registrable Securities are also for the benefit of, and enforceable by,
any subsequent holder of Investor Registrable Securities. The Company
may not assign any of its rights or obligations under this Agreement without the
prior written consent of the Investors. Each Investor may assign all
or any part of its rights and obligations hereunder.
(f) Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained
herein.
(g) Counterparts. This
Agreement may be executed simultaneously in two or more counterparts (including
by means of facsimile), each of which shall be deemed an original, and all of
which taken together shall constitute one and the same Agreement.
(h) Descriptive Headings;
Interpretation. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a substantive part of this
Agreement.
(i) Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT
GIVING ANY EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
(j) Notices. All
notices hereunder shall be in writing and shall be deemed to have been given at
the time when hand delivered, when received if sent by facsimile or by same day
or overnight recognized commercial courier service, or three (3) days after
being mailed by certified mail, addressed to the address below stated of the
party to which notice is given, or to such changed address as such party may
have fixed by notice:
To the
Company:
SteelCloud,
Inc.
00000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx X. Xxxxxx
12
with a copy
to:
Fettmann,
Xxxxxxx & Majors, PC
00000
Xxxxxxxx Xxxxx
Xxxxx
000
Xxxxxxx,
XX 00000
Fax:
000-000-0000
Attn:
Xxxxxx X. Xxxxxxx, Esq.
To
Clipper:
Clipper
Investors LLC
0000
Xxxxxx Xxxx
Xxxxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxx
with a copy
to:
Ungaretti
& Xxxxxx LLP
00 Xxxx
Xxxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Attn: Xxxxxxx
X. Xxxxx
To
Caledonia:
Caledonia
Capital Corporation
00000 Xxxx Xxxxx Xxxxx, Xxxxx
000
Xxxxxxxx,
XX 00000,
Attn: Xxxxxx Xxxxxxx
with a copy
to:
Grossberg,Yochelson,
Fox & Xxxxx, LLP
0000 X
Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxxx X. Xxxxxxxx
provided,
however, that any notice of change of address shall be effective only upon
receipt
(k) No Strict
Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
[signature
page follows]
13
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first above written.
|
STEELCLOUD,
INC.
|
||
|
By:
|
/s/ Xxxxx X.
Xxxxxx
|
|
|
Name: Xxxxx
X. Xxxxxx
|
||
|
Its:
President & CEO
|
||
|
CLIPPER
INVESTORS LLC
|
||
|
By:
|
/s/ Xxxxxxx X.
Xxxxxx
|
|
|
Name: Xxxxxxx
X. Xxxxxx
|
||
|
Its:
President & CEO
|
||
|
CALEDONIA
CAPITAL CORPORATION
|
||
|
By:
|
/s/ Xxxxxx X.
Xxxxxxx
|
|
|
Name: Xxxxxx
X. Xxxxxxx
|
||
|
Its:
President
|
||
Signature
Page to Registration Rights Agreement
