Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of August 9,
2006 by and among XXXXXXXXXXXXX.XXX, Inc., a Nevada corporation (the "Company"),
and each person identified as a Holder on the signature pages hereto. All terms
used herein but not defined herein shall have the meaning given to them in the
Securities Purchase Agreement by and among the Company and the Holders dated as
of the date hereof (the "Purchase Agreement").
SECTION 1
DEFINITIONS
For purposes of this Agreement the following terms shall be defined as follows:
The term "Common Shares" means the shares of common stock, par value, $.001 per
share of the Company.
The term the "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
The term "Holder" means initially an Investor, and thereafter any person who at
a given time is the Holder of record of any Registrable Securities, so long as
such transfers or assignments were made in compliance with Section 6.2 hereof.
The term "Investor" means a purchaser of Redeemable Convertible Notes pursuant
to the Purchase Agreement.
The terms "register," "registered" and "registration" refer to a registration
effected by preparing and filing a Registration Statement or statements or
similar documents in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering securities
on a continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement or document by the SEC.
The term "Registrable Securities" means (i) the Shares issuable upon conversion
of the Redeemable Convertible Notes, (ii) the Shares issuable upon exercise of
the Warrants , (iii) shares issuable upon exercise of the EBIDTA Shortfall
Warrants and the Liquidated Damage Warrants ( defined hereafter), and (iv) any
securities issued upon any stock split, stock dividend, recapitalization or
similar event with respect to any of the Shares specified in the preceding
clauses (i), (ii) and (iii) ; provided however that securities shall only be
treated as Registrable Securities if and only so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC
or (B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon or
prior to the consummation of such sale.
The term "Registration Statement" means any registration statement, including a
Shelf Registration Statement, or comparable document of the Company under the
Securities Act that registers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement and all amendments and supplements
to such Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such Registration
Statement.
The terms "Redeemable Convertible Notes" means the senior secured redeemable
convertible promissory notes of the Company issued pursuant to the Purchase
Agreement.
The term "Securities Act" shall mean the Securities Act of 1933, as amended.
The term "Warrants" means (i) the common stock purchase warrants issued pursuant
to the Purchase Agreement, including any EBITDA Shortfall Warrants, and (ii) any
Liquidated Damages Warrants.
SECTION 2
REGISTRATION RIGHTS
2.1 Registration.
(a) The Company shall use its best efforts to prepare and file a
Registration Statement on a form that shall (A) be available for the sale of the
Registrable Securities by the selling Holders thereof and (B) comply as to form
with the requirements of the applicable form on which such Registration
Statement is filed and include all financial statements required by the SEC to
be filed therewith ("Shelf Registration Statement") with the SEC within ninety
(90) days of the Closing Date to provide for the offer and sale of the
Registrable Securities and shall cause the Shelf Registration Statement to
become effective under the Act no later than the earlier of (i) one hundred
eighty (180) days after the Closing Date and (ii) the thirtieth (30th) day
following the date on which the Company is notified by the SEC that such Shelf
Registration Statement will not be reviewed or is no longer subject to further
review and comments (the "Effective Date"). The Registration Statement filed
pursuant to this Section 2.1(a) may, at the Company's discretion and with the
consent of the Holders of not less than fifty percent (50%) of the Registrable
Securities, include securities of the Company other than the Registrable
Securities.
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(b) In the event the Shelf Registration Statement is not declared
effective by the Effective Date, the Company shall promptly, but no later than
ten (10) business days from the Effective Date, issue to each Holder warrants
exercisable for a number of shares of Common Stock equal to two percent (2%) of
the number of shares of Common Stock issuable to such Holder upon conversion of
all Redeemable Convertible Notes held by such Holder. In addition, for each full
thirty (30) day period (each such period consisting of thirty consecutive days)
after the Effective Date that the Shelf Registration has not been declared
effective (each, a "Default Period"), the Company shall be obligated to issue to
the Holder (or any assignee thereof) warrants exercisable for a number of shares
of Common Stock equal to two percent (2%) of the number of shares of Common
Stock issuable to such Holder upon conversion of all Redeemable Convertible
Notes held by such Holder. Any issuances of warrants the Company is obligated to
make for subsequent Default Periods shall be made no later than ten (10)
business days from the last day of such Default Period. The warrants issued
pursuant to this Section 2.1(b) shall be hereinafter referred to as a
"Liquidated Damages Warrants." The parties acknowledge the irresolvable
uncertainty entailed in any effort to calculate the actual damage shall the
Registration Statement fail to be effective on or prior to the Effective Date,
and hereby agree that the Liquidated Damage Warrants represent a reasonable
estimate on the part of the parties, as of the date of this Agreement, of the
amount of damages that may be incurred by the Holder if the Registration
Statement has not been declared effective by the SEC on or prior to the
Effective Date.
(c) Notwithstanding the foregoing, the Company's obligation to issue
the Liquidated Damages Warrants shall cease one (1) year from the date hereof so
long as the Company has remained current, and remains current for at least one
(1) contiguous year thereafter, with respect to all of its filings required
under the Exchange Act (the "Filings"). In the event that subsequent to the
first anniversary of the date hereof and prior to the second anniversary of the
date hereof, the Holders are not eligible to sell any Registrable Securities
pursuant to Rule 144 under the Securities Act ("Rule 144") because the Company
has ceased to be current with respect to all of its Filings or because the
Company's transfer agent refuses to remove the restrictive legend with respect
to such Registrable Securities (including without limitation, as a result of the
failure of the Company's legal counsel to issue an appropriate legal opinion to
the transfer agent), the Company's obligation to issue the Liquidated Damages
Warrants pursuant to Section 2.1(a) above shall resume with respect to each
period of 30 consecutive days after the first anniversary of the date hereof
during which the Company is not current with respect to its Filings. Any and all
obligations of the Company to issue any Liquidated Damages Warrants shall be
contingent upon the Holder delivering appropriate documentation to the Company,
as determined by the Company in its reasonable discretion, in order to satisfy
applicable Federal and state securities laws.
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2.2 Piggyback Registration.
(a) From and after the Closing Date and until such time as the
Registrable Securities are freely saleable under Rule 144(k) without volume
limitations, if the Company shall determine to proceed with the preparation and
filing of a Registration Statement in connection with the proposed offer and
sale of any of its securities by it or any of its security Holders (other than a
registration statement on Form X-0, X-0, any successor form thereto or other
limited purpose form), the Company will give written notice of its determination
to all record Holders of the Registrable Securities at least twenty (20) days
prior to filing. Upon receipt of a written request from any such Holder within
twenty (20) days after receipt of any such notice from the Company, the Company
will, except as herein provided, cause all the Registrable Securities owned by
such Holders to be included in such Registration Statement in order to permit
the sale or other disposition by the prospective seller or sellers of the
Registrable Securities to be so registered. If any registration pursuant to this
Section 2.2 shall be underwritten in whole or in part, the Company shall cause
the Registrable Securities requested for inclusion pursuant to this Section 2.2
to be included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters, except to the extent
provided in Section 2.2(b) below. In such event the right of any Holder to
registration shall be conditioned upon such underwriting and the inclusion of
such Holder's Registrable Securities in such underwriting to the extent provided
in Section 2.2(b) below. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other Holders
distributing their securities through such underwriting) enter into an
underwriting agreement with the underwriters' representative for such offering;
provided that such Holders shall have no right to participate in the selection
of the underwriters for an offering pursuant to this Section 2.2(a). The
obligation of the Company under this Section 2.2 shall be unlimited as to the
number of Registration Statements to which it applies. Notwithstanding the
foregoing, to the extent that all Registrable Securities are registered on an
effective Registration Statement on Form S-3, the Company shall not be required
to provide notice to Holders of the preparation and filing of a registration
statement in connection with the proposed nonunderwritten offer and sale of any
of its securities and the Holders shall not he entitled to include any
Registrable Securities in such registration statement.
(b) In connection with an underwritten public offering
for the account of the Company, if, in the opinion of the
underwriters' representative market factors (including, without limitation, the
aggregate number of shares of Common Stock requested to be registered, the
general condition of the market, and the status of the persons proposing to sell
securities pursuant to the registration) require a limitation of the number of
shares to be underwritten, the underwriters' representative may exclude some or
all Registrable Securities from such registration and underwriting and the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which the Holders
have requested inclusion hereunder as the underwriters shall permit. Any
exclusion of Registrable Securities shall be made pro rata among the Holders
seeking to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Holder; provided, however,
that the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the Holders of which are not
contractually entitled to inclusion of such securities in such Registration
Statement or are not contractually entitled to pro rata inclusion with the
Registrable Securities; and provided, further, however, that, after giving
effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with Holders of other securities having the
right to include such securities in the Registration Statement. No Registrable
Securities excluded from the underwriting by reason of this Section 2.2(b) shall
be included in such Registration Statement.
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2.3 Limitations on Subsequent Registration Rights. From and after the date
of this Agreement and until sixty (60) days following the Effective Date, the
Company shall not, without the prior written consent of the Holders of 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 provides such Holder or prospective Holder with registration rights
superior to or that conflict with the registration rights provided to the
Holders pursuant to this SECTION 2.
SECTION 3
REGISTRATION PROCEDURES AND EXPENSES
3.1 Registration Procedures. If and whenever the Company is required by
the provisions of Sections 2.1 or 2.2 to effect the registration of Registrable
Securities under the Securities Act, the Company will:
(a) use its best efforts to cause such a Registration Statement to
become and remain effective for a period of two (2) years from the date the
Registration Statement becomes effective; provided, however, that any
Registration Statement filed pursuant to Section 2.2 may be kept effective for
such lesser period of time until which all Registrable Securities included
thereunder are freely saleable (without any volume, legend or other restriction,
except with regard to Registrable Securities held by persons deemed to be
"affiliates" of the Company) or have been disposed of pursuant to a registration
statement or all transfer restrictions or legends have otherwise been removed;
(b) prepare and file with the SEC such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for the period of
time described in paragraph (a) above;
(c) furnish to the Holders participating in such registration such
reasonable number of copies of such Registration Statement, preliminary
prospectus, final prospectus in conformity with the requirements of the Act and
such other documents as such underwriters or selling shareholders may reasonably
request in order to facilitate the public offering of such securities;
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(d) use its best efforts to register or qualify the securities
covered by the Registration Statement under such state securities or blue sky
laws of such jurisdictions as such participating Holders may reasonably request
in writing within twenty (20) days following the original filing of such
Registration Statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) in the event that a registration involves an underwritten
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering;
(f) notify the Holders participating in such registration, promptly,
and in no event later than two (2) business days after, the Registration
Statement has become effective or a supplement to any prospectus forming a part
of the Registration Statement has been filed;
(g) notify such Holders promptly of any request by the SEC for
amending or supplementing the Registration Statement or prospectus or for
additional information;
(h) within ten (10) business days (subject to extension for delivery
by auditors for the Company of materials, information or other responses
required to so respond) of its receipt of any comment or inquiry from the SEC
regarding the Registration Statement, respond to the SEC's comment or inquiry;
(i) notify such Holders promptly of the Company's reasonable
determination that a post-effective amendment to a Registration Statement or
prospectus would be appropriate;
(j) prepare and file with the SEC, promptly upon the request of any
such Holders, any amendments or supplements to the Registration Statement or
prospectus which, in the opinion of counsel for such Holders (and concurred in
by counsel for the Company), is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of the
Registrable Securities;
(k) prepare and promptly file with the SEC and promptly notify such
Holders of the filing of such amendment or supplement to the Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(l) advise such Holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of the Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or, to obtain its withdrawal if such
stop order should be issued;
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(m) at the request of Holders of a majority of the Registrable
Securities included in the Registration Statement, finish to the underwriters or
selling shareHolders on the date that the Registrable Securities are delivered
to underwriters for sale in connection with a registration pursuant to this
Agreement (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters and (ii) a letter dated such date, from the independent
certified accountants of the Company, in form an substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters;
(n) make available for inspection by any underwriters participating
in an offering covering Registrable Securities, and the counsel, accountants or
other agents retained by any such underwriter, all pertinent financial and other
records, corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such underwriters in connection with such offering;
(o) to the extent the Registration Statement is not filed on Form
S-3, convert such Registration Statement to Form S-3 as soon as reasonably
practicable following the Company becoming eligible to register securities on
Form S-3;
(p) if the Common Stock is then listed on a national securities
exchange, cause all the Registrable Securities to be listed on each such
exchange, or if reported on Nasdaq, to be reported on Nasdaq;
(q) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement in which Registrable Securities are included; and
(r) comply with all applicable rules and regulations of the
Commission and make generally available to its security Holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder no later than forty five (45) days after the end of any
twelve (12) month period (or ninety (90) days after the end of any twelve (12)
month period if such period is a fiscal year) commencing on the first day of the
first fiscal quarter of the Company after the effective date of the Shelf
Registration Statement, which statements shall cover said twelve (12) month
period.
3.2 Expenses. With respect to each inclusion of Registrable Securities in
a Registration Statement pursuant to Sections 2.1 and 2.2 hereof, the fees,
costs and expenses of registration to be borne by the Company shall include all
registration, filing, and NASD fees; printing expenses, fees and disbursements
of counsel and accountants for the Company; all legal fees and disbursements and
other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the selling
security Holders shall be borne by the selling security Holders, and selling
security Holders participating in such registration shall bear their pro rata
share of the underwriting discounts and commissions and transfer taxes. If NASD
Rule 2710 or any similar rule requires any broker-dealer to make a filing prior
to executing a sale of Registrable Securities, the Company shall make an Issuer
Filing with the NASD Corporate Financing Department pursuant to NASD Rule 2710
and respond within five (5) business days to any comments received from the NASD
in connection therewith.
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SECTION 4
CERTAIN OBLIGATIONS OF HOLDERS
4.1(a) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of (i) any event of the kind described in Sections
3.1(g), 3.1(h), 3.1(i), 3.1(j) or 3.1(k) hereof, or (ii) a determination by the
Company's Board of Directors that it is advisable to suspend use of the
prospectus for a discrete period of time due to pending corporate developments
such as negotiation of a material transaction which the Company, in its sole
discretion after consultation with legal counsel, determines it would be
obligated to disclose in the Shelf Registration Statement, which disclosure the
Company believes would be premature or otherwise inadvisable at such time or
would have a material adverse effect on the Company and its stockHolders, such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by the Shelf Registration Statement or prospectus until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 3.1 hereof, or until such Holder is advised in writing by the Company
that the use of the applicable prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such prospectus. The period of time in which
the use of a prospectus or Shelf Registration Statement is so suspended shall be
referred to as a "Black-Out Period." The Company agrees to so advise such Holder
promptly of the commencement and termination of any such Black-Out Period, and
the Holder agrees to keep the fact of such Black-Out Period confidential. The
Company shall not impose a Black-Out Period under this SECTION 4 for more than
thirty (30) consecutive days and not more than twice in any given twelve (12)
month period; provided, that at least ninety (90) days must pass between
Black-Out Periods. Notwithstanding the foregoing, the Company may suspend the
effectiveness of any Shelf Registration Statement if the SEC rules and
regulations prohibit the Company from maintaining the effectiveness of a Shelf
Registration because its financial statements are stale at a time when its
fiscal year has ended or it has made an acquisition reportable under Item 2 of
Form 8-K or any other similar situation until the earliest time in which the SEC
would allow the Company to re-effect a Shelf Registration Statement (provided
that the Company shall use its reasonable best efforts to cure any such
situation as soon as possible so that the Shelf Registration Statement can be
made effective at the earliest possible time). The Company shall not effect a
Black-Out Period unless the Company also institutes such Black-Out Period
against sales under any Registration Statements on Form S-8 or any other
registration statement that the Company has on file with the SEC at such time.
Notwithstanding the foregoing, the Company undertakes and covenants that until
the first to occur of (i) the end of sixty (60) days following the effective
date of the Shelf Registration Statement, or (ii) the date that all the Shares
have been resold pursuant to a registration statement or Rule 144, the Company
will not take any action, including, without limitation, entering into any
acquisition, share exchange or sale or other transaction that could have the
effect of delaying the effectiveness of any pending Registration Statement,
requiring a post-effective amendment to be filed or causing a post-effective
amendment to a Registration Statement to not be declared effective or for a
Holder not to be able to effect sales for a period of fifteen (15) or more days.
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(b) in connection with the registration of the Registrable
Securities, each of the Holders shall have the following obligations:
(i) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement with respect to each
Holder that such Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended methods of
disposition of such securities as shall be reasonably required to effect the
registration of the Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least fifteen (15) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Holder of the information
the Company requires from each such Holder (the "Requested Information") if it
elects to have any of his Registrable Securities included in the Registration
Statement. If within seven (7) days of the filing date the Company has not
received the Requested Information from a Holder (a "Non-Responsive Holder"),
then the Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Holder.
(ii) Each Holder participating in an underwritten offering
agrees to cooperate with the Company in connection with the preparation and
filing of any Registration Statement hereunder, unless any such Holder has
notified the Company in writing of its election to exclude all of its
Registrable Securities from the Registration Statement.
(iii) In the event Holders holding a majority in interest of
the Registrable Securities being sold pursuant to the Shelf Registration
Statement select underwriters for the offering, each Holder agrees to enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations and market stand-off obligations, with the managing
underwriter of such offering and to take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registrable
Securities being sold, unless such Holder has notified the Company in writing of
its election to exclude all of his Registrable Securities from the Registration
Statement.
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SECTION 5
INDEMNIFICATION
5.1 Indemnification by the Company. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder of Registrable Securities
which are included in a Registration Statement pursuant to the provisions of
Sections 2.1 and 2.2 hereof, such Holder's directors and officers, employees,
assignees, agents, brokers, and investment advisors, and any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Securities
Act, and directors, officers, employees and designees of such controlling person
from and against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Holder or any such underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in a
Registration Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the 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; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage, liability,
cost or expenses arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
written information furnished by such Holder, such underwriter or such
controlling person specifically for use in the preparation thereof; provided,
however, that the indemnity agreement set forth herein shall not apply (i) to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the prior consent of the Company (which
consent shall not be unreasonably withheld) or (ii) with respect to any
preliminary prospectus, if the untrue statement or omission of material fact
contained in such preliminary prospectus was corrected in an amended prospectus
and the Company has provided notice of such amendment to each Investor pursuant
to Section 3.1 hereof. The indemnification undertaking set forth in This Section
5.1 shall remain in full force and effect regardless of any investigation made
by or on behalf of an indemnified party and shall survive the transfer of
Registrable Securities by the Holder.
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5.2 Indemnification by the Holders. Each Holder of Registrable Securities
included in a registration pursuant to the provisions of Sections 2.1 and 2.2
hereof will indemnify and hold harmless the Company, its directors and officers,
any controlling person and any underwriter from and against, and will reimburse
the Company, its directors and officers, any controlling person and any
underwriter with respect to, any and all loss, damage, liability, cost or
expense to which the Company or any controlling person and/or any underwriter
may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the 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, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance upon and in strict conformity with
written information furnished by or on behalf of such Holder specifically for
use in the preparation thereof; provided, however, that the indemnity agreement
set forth herein shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
prior consent of the Holder (which consent shall not be unreasonably withheld )
and provided further, that the maximum amount that may be recovered from any
Holder shall be limited to the net amount of proceeds received by such Holder
from the sale of the Registrable Securities pursuant to the Registration
Statement.
5.3 Indemnification Procedure. Promptly after receipt by an indemnified
party under this SECTION 5 of a notice of the commencement of any action
(including any governmental action) such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party hereunder, deliver
to the indemnifying party a written notice of the commencement thereof. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall relieve such indemnifying
party of any liability to the indemnified party under this SECTION 5 only to the
extent prejudicial to its ability to defend such action, but the omission so to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to an indemnified party otherwise than under this
Agreement. The indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the
reasonable fees and expenses to be paid by the indemnifying party, if in the
reasonable determination of counsel for the indemnifying party, representation
of such indemnified party by the counsel obtained by the indemnifying party
would be inappropriate due to actual or potential conflicting interests between
such indemnified party and any other party represented by such counsel in such
proceeding. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party pursuant to the provisions of paragraph
5.1 or 5.2 above for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action or (iii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party.
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5.4 Survival. The indemnification undertakings set forth above in this
Section 5 shall survive the completion of any offering of Registrable
Securities.
SECTION 6
ADDITIONAL RIGHTS AND OBLIGATIONS
6.1 Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under SECTION 5 hereof to the extent permitted by law, provided that (i)
no contribution shall be made under circumstances where the maker would not have
been liable for indemnification pursuant to the provisions of SECTION 5 hereof,
(ii) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11 (f) of the Securities Act) shall be entitled
to contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Securities shall be limited to the net amount of proceeds received
by such seller from the sale of such Registrable Securities.
6.2 Assignable Rights. The rights with respect to any Registrable
Securities under this Agreement shall, in addition to being for the benefit of
the parties hereto, be for the benefit of and enforceable by a transferee of
such Registrable Securities, provided that the Company is furnished with written
notice of the name and address of such transferee or assignee with respect to
which such registration rights are being assigned, such notice provides a
written agreement for the transferee or assignee to be bound by the terms and
provisions of this Agreement and the Purchase Agreement and such assignment or
transfer is in accordance with and permitted by applicable Federal and state
securities laws and the terms of the Purchase Agreement. The obligations of the
Company contained in this Agreement shall be binding upon any successor to the
Company and continue to be in effect with respect to any securities issued by
any successor to the Company in substitution or exchange for any Registrable
Securities.
6.3 Reports Under Exchange Act. With a view to making available to the
Holders of Registrable Securities the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit the Holders of the Registrable
Securities to sell any of the Registrable Securities to the public without
registration, the Company agrees to apply its commercially reasonable best
efforts to:
(a) make and keep public information available, as those terms are
understood and declined in Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
(c) furnish to each Holder of Registrable Securities, forthwith upon
request (I) (if true) a written statement by the Company that it has complied
with the reporting requirements of Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company and (iii) such
other information as may be reasonably requested in availing the Holders of any
Registrable Securities of any rule or regulation of the SEC which permits the
selling of any such securities without registration; and
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(d) direct its counsel to issue an appropriate legal opinion
instructing the Company's transfer agent to remove the legend with respect to
such Registrable Securities, subject to Investor providing any documentation
reasonably requested by the Company or its counsel for review in connection with
such request.
SECTION 7
MISCELLANEOUS PROVISIONS
7.1 Waivers and Amendments. Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended or waived except pursuant to a
written instrument executed by the Company and the Holders that hold at least
two-thirds (66 2/3%) of the Registrable Securities held by all Holders. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon all Holders and the Company. The failure of any party to exercise any right
or remedy under this Agreement or otherwise, or the delay by any party in
exercising such right or remedy, shall not operate as a waiver thereof
7.2 Notices. Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if delivered via fax, personally or by nationally
recognized overnight courier service or sent by registered or certified mail,
return receipt requested, addressed to such address as may be given herein;
provided, however, that notices with respect to Sections 3.1(f) , 3.1(g) and
3.1(h) hereof may be delivered via email; and, except as otherwise noted herein,
must be addressed as follows:
if to the Company, to:
XXXXXXXXXXXXX.XXX, Inc.
Xxxxx 0000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxxx, Xxxxxxxxx & Xxxxxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Facsimile:(000) 000-0000
and
if to any Holder, to the address shown on such Holder's signature page hereto,
marked for attention as there indicated, or to such other address as the party
to whom notice is to be given may have furnished to the other parties in writing
in accordance with the provisions of this Section 7.2 . Any such notice or
communication will he deemed to have been received: (A) in the case of
facsimile, email or personal delivery, on the date of such delivery; or (B) in
the case of nationally-recognized overnight courier, on the next business day
after the date sent.
7.3 Descriptive Headings and References. The descriptive headings herein
have been inserted for convenience only and are not deemed to limit or otherwise
affect the construction of any provisions hereof.
7.4 Applicable Law: Jurisdiction. This Agreement shall be governed by and
construed under the internal laws of the State of New York without regard to
conflict of law rules. The parties hereby submit to the exclusive jurisdiction
of the courts of the State of New York located in New York County and the
Federal courts located in the Southern District of New York, with respect to any
action or legal proceeding commenced by either party with respect to this
Agreement or the Registrable Securities. Each party irrevocably waives any
objection it now has or hereafter may have respecting the venue of any such
action or proceeding or the inconvenience of such forum, and each party consents
to the service of process in any such action or proceeding in the manner set
forth for the delivery of notices herein.
7.5 Waiver of Jury Trial. The parties hereby waive their rights to a trial
by jury in any action or proceeding involving any matter arising out of or
relating to this Agreement or to the Registrable Securities.
7.6 Counterparts. This Agreement may by executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
the parties, notwithstanding that all parties are not signatories to the same
counterpart. Any signature delivered by facsimile transmission shall create a
valid and binding obligation of the party so executing with the same force and
effect as if such facsimile signature page were an original thereof.
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7.7 Entire Agreement. This instrument contains the entire agreement of the
parties, and there are no representations, covenants or other agreements except
as stated or referred to herein.
7.8 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
7.9 Third Party Beneficiaries. Except as expressly provided herein, no
provision of this Agreement is intended to confer any rights, benefits or
remedies upon any person other than the parties hereto and their respective
successors and assigns.
7.10 Remedies. The Holders, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, shall be entitled to
specific performance of their rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by any Holder by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive in any action for specific performance the defense
that a remedy at law would be adequate.
7.11 Further Assurances. Each of the parties hereto shall execute and
deliver such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations or other actions
by, or giving any notices to, or making any filings with, any governmental
authority or any other Person) as may be reasonably required or desirable to
carry out or to perform the provisions of this Agreement.
7.12 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the respective successors and assigns of the
parties, except that the Company shall not have the right to assign or otherwise
transfer all or any part of its rights or obligations hereunder or any interest
herein without the prior written consent of the Holders.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
on the day and year first set forth above.
XXXXXXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: CEO
HOLDER SIGNATURE PAGES FOLLOW
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HOLDER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
The undersigned Holder hereby executes this counterpart signature page to the
Registration Rights Agreement, dated as of August 9, 2006 by and among
XXXXXXXXXXXXX.XXX, INC. and certain Holders, including the undersigned.
Mellon HBV Master U.S. Event Driven Fund, LP
By: /s/ X. Xxxxxxxxx
(Signature)
Print Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
Address: ___________________________
Phone: _____________________________
Fax: _______________________________
Email: ______________________________
Mellon HBV Master Global
Event Driven Fund, LP
By:/s/ Xxxxxxx X. Xxxxxx III
(Signature)
Print Name: Xxxxxxx X. Xxxxxx III
Title: President/CEO
Address: ___________________
Phone: ______
Fax: _________
Email:_______________
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