REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.10
This
Registration Rights Agreement (this “Agreement”)
is
made as of December 21, 2007 by Aftersoft Group Inc., a Delaware corporation
(the “Company”),
for
the benefit of the Holders (as such term is hereinafter defined). The Company
hereby confirms that the rights granted under this Agreement constitute a
material inducement to the Holders to enter into the Loan Agreement (as such
term is hereinafter defined), make Loans from time to time thereunder, and/or
acquire or hold Conversion Shares and/or Warrant Shares (as such terms are
hereinafter defined). Each Holder, by its participation or request to
participate in any Registration effected pursuant to this Agreement, shall
be
deemed to have confirmed such Holder’s agreement to comply with the applicable
provisions of this Agreement.
NOW,
THEREFORE, the Company hereby agrees, in favor of the Holders, as
follows:
1. Definitions.
In
addition to those terms defined elsewhere in this Agreement, the following
terms
shall have the following meanings wherever used in this Agreement:
“Act”
shall
mean the Securities Act of 1933, as amended, and any successor statute from
time
to time.
“Affiliate”
shall
mean, with respect to any person, any other person controlling, controlled
by or
under common control with the first person.
“Board”
shall
mean the Board of Directors of the Company.
“Business
Day”
shall
have the meaning ascribed thereto in the Loan Agreement.
“Common
Stock”
shall
mean the authorized common stock of the Company.
“Company”
shall
mean Aftersoft Group, Inc., and shall include any successor
thereto.
“Conversion
Shares”
shall
mean the shares of Common Stock issuable at any time and from time to time
upon
conversion of the Term Note.
“Costs
and Expenses”
shall
mean all of the costs and expenses relating to any subject Registration
Statement, including but not limited to registration, filing and qualification
fees, blue sky expenses, costs of listing any Shares on any exchange or other
trading media, and printing expenses, fees and disbursements of counsel and
accountants to the Company, and reasonable fees and disbursements of a single
counsel to the Holders (not to exceed $15,000 per Registration, absent exigent
circumstances); provided,
however,
that
underwriting discounts and commissions attributable solely to the securities
registered for the benefit of Holders, fees and disbursements of any additional
counsel to Holders, and all other expenses attributable solely to Holders shall
be borne by each subject Holder.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and any successor statute
from time to time.
“Holders”
shall
mean, collectively, all Persons holding Registrable Shares from time to
time.
“Loan
Agreement”
shall
mean the Revolving Credit and Term Loan Agreement of even date herewith by
and
between ComVest Capital, LLC and the Company, as the same may be amended,
modified, supplemented and/or restated from time to time in accordance with
the
provisions thereof.
“Loans”
shall
mean the loans extended to the Company from time to time under and pursuant
to
the Loan Agreement.
“Person”
shall
mean any individual, corporation, partnership, limited partnership, limited
liability company, trust, or other entity of any kind, and any government or
department or agency thereof.
“Registrable
Shares”
shall
mean all Shares, excluding any Shares which may then be sold by the Holder
thereof pursuant to Rule 144(k) promulgated under the Act.
“Registration”
shall
mean any registration of Common Stock pursuant to a registration statement
filed
by the Company with the SEC in respect of any class of Common Stock,
other than
a
registration statement in respect of employee stock options or other employee
benefit plans or in respect of any merger, consolidation, acquisition or like
combination, whether on Form X-0, Xxxx X-0 or any equivalent form of
registration then in effect.
“Registration
Period”
shall
mean, with respect to a Registration Statement, the period of time from the
effective date of such Registration Statement until such date as is the earlier
of (a) the date on which all of the Registrable Securities covered by such
Registration Statement shall have been sold to the public, or (b) the date
on which the Conversion Shares and the Warrant Shares issued or issuable upon
cashless exercise of the Warrant in accordance with Section 1.3 of the Warrant
(in the opinion of counsel to the Company evidenced by a written opinion issued
to the Holders in form reasonably acceptable to the Holders) may be immediately
sold without restriction (including, without limitation, as to volume
restrictions) by each Holder thereof without registration under the
Act.
“Registration
Statement”
shall
mean any registration statement filed or to be filed by the Company in respect
of any Registration.
“SEC”
shall
mean the United States Securities and Exchange Commission, or any successor
agency or agencies performing the functions thereof.
“Shares”
shall
mean (a) the Conversion Shares issued and/or issuable from time to time, (b)
the
Warrant Shares issued and/or issuable from time to time, and (c) any additional
or other shares of Common Stock issued in respect of any of the foregoing Shares
by reason of any stock split, stock dividend, merger, share exchange,
recapitalization or other such event.
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“Term
Note”
shall
mean the Term Note issued pursuant to and as defined in the Loan
Agreement.
“Warrants”
shall
mean the warrants to purchase Shares, issued by the Company pursuant to the
Loan
Agreement, including any and all warrants issued in replacement of the original
such warrants.
“Warrant
Shares”
shall
mean the Common Stock and/or other securities issued and/or issuable at any
time
and from time to time upon exercise of any of the Warrants, and any additional
or other shares of Common Stock issued in respect of any of such Shares by
reason of any stock split, stock dividend, merger, share exchange,
recapitalization or other such event.
2. Shelf
Registration.
(a) The
Company hereby represents and warrants to the Holders that (i) the Company
is
currently “in registration” with respect to a registration statement covering
the Common Stock held by Auto Data Network, Inc., which Common Stock will be
distributed as a dividend to Auto Data Network, Inc.’s shareholders upon such
registration statement being declared effective, and (ii) in connection with
a
recently completed private placement of Common Stock in the gross amount of
$2,500,000, the Company has granted registration rights to the holders of such
Common Stock pursuant to a registration rights agreement, a true and complete
copy of which has been provided by the Company to Convest Capital, LLC (the
“Private
Placement Rights Agreement”).
Following the successful completion of the registration process for the Common
Stock held by Auto Data Network, Inc., and subject to the Company’s obligations
under the Private Placement Rights Agreement (it being the Company’s intention
to file a single Registration Statement covering the Registrable Shares and
the
Common Stock entitled to the benefit of the Private Placement Rights Agreement),
the Company shall prepare and file with the SEC, within sixty (60) days after
the first date on which filing thereof is permitted by the SEC following the
effectiveness of the registration statement in respect of the Common Stock
held
by Auto Data Network, Inc (or, if such registration statement is not declared
effective by May 1, 2008, then the Registration Statement hereunder shall be
filed not later than June 30, 2008, a Registration Statement on a form that
is
appropriate under the Act (and, if available, pursuant to Rule 415 promulgated
under the Act), covering the resale of all of the Registrable Securities, in
an
amount sufficient to cover the resale of all Conversion Shares, Warrant Shares
and additional shares of Common Stock issuable pursuant to the anti-dilution
provisions of the Term Note and the Warrants; provided,
however,
that in
the event that the SEC limits the number of Shares which may be included in
such
Registration Statement, then the Company shall, as promptly thereafter as shall
be permitted by the SEC, file one or more additional Registration Statements
covering the Registrable Shares which are not subject to an effective
Registration Statement hereunder. The Company shall not be subject to any fees
under Section 2(c) below by reason of any limitation imposed by the SEC as
aforesaid, provided that this sentence shall not absolve the Company of any
such
fees which may be payable in the event that the Company fails to file or have
declared effective an additional Registration Statement in accordance with
Section 2(c)(ii) below.
(b) The
Company shall use its best efforts to cause the Registration Statement (or,
if
applicable, the initial Registration Statement) required by this Section 2
to be
declared effective under the Act as promptly as possible after the filing
thereof, but in any event not later than ninety (90) days after the filing
thereof; and the Company shall further use its best efforts to cause any
additional Registration Statement(s) contemplated by the proviso
to
Section 2(a) above to be declared effective under the Act as promptly as
possible (and in any event within ninety (90) days) after the SEC shall permit
the filing thereof.
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(c) If
(i) the Registration Statement required by this Section 2 (or, if
applicable, the initial Registration Statement) is not filed within sixty (60)
days after the date first permitted to be filed, or is not declared effective
under the Act within one hundred fifty (150) days after same is first permitted
to be filed, (ii) any additional Registration Statement(s) contemplated by
the
proviso
to
Section 2(a) above is not filed promptly after the filing thereof as permitted
by the SEC, or is not declared effective within ninety (90) days after the
filing thereof, or (iii) any Registration Statement required by this
Section 2 shall cease to be available for use by the Holders as selling
stockholders (A) as provided under Section 2(f) below where such
unavailability continues for a period in excess of five (5) trading days beyond
the allowed time period, or (B) for any other reason including, without
limitation, by reason of a stop order, a material misstatement or omission
in
such Registration Statement or the information contained in such Registration
Statement having become outdated and continues to be unavailable for a period
in
excess of thirty (30) days (which need not be consecutive days) in any twelve
(12) month period, then the Company shall pay to the Holders, ratably in
proportion to the number of Registrable Shares held by the respective Holders,
a
cash fee equal to the product of $500 multiplied by the number of calendar
days
during which any of the events described in clauses (i) or (ii) above occurs
and
is continuing (the “Blackout
Period”);
provided,
however,
that
the aggregate of such fees payable under this Section 2(c) shall not exceed
$500,000; and further provided,
that
the Company shall not be liable to pay any fees under this Section 2(c) to
the
extent that the occurrence of the events described in clauses (i) or (ii) above
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
information furnished to the Company by a Holder for inclusion in the
Registration Statement. Each such payment shall be due within five (5) Business
Days after the end of each 30-day period of the Blackout Period until the
termination of the Blackout Period and within five (5) Business Days after
such
termination. The Blackout Period shall terminate upon the filing or
effectiveness (as the case may be) of the Registration Statement in the case
of
clause (i) above and upon notice from the Company that the Registration
Statement is again available in the case of clause (ii) above. The foregoing
notwithstanding, the Company shall not be subject to the foregoing fees to
the
extent that such fees arise solely by reason of the Company’s compliance with
its obligations under the Private Placement Rights Agreement.
(d) The
Company shall use its best efforts to keep each Registration Statement under
this Section 2 effective at all times during the applicable Registration
Period.
(e) If
any
offering pursuant to a Registration Statement pursuant to this Section 2
involves an underwritten offering (which may only be with the consent of the
Company, which shall not be unreasonably withheld or delayed), (i) the Holders
(acting by a majority in interest) shall have the right to select legal counsel
and an investment banker or bankers and manager or managers to administer to
the
offering, which investment banker or bankers or manager or managers shall be
reasonably satisfactory to the Company, and (ii) the Company shall promptly
enter into a customary agreement with the subject under rider (s) containing
customary inspection rights, indemnifications and other customary
provisions.
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(f) If
the
Registrable Securities are registered for resale under an effective Registration
Statement, the Holders shall cease any distribution of such Shares under such
Registration Statement:
(i) for
a
period of up to six (6) months if (A) such distribution would require the public
disclosure of material non-public information concerning any transaction or
negotiations involving the Company or any of its Affiliates that, in the
reasonable judgment of the Company’s Board of Directors, would materially
interfere with such transaction or negotiations, or (B) such distribution would
otherwise require premature disclosure of information that, in the reasonable
judgment of the Company’s Board of Directors, would adversely affect or
otherwise be detrimental to the Company; provided
that the
Company shall not invoke this clause (i) more than once in any twelve (12)
month
period or for more than six (6) months in any such twelve (12) month period;
(ii) not
more
than once in any twelve (12) month period, for up to thirty (30) days, upon
the
request of the Company if the Company proposes to file a Registration Statement
under the Act for the offering and sale of securities for its own account in
an
underwritten offering and the managing underwriter therefor shall advise the
Company in writing that in its opinion the continued distribution of the
Registrable Securities would adversely affect the offering of the securities
proposed to be registered for the account of the Company; and
(iii) for
a
period of up to sixty (60) days after the filing of the Company’s annual report
on Form 10-K or Form 10-KSB, the quiet period running from the end of a fiscal
quarter of the Company until the applicable Form 10-Q or Form 10-QSB has been
filed, or other event that requires the filing of a post-effective amendment
to
any Registration Statement hereunder, so long as the Company has filed and
is
during such period actively pursuing effectiveness of such post-effective
amendment with the staff of the SEC.
The
Company shall promptly notify the Holders in writing at such time as (x) such
transactions or negotiations have been otherwise publicly disclosed or
terminated, or (y) such non-public information has been publicly disclosed
or
counsel to the Company has determined that such disclosure is not required
due
to subsequent events.
(g) The
Company shall (i) permit the Holders’ counsel to review (A) such
Registration Statement, and all amendments and supplements thereto, in each
case
to the extent of any information with respect to the Holders, their and their
Affiliates’ beneficial ownership of securities of the Company, and their
intended method of disposition of Registrable Securities, and (B) all requests
for acceleration or effectiveness thereof and any correspondence between the
Company and the SEC relating to the Registration Statement (collectively, the
“Registration
Documents”),
for a
reasonable period of time prior to their filing with the SEC, (ii) not file
(or send) any Registration Documents in a form to which such counsel reasonably
objects (and the running of any time period will be tolled during the period
of
any such review), and (iii) not request acceleration of such Registration
Statement without prior notice to such counsel. The sections of such
Registration Statement covering information with respect to the Holders, their
and their Affiliates’ beneficial ownership of securities of the Company, and
their intended method of disposition of Registrable Securities shall conform
in
all material respects to the information provided to the Company by the Holders.
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(h) The
Registration Statement pursuant to this Section 2 shall not, except for Common
Stock entitled to the benefit of the Private Placement Rights Agreement or
otherwise as consented to in writing by the Holders of a majority of the
Registrable Shares, include any securities other than Registrable
Shares.
(i) The
Company shall bear all of the Costs and Expenses of the Registration pursuant
to
this Section 2.
3. Piggyback
Registration.
In the
event that the Company shall propose a Registration at any time when a
Registration Statement is not effective pursuant to Section 2 above, then the
Company shall give to each Holder written notice (the “Registration
Notice”)
of
such proposed Registration (which notice shall include a statement of the
proposed filing date thereof, the underwriters and/or managing underwriters
of
the subject offering, and any other known material information relating to
the
proposed Registration) not less than twenty (20) or more than sixty (60) days
prior to the filing of the subject Registration Statement, and shall, subject
to
the limitations provided in this Section 3, include in such Registration
Statement all or a portion of the Registrable Shares owned by and/or issuable
to
each Holder, as and to the extent that such Holder may request same to be so
included by means of written notice given to the Company within ten (10) days
after the Company’s giving of the Registration Notice. Each Holder shall be
permitted to withdraw all or any part of its Registrable Shares from a
Registration Statement by written notice to the Company given at any time prior
to the effective date of the Registration Statement. The Company shall bear
all
of the Costs and Expenses of any Registration described in this Section 3;
provided,
however,
that
each Holder shall pay, pro rata
based
upon the number of its Registrable Shares included therein, the underwriters’
discounts, commissions and compensation attributable solely to the inclusion
of
such Registrable Shares in the overall public offering. Notwithstanding anything
to the contrary contained herein, the Company’s obligation to include a Holder’s
Registrable Shares in any such Registration Statement shall be subject, at
the
option of the Company, to the following further conditions:
(a) The
distribution for the account of such Holder shall be underwritten by the same
underwriters (if any) who are underwriting the distribution of the securities
for the account of the Company and/or any other persons whose securities are
covered by such Registration Statement, and shall be made at the same
underwriter discount or commission applicable to the distribution of the
securities for the account of the Company and/or any other persons whose
securities are covered by such Registration Statement; and such Holder shall
enter into an agreement with such underwriters containing customary
indemnification and other provisions;
(b) If
at any
time after giving the Registration Notice, and prior to the effective date
of
the Registration Statement filed in connection with such Registration Notice,
the Company shall determine for any reason not to proceed with the subject
Registration, the Company may, at its election, give written notice of such
determination to the Holders and, thereupon, shall be relieved of its obligation
to register any of the Holders’ Registrable Shares in connection with such
Registration;
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(c) In
connection with an underwritten public offering pursuant to a Registration
Statement under this Section 3, if and only if the managing underwriter(s)
thereof shall advise the Company in writing that, due to adverse market
conditions or the potential adverse impact on the offering to be made for the
account of the Company, the securities to be included in such Registration
will
not include all of the Registrable Shares requested to be so included by the
Holders, then the Company will promptly furnish each such Holder with a copy
of
such written statement and may require, by written notice to each such Holder
accompanying such written statement, that the distribution of all or a specified
portion of such Registrable Shares be excluded from such distribution (with
any
such “cutback” to be allocated among the subject Holders (and, if applicable,
any other holders of Common Stock to be included in such Registration) in
proportion to the relative number of shares of Common Stock requested by such
Persons to be included in such Registration); and
(d) The
Company shall not be obligated to effect any registration of Shares incidental
to the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option
or
other employee benefit plans.
4. Registration
Procedures.
In the
case of each Registration effected by the Company in which Registrable Shares
are to be sold for the account of any Holder, the Company, at its sole cost
and
expense (exclusive of items excluded in the proviso
to the
definition of “Costs and Expenses” above), will use its best efforts
to:
(a) prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus included therein as may be necessary to effect
and
maintain the effectiveness of such Registration Statement, until the completion
of the distribution of the Registrable Shares included therein, as may be
required by the applicable rules and regulations of the SEC and the instructions
applicable to the form of such Registration Statement, and furnish to the
Holders of the Registrable Shares covered thereby copies of any such supplement
or amendment not less than three (3) Business Days prior to the date first
used
and/or filed with the SEC; and comply with the provisions of the Act with
respect to the disposition of all the Shares to be included in such Registration
Statement;
(b) provide
(i) the Holders of the Registrable Shares to be included in such Registration
Statement, and (ii) one counsel for all the Holders of such Registrable Shares,
the reasonable opportunity review such Registration Statement, each prospectus
included therein or filed with the SEC, and each amendment or supplement
thereto, in each case to the extent of any disclosures regarding the Holders,
their and their Affiliates’ beneficial ownership of securities of the Company,
and their intended method of disposition of the Registrable Shares included
in
such Registration Statement (or any amendment to any such information previously
included in such Registration Statement (including any amendment or supplement
thereto) or any prospectus included therein);
(c) for
a
reasonable period prior to the filing of such Registration Statement, and not
more than once in any calendar quarter throughout the period specified above,
make available for inspection by the Persons referred to in Section 4(b) above
such financial and other information and books and records of the Company,
and
cause the officers, directors, employees, counsel and independent certified
public accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the reasonable judgment of the counsel for the subject
Holders, to conduct a reasonable investigation within the meaning of the Act;
provided,
however,
that
each such party shall be required to maintain in confidence and not disclose
to
any other person or entity any information or records reasonably designated
by
the Company in writing as being confidential, until such time as and to the
extent that (i) such information becomes a matter of public record or generally
available to the public (whether by virtue of its inclusion in such Registration
Statement or otherwise, other than by reason of a breach hereof), (ii) such
party shall be required to disclose such information pursuant to the subpoena
or
order of any court or other governmental agency or body having jurisdiction
over
the matter, or (iii) such information is required to be set forth in such
Registration Statement or the prospectus included therein or in an amendment
to
such Registration Statement or an amendment or supplement to such prospectus
in
order that such Registration Statement, prospectus, amendment or supplement,
as
the case may be, does not include an untrue statement of a material fact or
omit
to state therein a material fact required to be stated therein or necessary
to
make the statements therein not misleading; and
further provided,
that
the Company need not make such information available, nor need it cause any
officer, director or employee to respond to such inquiry, unless each such
Holder of Registrable Shares to be included in a Registration Statement
hereunder, upon the Company’s request, executes and delivers to the Company a
specific undertaking to substantially the same effect contained in the preceding
proviso;
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(d) promptly
notify in writing the counsel for the Holders of Registrable Shares to be
included in a Registration Statement hereunder, (i) when such Registration
Statement or the prospectus included therein or any prospectus amendment or
supplement or post-effective amendment has been filed, and, with respect to
such
registration statement or any post-effective amendment, when the same has become
effective, (ii) of any comments by the SEC and by the blue sky or securities
commission or regulator of any state with respect thereto or any request by
the
SEC for amendments or supplements to such Registration Statement or the
prospectus or for additional information, (iii) of the issuance by the SEC
of
any stop order suspending the effectiveness of such registration statement
or
the initiation of any proceedings for that purpose, (iv) of the receipt by
the
Company of any notification with respect to the suspension of the qualification
of any Shares for sale in any jurisdiction or the initiation or threatening
of
any proceeding for such purpose, or (v) if it shall be the case, at any time
when a prospectus is required to be delivered under the Act, that such
Registration Statement, prospectus, or any document incorporated by reference
in
any of the foregoing 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 in light of the circumstances then
existing;
(e) obtain
the withdrawal of any order suspending the effectiveness of such Registration
Statement or any post-effective amendment thereto at the earliest practicable
date;
(f) if
requested by the counsel for the Holders of Registrable Shares to be included
in
a Registration Statement, promptly incorporate in a prospectus, prospectus
supplement or post-effective amendment such information as is required by the
applicable rules and regulations of the SEC and as such counsel may reasonably
specify should be included therein relating to the terms of the sale of the
Registrable Shares included thereunder, including, without limitation,
information with respect to the number of Registrable Shares being sold by
each
Holder, the name and description of such Holder, the offering price of such
Registrable Shares and any discount, commission or other compensation payable
in
respect thereof, the purchase price being paid therefor by any underwriters
and
with respect to any other terms of the offering of the Registrable Shares to
be
sold in such offering; and make all required filings of such prospectus,
prospectus supplement or post-effective amendment promptly after notification
of
the matters to be incorporated in such prospectus, prospectus supplement or
post-effective amendment;
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(g) furnish
to each Holder of Registrable Shares to be included in such Registration
Statement hereunder and the counsel referred to in Section 4(b) a copy of such
Registration Statement, each such amendment and supplement thereto (in each
case
excluding all exhibits and documents incorporated by reference) and such number
of copies of the Registration Statement (excluding exhibits thereto and
documents incorporated by reference therein unless specifically so requested
by
counsel for the Holders) and the prospectus included in such Registration
Statement (including each preliminary prospectus and any summary prospectus),
in
conformity with the requirements of the Act, as such counsel may reasonably
request in order to facilitate the disposition of the Shares owned by such
Holder, and to permit such Holder to satisfy the prospectus delivery
requirements of the Act; and the Company hereby consents to the use of such
prospectus and any amendment or supplement thereto by each such Holder in the
form most recently provided to such person by the Company, in connection with
the offering and sale of the Shares covered by the prospectus (including such
preliminary and summary prospectus) or any supplement or amendment
thereto;
(h) timely
(i) register or qualify (to the extent legally required) the Shares to be
included in such registration statement under such other securities laws or
blue
sky laws of such jurisdictions to be designated by the Holders of a majority
of
such Shares participating in such registration, as any Holder of the securities
being sold shall reasonably request, (ii) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions for
so
long as may be necessary to enable such Holder to complete its distribution
of
the Registrable Shares pursuant to such Registration Statement, and (iii) take
any and all such actions as may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in such jurisdictions of such Shares;
provided,
however,
that
the Company shall not be required for any such purpose to (A) qualify generally
to do business as a foreign corporation or a broker-dealer in any jurisdiction
wherein it would not otherwise be required to qualify but for the requirements
of this Section 4(h), (B) subject itself to taxation in any such jurisdiction,
or (C) consent to general service of process in any such
jurisdiction;
(i) cooperate
with the Holders of the Registrable Shares to be included in a Registration
Statement hereunder to facilitate the timely preparation and delivery of
certificates representing Registrable Shares to be sold, which certificates
shall be printed, lithographed or engraved, or produced by any combination
of
such methods, in customary form to permit the transfer thereof through the
Company’s transfer agent;
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(j) provide
a
CUSIP number for all Shares, not later than the effective date of the
Registration Statement;
(k) notify
in
writing each Holder of Registrable Shares of any proposal by the Company to
amend or waive any provision of this Agreement and of any amendment or waiver
effected pursuant thereto, each of which notices shall contain the text of
the
amendment or waiver proposed or effected, as the case may be;
(l) engage
to
act on behalf of the Company, with respect to the Registrable Shares to be
so
registered, a registrar and transfer agent having such duties and
responsibilities (including, without limitation, registration of transfers
and
maintenance of stock registers) as are customarily discharged by such an agent,
and to enter into such agreements and to offer such indemnities as are customary
in respect thereof; and
(m) otherwise
comply with all applicable rules and regulations of the SEC, and make available
to the Holders, as soon as practicable, but in any event not later than 18
months after the effective date of such Registration Statement, an earnings
statement covering a period of at least twelve months which shall satisfy the
provisions of Section 6(a) of the Act (including, at the option of the Company,
pursuant to Rule 158 thereunder).
5. Indemnification
by the Company.
(a) The
Company shall indemnify each Holder and its agents and Affiliates from and
against any claim, loss, cost, charge or liability of any kind, including
amounts paid in settlement and reasonable attorneys’ fees, which may be incurred
by the Holder or Affiliate as a result of any breach of any representation
or
warranty or covenant of the Company contained in this Agreement or in any
certificate delivered on the closing date of any public offering of
Shares.
(b) The
Company shall indemnify and hold harmless each Holder and its agents and
Affiliates against any losses, expenses, claims, damages or liabilities, joint
or several, to which such Holder or any such agent or Affiliate becomes subject,
under the Act or any rule or regulation thereunder or otherwise, insofar as
such
losses, expenses, claims, damages or liabilities (or actions in respect thereof)
(i) are caused by any untrue statement or alleged untrue statement of any
material fact contained in any preliminary prospectus (if used prior to the
effective date of the Registration Statement), or contained, on the effective
date thereof, in any Registration Statement in which Registrable Shares were
included, the prospectus contained therein, any amendment or supplement thereto,
or any other document related to such Registration Statement, or (ii) 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 not misleading, or (iii) arise out of any violation by the Company
of
the Act or any rule or regulation thereunder applicable to the Company and
relating to actions or omissions otherwise required of the Company in connection
with such registration. The Company shall reimburse each Holder and any such
agent or Affiliate for any legal or other expenses reasonably incurred by such
Holder, agent or Affiliate in connection with investigating, defending or
settling any such loss, claim, damage, liability or action; provided,
however,
that
the Company shall not be liable to any such persons in any such case to the
extent that any such loss, claim, damage, liability or action arises out of
or
is based upon any untrue statement or alleged untrue statement or omission
or
alleged omission made in reliance upon and in conformity with information
furnished to the Company in writing by such Person expressly for inclusion
in
any of the foregoing documents. This indemnity shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company or the subject
indemnified person, which consent shall not be unreasonably withheld or
delayed.
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6. Further
Obligations of Holders.
The
obligations of the Company with respect to any particular Holder are subject
to
such Holder’s agreement to the following (which such Holder shall specifically
confirm in writing to the Company upon the Company’s request in connection with
any Registration Statement):
(a) Such
Holder shall furnish in writing to the Company all information concerning such
Holder and its and its Affiliates’ holdings of securities of the Company and its
Affiliates, and the intended method of disposition of the Registrable Securities
included in such Registration Statement, as shall be reasonably required in
connection with the preparation and filing of any Registration Statement
covering any of such Holder’s Registrable Shares.
(b) Such
Holder shall indemnify and hold harmless the Company, its agents and Affiliates,
and each of its directors, each of its officers who has signed a Registration
Statement, each person (if any) who controls the Company within the meaning
of
the Act, and any underwriter (as defined in the Act) for the Company, against
any losses, claims, damages or liabilities to which the Company or any such
director, officer or controlling person may become subject under the Act or
any
rule or regulation thereunder or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (i) are caused by any
untrue statement or alleged untrue statement of any material fact contained
in
any preliminary prospectus (if used prior to the effective date of the
Registration Statement), or contained, on the effective date thereof, in any
Registration Statement in which such Holder’s Registrable Shares were included,
the prospectus contained therein, or any amendment or supplement thereto, or
(ii) 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 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 made in reliance upon and in conformity with information
furnished to the Company by such Holder in writing expressly for inclusion
in
any of the foregoing documents. In no event shall any Holder be required to
pay
indemnification hereunder (or contribution under Section 7(d) below) in an
aggregate amount in excess of the net proceeds received by such Holder in the
subject offering. This indemnity shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the subject Holder or indemnified person, which
consent shall not be unreasonably withheld or delayed.
7. Additional
Provisions.
(a) Each
Holder and each other Person indemnified pursuant to Section 5 above shall,
in
the event that it receives notice of the commencement of any action against
it
which is based upon an alleged act or omission which, if proven, would result
in
the Company’s having to indemnify it pursuant to Section 5 above, promptly
notify the Company, in writing, of the commencement of such action and permit
the Company, if the Company so notifies such Holder within thirty (30) days
after receipt by the Company of notice of the commencement of the action, to
participate in and to assume the defense of such action with counsel reasonably
satisfactory to such Holder (and in this regard, Xxxxxxx Xxxxxx LLP shall be
deemed reasonably satisfactory to such Holder); provided,
however,
that
such Holder or other indemnified person shall be entitled to retain its own
counsel at its own expense (except that the indemnifying party shall bear the
expense of such separate counsel if representation of both parties by the same
counsel would be inappropriate due to actual or potential conflicts of
interest). The failure to notify the Company promptly of the commencement of
any
such action shall not relieve the Company of any liability to indemnify such
Holder or such other indemnified person, as the case may be, under Section
5
above, except to the extent that the Company shall be actually prejudiced or
shall suffer any loss by reason of such failure to give notice, and shall not
relieve the Company of any other liabilities which it may have under this or
any
other agreement.
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(b) The
Company and each other Person indemnified pursuant to Section 6 above shall,
in
the event that it receives notice of the commencement of any action against
it
which is based upon an alleged act or omission which, if proven, would result
in
any Holder having to indemnify it pursuant to Section 6 above, promptly notify
such Holder, in writing, of the commencement of such action and permit such
Holder, if such Holder so notifies the Company within thirty (30) days after
receipt by such Holder of notice of the commencement of the action, to
participate in and to assume the defense of such action with counsel reasonably
satisfactory to the Company (and in this regard, Xxxxxxxxx Traurig, LLP shall
be
deemed reasonably satisfactory to the Company); provided,
however,
that
the Company or other indemnified person shall be entitled to retain its own
counsel at the Company’s expense. The failure to notify any Holder promptly of
the commencement of any such action shall not relieve such Holder of liability
to indemnify the Company or such other indemnified person, as the case may
be,
under Section 6 above, except to the extent that the subject Holder shall be
actually prejudiced or shall suffer any loss by reason of such failure to give
notice, and shall not relieve such Holder of any other liabilities which it
may
have under this or any other agreement.
(c) No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified person who is party to such claim
or
litigation, consent to entry of any judgment or enter into any settlement that
does not include as a term thereof the giving by the claimant or plaintiff
to
such indemnified person of an unconditional release from all liability in
respect to such claim or litigation. Each such indemnified person shall furnish
such information regarding itself or the claim in question as an indemnifying
party may reasonably request in writing and as shall be reasonably required
in
connection with defense of such claim and litigation resulting
therefrom.
(d) If
the
indemnification provided for in Sections 5 and 6 is unavailable or insufficient
to hold harmless an indemnified party, then, subject to the limits set forth
in
Section 6(b) above, each indemnifying party shall contribute to the amount
paid
or payable by such indemnified party as a result of the expenses, claims,
losses, damages or liabilities (or actions or proceedings in respect thereof)
referred to in Sections 5 and 6, in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the sellers of Shares
on
the other hand in connection with statements or omissions which resulted in
such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses, as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the sellers of Shares and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Holders agree that it
would not be just and equitable if contributions pursuant to this Section 7(d)
were to be determined by pro rata allocation (even if all sellers of Shares
were
treated as one entity for such purpose) or by another method of allocation
which
does not take account of the equitable considerations referred to in the first
sentence of this Section 7(d). The amount paid by an indemnified person as
a
result of the expenses, claims, losses, damages or liabilities (or actions
or
proceedings in respect thereof) referred to in the first sentence of this
Section 7(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified person in connection with investigating or
defending any claim, action or proceeding which is the subject of this Section
7(d). No person guilty of fraudulent misrepresentation (within the meaning
of
Section 11(f) of the Act) shall be entitled to contribution from any person
who
was not guilty of such fraudulent misrepresentation. The obligations of sellers
of Shares to contribute pursuant to this Section 7(d) shall be several in
proportion to the respective amounts of Shares sold by them pursuant to a
Registration Statement.
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8. Rule
144 Information.
For so
long as the Company shall remain a reporting company under the Exchange Act,
the
Company will at all times keep publicly available adequate current public
information with respect to the Company of the type and in the manner specified
in Rule 144(c) promulgated under the Act.
9. Limitations
on Subsequent Registration Rights. Except
for the Company’s obligations under the Private Place Rights Agreement as
currently in effect, from and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a majority of
the
Registrable Shares then outstanding and/or issuable, enter into any agreement
with any holder or prospective holder of any securities of the Company which
would (a) prohibit, limit or delay the filing or effectiveness of the
Registration Statement(s) required under Section 2 above, (b) require the
Company to include such securities in any Registration filed under Section
2
above, (c) prohibit or limit the inclusion of Shares in any Registration
described in Section 3 above, or (d) grant to such holder or prospective holder
priority over the Holders in the event of any “cutback” described in Section
3(c) above.
10. Notices.
All
notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be given by personal delivery,
by
telecopier (with confirmation of receipt), or by recognized overnight courier
service (with all charges prepaid or billed to the account of the sender),
addressed (a) if to the Company, at its office at Regus House, Heronsway,
Xxxxxxx Xxxxxxxx Xxxx, Xxxxxxx, XX0 0XX, Xxxxxx Xxxxxxx, Attention: Xxxxx
Xxxxxxxx, Telecopier: 011-44-870-134-2941, or such other address or telecopier
number as shall have been specified by the Company to the Holders by written
notice, or (b) if to any Holder, at his, her or its address or telecopier number
as same appears on the records of the Company. All notices shall be deemed
to
have been given either at the time of the delivery or telecopy thereof (provided
that any telecopy which is sent at any time which is not during normal business
hours at the point of receipt shall be deemed to have been given on the next
succeeding Business Day), or, if sent by overnight courier, on the third
(3rd)
Business Day following delivery thereof to the overnight courier service.
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11. Waiver
and Amendment.
No
waiver, amendment or modification of this Agreement or of any provision hereof
shall be valid unless evidenced by a writing duly executed by the Company and
Holders holding, in the aggregate, a majority of the Registrable Shares then
outstanding and/or issuable. No waiver of any default hereunder shall be deemed
a waiver of any other, prior or subsequent default hereunder.
12. Governing
Law.
This
Agreement shall (irrespective of the place where it is executed and delivered)
be governed, construed and controlled by and under the substantive laws of
the
State of New York, without regard to conflicts of law principles.
13. Binding
Effect.
This
Agreement shall binding upon and shall inure to benefit of the Company and
the
Holders and their respective successors in interest from time to
time.
14. Captions.
The
captions and Section headings used in this Agreement are for convenience only,
and shall not affect the construction or interpretation of this Agreement or
any
of the provisions hereof.
15. Gender.
All
pronouns used in this Agreement in the masculine, feminine or neuter gender
shall, as the context may allow, also refer to each other gender.
16. Entire
Agreement.
This
Agreement constitutes the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersedes all prior
discussions, agreements and understandings of every kind and nature between
them
as to such subject matter.
17. Reliance
and Benefit.
This
Agreement is intended to benefit, and may be relied upon by, all Holders from
time to time, as if such Holders were expressly named herein, party hereto
and
signatory hereon.
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IN
WITNESS WHEREOF,
the
Company has executed this Agreement as of the date first set forth
above.
