REGISTRATION RIGHTS AGREEMENT
EXHIBIT 4.4
THIS REGISTRATION RIGHTS AGREEMENT
(this "Agreement")
is entered into as of August 6, 2007, among Deep Down, Inc., a Nevada
corporation (the "Company"),
and Prospect Capital Corporation, a Maryland corporation ("Holder").
WITNESSETH:
WHEREAS, the Company has
agreed to issue Holder a Warrant ("Warrant")
to acquire Four Million Nine Hundred Sixty Thousand Five Hundred Eighty
Five (4,960,585) shares (the "Shares")
of the common stock, par value $0.001 per share, of the Company (the
"Common
Stock");
WHEREAS, the Company has
agreed to xxxxx Xxxxxx certain registration rights in connection with the Shares
(the "Registration
Rights");
WHEREAS, concurrent with the
execution of this Agreement, Holder or its affiliate has entered into the Credit
Agreement (as defined below) with the Company;
WHEREAS, Holder and/or its
affiliate has required that Company enter into this Agreement to evidence the
grant of Registration Rights and as a condition to Holder's entering into the
Credit Agreement with the Company;
WHEREAS, the Company believes
its issuance of the Warrant and entering into the Credit Agreement will be
beneficial to the Company; and
WHEREAS, in consideration of
Holder's and/or its affiliate's execution of the Credit Agreement, the Company
is willing to xxxxx Xxxxxx the Registration Rights provided for
herein;
NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants hereinafter set forth,
and for other good and valuable consideration, the parties hereby agree as
follows:
ARTICLE
I.
REGISTRABLE
STOCK
Section
1.1 Registrable
Securities. For purposes of this Agreement, "Registrable
Securities"
means the Shares and all shares of the Common Stock now or
hereafter owned and held by Holder or a permitted transferee of a Holder
(collectively, the "Holders").
Shares cease to be "Registrable Securities" when they may be sold
pursuant to Rule 144(k) pursuant to the Securities Act of 1933, as amended (the
"Securities
Act"). All capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Warrant.
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ARTICLE
II.
DEMAND
REGISTRATIONS
Section
2.1 Requests for
Registration.
(a) At any
time and from time to time (provided no prohibitions exist pursuant
to any rules and regulations promulgated by the Commission or pursuant to the
Exchange Act) after the Unlock Date (as defined in the Warrant), the Holders
representing ownership of at least 20% of the Registrable Securities (the "Initiating
Holders")
may request registration under the Securities Act of all or any part of
their Registrable Securities (each, a "Demand
Registration") on any registration statement, subject to the terms and
conditions of this Agreement. Any request (a "Registration
Request")
for a Demand Registration shall specify (a) the approximate number of
shares of Registrable Securities requested to be registered (but not less than
20% of the total number of shares of Registrable Securities then outstanding),
and (b) the intended method of distribution of such shares. Within ten (10) days
after the date of sending of a Registration Request, the Company will give
written notice of such requested registration to any other Holders of
Registrable Securities and will include in such registration all shares of
Registrable Securities which Holders of Registrable Securities request the
Company to include in such registration by written notice given to the Company
within fifteen (15) days after the date of sending of the Company's
notice.
(b) Subject
to Article IV, the Holders of Registrable Securities will be entitled
to request up to one (1) Demand Registrations at any time and from time to
time.
(c) A
registration will not count as one (1) of the Demand Registrations
paid for by the Company (as provided in Article V) unless the Holders of
Registrable Securities are able to register and sell at least 75% of the
Registrable Securities requested to be included in such
registration.
(d) The
Company will not include in any Demand Registration any securities
other than shares of Registrable Securities without the prior written consent of
the Holders of at least 5% of the shares of Registrable Securities included in
such registration, except that the Company may include in such registration any
equity securities of the Company (the "Equity
Securities") to be sold for the account of the Company if the managing
underwriter(s) advise the Company that in their opinion the inclusion of such
shares of Registrable Securities and other Equity Securities proposed to be
included in such offering will not adversely affect the
ability of the underwriter to sell the shares of
Registrable Securities and such Equity Securities in an orderly manner in such
offering within a price range acceptable to the Holders of a majority of the
shares of Registrable Securities initially requesting registration. If the
managing underwriter(s) advise the Company that in their opinion the number of
shares of Registrable Securities and Equity Securities proposed to be included
in such registration for sale by the Company exceeds the number of shares that
can be sold in an orderly manner in such offering within a price range
acceptable to a majority of the Initiating Holders, the Company will include in
such registration, prior to the inclusion of any securities other than
Registrable Securities, the number of shares of Registrable Securities requested
to be
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included
that in the opinion of such underwriters can be sold in an orderly manner within
the price range of such offering, pro rata among the respective Holders of such
Registrable Securities on the basis of the number of shares of Registrable
Securities that each such Holder has requested the Company to include in such
registration over the total number of shares of Registrable Securities requested
to be included in such registration.
(e) The
Company shall not be obligated to effect, or to take any action to
effect, any Demand Registration:
(1) Within
twelve (12) months after the effective date of the first
Demand Registration;
(2) During
the period starting with the date sixty (60) days prior to
the Company's good faith estimate of the date of filing of, and ending on a date
nine (9) months after the effective date of, a Company- initiated registration;
provided that
the Company is actively employing in good faith all commercially reasonable
efforts to cause such registration statement to become effective;
or
(3) If
the Initiating Holders propose to dispose of shares of Registrable
Securities which may be immediately registered on Form S-3 pursuant to a request
made under Section 2.3 of this Agreement.
(f)
Notwithstanding the foregoing, if the Company shall furnish to the Initiating
Holders a certificate signed by the president, chief financial officer or chief
executive officer ("CEO")
of the Company stating that in the good faith judgment of the board of
directors of the Company (the "Board")
it would be seriously detrimental to the Company and its stockholders for
such registration to be effected at such time, then the Company shall have the
right to defer the filing of the registration statement no more than once during
any twelve (12) month period for a period of not more than one hundred- eighty
(180) days after receipt of the Registration Request from the Initiating
Holders, provided that all reasonable costs and expenses incurred by Holder in
connection with such deferred filing shall be reimbursed to Holder and paid by
the Company in accordance with Section 5.2 hereof.
Section
2.2 Selection of
Underwriter. The Holders of at least 50% of the outstanding shares of
Registrable Securities to be included in such registration will have the right
to select the managing underwriter(s) to manage the offering, subject to the
Company's approval, which will not be unreasonably withheld or delayed;
provided, that the managing underwriter(s) shall be the firm or firms that
managed the Company's most recently completed underwritten public offering of
Equity Securities unless the Holders of a majority of the shares of Registrable
Securities to be included in such registration shall object to such firm or
firms for reasons related to the ability of such firms to effectively manage the
offering.
Section
2.3 Shelf
Registration.
(a) Registrations on Form
S-3. At such time that the Company is qualified
for the use of Form S-3 or any comparable or successor form or forms,
in
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addition
to the rights contained in Section 2.1 and Section 2.2, the holders of at least
25% of the shares of Registrable Securities shall have the right, once in each
twelve (12) month period thereafter, to request a registration on Form S-3. Such
requests shall be in writing and shall state the number of shares of Registrable
Securities proposed to be disposed of and the intended method of distribution of
such shares by such holder or holders. The Company shall be obligated to effect
such registration pursuant to this Section 2.3 unless:
(i) the
Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate price
to the public of less than $1,000,000;
(ii) the
Company shall furnish to the Holders a certificate
signed by the president, chief financial officer or CEO of the Company (or in
the absence of such officer, any manager of the Company) stating that in the
good faith judgment of the Board, it is likely to be seriously detrimental to
the Company and its stockholders for such registration to be effected at such
time, in which event the Company shall have the right to defer the filing of the
registration no more than once during any twelve (12) month period for a period
of not more than one hundred-eighty (180) days after receipt of the request of
the Holder or Holders under this Section 2.3, provided that all reasonable costs
and expenses incurred by Holder in connection with such deferred filing shall be
reimbursed to Holder and paid by the Company in accordance with Section 5.2
hereof; or
(iii)
Notwithstanding the foregoing, if the Company fails to qualify for registration
on a registration statement on Form S-3 or any comparable or successor form or
forms, then Holders shall have the right to require the Company to use a
registration statement on Form S-1 in lieu of Form S-3 for any registration
pursuant to this Agreement.
(b) Delay Rights.
Notwithstanding anything to the contrary contained herein,
the Company may, upon written notice to any Holder whose Registrable Securities
are included in the Shelf Registration Statement, suspend such Holder's use of
any prospectus which is a part of the Shelf Registration Statement (in which
event the Holder shall discontinue sales of the Registrable Securities pursuant
to the Shelf Registration Statement) if (i) the Company is pursuing an
acquisition, merger, reorganization, disposition or other similar transaction
and the Company determines in good faith that the Company's ability to pursue or
consummate such a transaction would be materially and adversely affected by any
required disclosure of such transaction in the Shelf Registration Statement or
(ii) the Company has experienced some other material non-public event the
disclosure of which at such time, in the good faith judgment of the Company,
would materially and adversely affect the Company; however, in no event shall
any delay pursuant hereto exceed sixty (60) days in any one hundred-eighty (180)
day period or one-hundred twenty (120) days in any twelve (12) month period.
Upon disclosure of such information or the telinination of the condition
described above, the Company shall provide prompt notice to the Holders whose
Registrable Securities are
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included
in the Shelf Registration Statement, and shall promptly terminate any suspension
of sales it has put into effect and shall take such other actions to permit
registered sales of Registrable Securities as contemplated in this
Agreement.
ARTICLE
III.
PIGGYBACK
REGISTRATIONS
Section
3.1 Right to
Piggyback. If the Company proposes to register any of its securities
under the Securities Act (other than pursuant to a Demand Registration or a
registration solely in connection with an employee benefit or stock ownership
plan or in a transaction described in Rule 145 under the Securities Act) and the
registration form to be used may be used for the registration of the sale of
Registrable Securities (a "Piggyback
Registration"),
the Company will give prompt written notice to all Holders of Registrable
Securities of its intention to effect such a registration (each a "Piggyback
Notice"). Subject to Sections 3.2 and 3.3, the Company will include in
such registration all shares of Registrable Securities that Holders of
Registrable Securities request the Company to include in such registration by
written notice given to the Company within fifteen (15) days after the date of
the Company's notice.
Section
3.2 Priority on
Primary Registrations. If a Piggyback Registration relates to
an
underwritten public offering of securities by the Company and the managing
underwriter(s) advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in an orderly manner in such offering within a price range
acceptable to the Company, the Company will include in such registration (i)
first, the securities proposed to be sold by the Company; (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the Holders based on the ratio of the number of shares of Registrable
Securities that each such Holder has requested the Company include in such
registration over the total number of shares of Registrable Securities requested
to be included in such registration; and (iii) third, other securities requested
to be included in such registration, pro rata among the holders of such other
securities based on the ratio of the number of such other securities that each
such holder has requested the Company include in such registration over the
total number of other securities requested to be included in such
registration.
Section
3.3 Priority on
Secondary Registrations. If a Piggyback Registration relates to
an
underwritten public offering of securities by holders of the Company's
securities and the managing underwriter(s) advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number that can be sold in an orderly manner in such
offering within a price range acceptable to the holders initially requesting
such registration, the Company will include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration; (ii) second, the Registrable Securities requested to be included
in such registration, pro rata among the Holders based on the ratio of the
number of shares of Registrable Securities that each such Holder has requested
the Company include in such registration over the total number of shares of
Registrable Securities requested to be included in such registration; and (iii)
third, other securities requested to be included in such registration, pro rata
among the holders of such securities based on the ratio of
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the
number of such other securities that each such Holder has requested the Company
include in such registration over the total number of other securities requested
to be included in such registration.
Section
3.4 Limitation
on Subsequent Registration Rights. The Company represents, warrants
and covenants to Holder that, except as set forth on Schedule 3.4, (i) no
individual, corporation, limited liability company, partnership, trust or any
other organization or entity (collectively, "Person")
has registration rights with respect to any securities of the Company
held by any Person nor is the Company party to any agreement or understanding to
grant or allow any other Persons any registration rights with respect to any
securities of the Company held by such Persons whether outstanding on the date
hereof or issued hereafter, which are senior to or pad passu with the rights
granted to Holder hereunder, and (ii) the Company will not enter into any
agreement or understanding to grant or allow any other Persons any registration
rights with respect to any securities of the Company, which are senior to the
rights granted to Holder hereunder.
ARTICLE
IV.
REGISTRATION
PROCEDURES
Section
4.1 Registration
Procedures. Whenever the Holders of Registrable Securities have
requested that the sale of any Registrable Securities be registered pursuant to
this Agreement, the Company will use its commercially reasonable efforts
consistent with this Agreement, legal requirements and, in the case of an
offering by the Company, prevailing market conditions, to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of distribution thereof and will as expeditiously as
possible:
(a) prepare
and file with the Securities and Exchange Commission (the "Commission")
a registration statement with respect to such Registrable Securities and
use its commercially reasonable efforts to cause such registration statement to
become effective, provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish to
the selling Holders' counsel selected by the Holders representing a majority of
the Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed, which documents will be subject to the
review of such counsel;
(b) prepare
and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for the
earlier of (i) such time as all such Registrable Securities covered by the
registration statement have been sold or (ii) a period of six (6) months after
the effective date of the registration statement covering such Registrable
Securities, and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of distribution by the
Holders thereof set forth in such registration statement;
(c)
furnish to each Holder such number of copies of such registration statement,
each amendment and supplement thereto, the prospectus included in
such
6
registration
statement (including each preliminary prospectus) and such other documents as
such Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder;
(d) use its
commercially reasonable efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any Holder reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder, provided that the Company will not be required (i) to qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph, (ii) to subject itself to taxation in any such
jurisdiction or (iii) to consent to general service of process in any such
jurisdiction unless the managing underwriter or the Company advises in writing
that in their respective opinion registration in such jurisdiction would need to
be delayed pursuant to Section 2.3(a) hereof;
(e) notify
each Holder of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such Holder, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all
such Registrable Securities to be listed on each securities exchange
on which similar securities issued by the Company are then listed and to be
qualified for trading on each system on which similar securities issued by the
Company are from time to time qualified;
(g) provide a
transfer agent and registrar for all such Registrable Securities
not later than the effective date of such registration statement and thereafter
maintain such a transfer agent and registrar;
(h) enter
into such customary agreements not inconsistent with this Agreement
(including underwriting agreements in customary form) and take all such other
actions as the Holders of a majority of the shares of Registrable Securities
being sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities;
(i) make
available for inspection by any underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other agent retained by any such underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably
7
requested
by any such underwriter, attorney, accountant or agent in connection with such
registration statement under a confidentiality agreement;
(j) otherwise
use its commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months beginning with the first day
of the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit
any Holder that might be deemed, in the reasonable judgment
of such Holder, to be an underwriter or a controlling Person of the Company, to
participate in the preparation of such registration or comparable statement and
to require the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of such Holder and its counsel should
be included; and
(l) in
the event of the issuance of any stop order suspending the effectiveness
of a registration statement, or of any order suspending or preventing the use of
any related prospectus or suspending the qualification of any Registrable
Securities included in such registration statement for sale in any jurisdiction,
the Company will use its commercially reasonable efforts promptly to obtain the
withdrawal of such order.
If any
such registration or comparable statement refers to any Holder by name or
otherwise as the holder of any securities of the Company and if, in its
reasonable judgment, such Holder is or might be deemed to be a controlling
person of the Company, such Holder shall have the right to require (a) the
inclusion in such registration statement of language, in form and substance
reasonably satisfactory to such Holder, to the effect that the holding of such
securities by such Holder is not to be construed as a recommendation by such
Holder of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such Holder will assist in meeting any
future financial requirements of the Company, or (b) in the event that such
reference to such Holder by name or otherwise is not required by the Securities
Act or any similar federal statute then in force, the deletion of the reference
to such Holder; provided, that with
respect to this clause (b) such Holder
shall furnish to the Company an opinion of counsel to such effect, which opinion
and counsel shall be reasonably satisfactory to the Company.
ARTICLE
V.
REGISTRATION
EXPENSES
Section
5.1 Definition. The term
"Registration Expenses" means all
expenses incident
to the Company's performance of or compliance with this Agreement, including
without limitation all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses, messenger and
delivery expenses, fees and expenses of attorneys, accountants and other
experts, and fees and expenses of underwriters and their attorneys and experts,
other than underwriters' discounts and commissions which shall be deducted from
the proceeds of the offering payable by the Holders of Registrable
Securities.
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Section
5.2 Payment. The
Company shall pay the Registration Expenses in connection
with (i) three (3) Demand Registrations, (ii) any and all Piggyback
Registrations and (iii) all registrations pursuant to Section 2.3. In connection
with each Demand Registration, each registration pursuant to Section 2.3 and
each Piggyback Registration, the Company will reimburse the Holders of
Registrable Securities covered by such registration for the reasonable fees and
disbursements of one nationally recognized counsel chosen by the Holders of at
least 50% of such Registrable Securities.
ARTICLE
VI.
INDEMNIFICATION
Section
6.1 Indemnification by the
Company. The Company agrees to indemnify, to the
extent permitted by law, each Holder, the officers, directors, partners,
members, managers, stockholders, accountants, attorneys, agents and employees of
each of them, and each Person who controls such Holder (within the meaning of
the Securities Act) and the officers, directors, partners, members, managers,
stockholders, accountants, attorneys, agents and employees of each such
controlling Person, against all losses, claims, damages, liabilities and
expenses, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees and any legal or other fees or expenses incurred by
such party in connection with any investigation or proceeding), judgments,
fines, penalties, charges and amounts paid in settlement (collectively, "Losses"), as incurred, caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification, or compliance, and will reimburse each such Holder, each of its
officers, directors, partners, members, managers, stockholders, accountants,
attorneys, agents and employees and each Person controlling such Holder, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending or settling any such claim, loss, damage, liability,
or action, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Holder expressly for use
therein; provided,
however, that the Company shall not be required to indemnify any Person
for any Losses caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
(i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in such registration statement, such prospectus or such form
of prospectus or in any amendment or supplement thereto or (ii) such Person uses
an outdated or defective prospectus after the Company has notified such Person
in writing that the prospectus is outdated or defective. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each Person who controls such
underwriters
9
(within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable
Securities.
Section
6.2 Indemnification by
Holders. In connection with any registration statement in which
a Holder is participating, each such Holder will furnish to the Company in
writing such information and affidavits as the Company reasonably requests for
use in connection with any such registration statement and related prospectus
and, to the extent permitted by law, will indemnify, severally and not jointly,
the Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any Losses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading and will reimburse the Company and such directors, officers,
partners, members, managers, stockholders, accountants, attorneys, employees,
agents, Persons, or control Persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action, in each case to the extent, but only
to the extent, that such untrue statement or omission is contained or should
have been contained in any information or affidavit so furnished in writing by
such Holder expressly for use in such registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto; provided, that the
obligation to indemnify will be individual to each Holder and will be limited to
the amount of net proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
Section
6.3 Notice;
Defense of Claims. Any Person entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one (1) counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
Section
6.4 Survival;
Contribution. The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of securities.
Subject to the limitations and conditions of this Article VI, the Company also
agrees to make such provisions as are reasonably requested by any indemnified
party for contribution to such party in the event the Company's indemnification
provided herein is unavailable for any reason.
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Section
6.5 Underwriting
Agreement. To the extent that the provisions on indemnification
and contribution contained in the underwriting agreement entered into in
connection with an underwritten public offering are in conflict with the
provisions of this Article VI, the provisions contained in the underwriting
agreement shall control.
ARTICLE
VII.
PARTICIPATION
IN UNDERWRITTEN REGISTRATIONS
Section
7.1 Acceptance of
Underwriting. No Person may participate in any registration
hereunder that is underwritten unless such Holder (i) agrees to sell such
Holder's securities on the basis provided in any underwriting arrangements
approved by the Holders entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements; provided, that no
Holder included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties regarding such Holder as are reasonably required
by the underwriters.
ARTICLE
VIII.
REPORTING
REQUIREMENTS UNDER EXCHANGE ACT
Section
8.1 Reporting.
When it is first legally required to do so, the Company shall register
its Common Stock under Section 12 of the Securities and Exchange Act of 1934, as
amended (the "Exchange
Act") and shall keep effective such registration and shall timely file
such information, documents and reports for so long as the Commission may
require or prescribe under Section 13 of the Exchange Act. From and after the
effective date of the first registration statement filed by the Company under
the Securities Act, the Company shall (whether or not it shall then be required
to do so) timely file such information, documents and reports which a
corporation, partnership or other entity (whichever is applicable) subject to
Section 13 or 15(d) of the Exchange Act is required to file. Immediately upon
becoming subject to the reporting requirements of either Section 13 or 15(d) of
the Exchange Act, the Company shall forthwith upon request furnish any Holder
(i) a written statement by the Company that it has complied with such reporting
requirements, (ii) a copy of the most recent annual or quarterly report of the
Company, and (iii) such other reports and documents filed by the Company with
the Commission as such Holder may reasonably request in availing itself of an
exemption for the sale of Registrable Securities without registration under the
Securities Act. The Company acknowledges and agrees that the purposes of the
requirements contained in this Article VIII are (a) to enable any such Holder to
comply with the current public information requirement contained in paragraph
(c) of Rule 144 under the Securities Act should such Holder ever wish to dispose
of any of the securities of the Company acquired by it without registration in
reliance upon Rule 144 under the Securities Act (or any other similar exemptive
provision) and (b) to
qualify the Company for the use of registration statements on Form S-3. In
addition, so long as the Company is subject to Section 13 or 15(d) of the
Exchange Act, the Company shall take such other measures and file such other
information, documents and reports, as shall hereafter be required by the
Commission as a condition to the availability of Rule 144 under the Securities
Act (or any similar exemptive provision hereafter in effect) and the use of Form
S-3. The
11
Company
also covenants to use its commercially reasonable best efforts, to the extent
that it is reasonably within its power to do so, to qualify for the use of Form
S-3.
ARTICLE
IX.
MISCELLANEOUS
Section
9.1 No
Inconsistent Agreements. The Company will not hereafter enter into
any
agreement with respect to its securities that is inconsistent with or violates
the rights granted to the Holders in this Agreement,
Section
9.2 Adjustments
Affecting Units. The Company will not take any action, or permit
any change to occur, with respect to its securities for the purpose of (i)
materially and adversely affecting the ability of the Holders to include
Registrable Securities in a registration undertaken pursuant to this Agreement
or (ii) materially and adversely affecting the marketability of such Registrable
Securities in any such registration (including, without limitation, effecting a
stock split or a combination of stock); provided that this
Section 9.2 shall not apply to actions or changes with respect to the Company's
business, earnings or revenues in which the effect of such actions or changes on
the Registrable Securities is merely incidental.
Section
9.3 Notices. All notices,
demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in writing and
will be deemed to have been given when delivered personally or by overnight
delivery service with signature proof of delivery, or seventy-two (72) hours
after having been mailed by certified or registered mail, return receipt
requested and postage prepaid, to the recipient. Such notices, demands and other
communications shall be sent to the Company, to the address of the Company's
principal office, Attn.: Xxxxxx Xxxxx, or to the Holders, to their most recent
addresses as set forth in the books and records of the Company, or to such other
address or to the attention of such other Person as the recipient party has
specified by prior written notice to the sending party with a copy to Xxxxx
Xxxxxxxx, 0000 Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000. Delivery by
facsimile or electronic mail shall not be deemed to be adequate notice
hereunder.
Section
9.4 Remedies.
Any person having rights under any provision of this Agreement will be entitled
to enforce such rights specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that money damages may
not be an adequate remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
Section
9.5 Amendments and
Waivers. Except as otherwise provided herein, no amendment, modification,
termination or cancellation of this Agreement shall be effective unless made in
writing signed by the Company and the Holders of at least 50% of the then
outstanding shares of Registrable Securities.
12
Section
9.6 Successors and
Assigns. The Holder may assign all or any portion of its rights
under this Agreement to any affiliate, partner, member or stockholder of such
Holder or to any Person to whom such Holder transfers at least 5% of the
Registrable Securities then held by such Holder. Subject to the foregoing, the
rights of the parties under this Agreement shall inure to the benefit of, and
this Agreement shall be binding upon, the successors and assigns of the parties
hereto.
Section
9.7 Severability. If any
provision of this Agreement shall be held to be illegal, invalid
or unenforceable under any applicable law, then such contravention or invalidity
shall not invalidate the entire Agreement. Such provision shall be deemed to be
modified to the extent necessary to render it legal, valid and enforceable, and
if no such modification shall render it legal, valid and enforceable, then this
Agreement shall be construed as if not containing the provision held to be
invalid, and the rights and obligations of the parties shall be construed and
enforced accordingly.
Section
9.8 Entire
Agreement. This Agreement, those documents expressly referred
to
herein, and the other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.
Section
9.9 Headings.
The headings of this Agreement are for convenience only and do not constitute a
part of this Agreement.
Section
9.10 Governing
Law. The construction, validity and interpretation of this Agreement will
be governed by and construed in accordance with the domestic laws of the State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.
Section
9.11 Further
Assurances. Each party to this Agreement hereby covenants and agrees,
without the necessity of any further consideration, to execute and deliver any
and all such further documents and take any and all such other actions as may be
necessary or appropriate to carry out the intent and purposes of this Agreement
and to consummate the transactions contemplated hereby.
Section
9.12 Counterparts. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, with the same effect as if all parties had
signed the same document. All such counterparts shall be deemed an original,
shall be construed together and shall constitute one and the same
instrument.
Section
9.13 Termination. This
Agreement shall terminate as to any Holder, when all Registrable Interests held
by such Holder are eligible for sale under (a) Rule 144 under the Securities Act
during any ninety (90) day period or (b) Rule 144(k).
[Remainder
of page intentionally left blank]
13
|
COMPANY:
|
|
| By: /s/ Xxx X. Xxxxx | |
| Name: Xxx X. Xxxxx | |
| Title: President | |
| HOLDER: | |
| PROSPECT CAPITAL CORPORATION | |
| By: /s/ signature | |
| Name: | |
| Title: |
Schedule
3.4 to Registration Rights Agreement
All
holders of options and warrant to purchase shares of common stock of the
Company, and all holders of the Company's Convertible Notes, have piggy-back
registration rights. The Company has satisfied its registration rights
obligation to those investors in its [____] offering, to the holders of the
Company's Convertible Notes and certain option holders and warrant holders by
filing its Registration Statement which was deemed effective as of [_______ __,
____] and continues to be effective as of the date hereof.
