EXHIBIT 10.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
December 14, 2004, is by and between AMERICAN TECHNOLOGY CORPORATION (the
"COMPANY") and KINGSBRIDGE CAPITAL LIMITED (the "INVESTOR").
WHEREAS, the Company and the Investor have entered into that certain
Common Stock Purchase Agreement, dated as of the date hereof (the "PURCHASE
AGREEMENT"), pursuant to which the Company may issue, from time to time, to the
Investor up to $25 million worth of shares of Common Stock as provided for
therein;
WHEREAS, pursuant to the terms of, and in partial consideration for the
Investor entering into, the Purchase Agreement, the Company has issued to the
Investor a warrant, exercisable from time to time within five (5) years
following the six-month anniversary of the date of issuance (the "WARRANT") for
the purchase of an aggregate of up to 275,000 shares of Common Stock at a price
specified in such Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the Registrable Securities (as defined in the Purchase Agreement) as set forth
herein;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrant, and in
the Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree as follows (capitalized terms used herein
and not defined herein shall have the respective meanings ascribed to them in
the Purchase Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENT.
(a) FILING OF THE REGISTRATION STATEMENT. Upon the terms and subject to
the conditions set forth in this Agreement, the Company shall file with the
Commission, within forty-five (45) calendar days after the Effective Date, a
registration statement on Form S-3 under the Securities Act or such other form
as deemed appropriate by counsel to the Company for the registration for the
resale by the Investor of the Registrable Securities (the "REGISTRATION
STATEMENT").
(b) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Company shall use
commercially reasonable efforts (i) to have the Registration Statement declared
effective by the Commission as soon as reasonably practicable, but in any event
no later than forty-five (45) calendar days, or one-hundred twenty (120)
calendar days in the event that the Commission reviews the Registration
Statement, following the date that the Registration Statement is filed and (ii)
to ensure that the Registration Statement remains in effect throughout the term
of this Agreement as set forth in Section 4.2, subject to the terms and
conditions of this Agreement.
(c) REGULATORY DISAPPROVAL. The contemplated effective date for the
Registration Statement as described in Section 1.1(b) shall be extended without
default or liquidated damages hereunder or under the Purchase Agreement in the
event that the Company's failure to obtain the effectiveness of the Registration
Statement on a timely basis results solely from the Commission's disapproval of
the structure of the transactions contemplated by the Purchase Agreement. In
such event, the parties agree to cooperate with one another in good faith to
arrive at a resolution acceptable to the Commission.
(d) FAILURE TO MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. After
the Registration Statement has been declared effective, in the event the Company
fails to maintain the effectiveness of the Registration Statement (or the
Prospectus) throughout the period set forth in Section 4.2, other than temporary
suspensions as set forth in Section 1.1(e) or 2.1(n), and the Investor holds any
Registrable Securities at any time during the period of such ineffectiveness (an
"INEFFECTIVE PERIOD"), the Company shall pay to the Investor in immediately
available funds into an account designated by the Investor an amount , which
shall not exceed $2.5 million equal to the product of (x) the total number of
Registrable Securities issued to the Investor under the Purchase Agreement and
owned by the Investor at any time during such Ineffective Period and (y) the
result, if greater than zero, obtained by subtracting the VWAP on the Trading
Day immediately following the last day of such Ineffective Period from the VWAP
on the Trading Day immediately preceding the day on which any such Ineffective
Period began; PROVIDED, HOWEVER, that the foregoing payments shall not apply in
respect of Registrable Securities that are otherwise freely tradable by the
Investor or that the Company offers to repurchase from the Investor for a per
share purchase price equal to the VWAP on the Trading Day immediately preceding
the day on which any such Ineffective Period began.
(e) DEFERRAL OR SUSPENSION DURING A BLACKOUT PERIOD. Notwithstanding
the provisions of Section 1.1 (d), if in the good faith judgment of the Company,
following consultation with legal counsel, it would be detrimental to the
Company or its stockholders for the Registration Statement to be filed or
declared effective, or for resales of Registrable Securities to be made pursuant
to the Registration Statement due to (i) the existence of a material development
or potential material development involving the Company that the Company would
be obligated to disclose in the Registration Statement, which disclosure would
be premature or otherwise inadvisable at such time or would have a Material
Adverse Effect on the Company or its stockholders, or (ii) a proposed filing or
use of an existing registration statement in connection with a Company-initiated
registration of any class of its equity securities, which, in the good faith
judgment of the Company, would adversely effect or require premature disclosure
of the filing or use of such Company-initiated registration (notice thereof, a
"BLACKOUT NOTICE"), the Company shall have the right to (A) immediately defer
such filing or request for effectiveness for a period of not more than sixty
(60) days beyond the date by which such Registration Statement was otherwise
required hereunder to be filed or declared effective or (B) suspend use of such
Registration Statement for a period of not more than thirty (30) days during any
calendar year (any such deferral or suspension period, a "BLACKOUT Period"). The
Investor acknowledges that it would be seriously detrimental to the Company and
its stockholders for such Registration Statement to be filed or declared
effective (or remain in effect) during a Blackout Period and therefore essential
to defer such filing (or suspend the use thereof) during such Blackout Period
and agrees to cease any disposition of the Registrable Securities during such
Blackout Period. The Company may not utilize any of its rights under this
Section 1.1(e) to defer the filing or request for effectiveness of a
Registration Statement (or suspend its effectiveness) more than six (6) times in
any twelve (12) month period. In the event that, within fifteen (15) Trading
Days following any Settlement Date, the Company gives a Blackout Notice to the
Investor and the VWAP on the Trading Day immediately preceding such Blackout
Period ("OLD VWAP") is greater than the VWAP on the first Trading Day following
such Blackout Period that the Investor may sell its Registrable Securities
pursuant to an effective Registration Statement ("NEW VWAP"), then the Company
shall pay to the Investor, by wire transfer of immediately funds to an account
designated by the Investor, the "BLACKOUT AMOUNT." For the purposes of this
Agreement, Blackout Amount means a percentage equal to: (1) seventy-five percent
(75%) if such Blackout Notice is delivered prior to the fifth (5th) Trading Day
following such Settlement Date; (2) fifty percent (50%) if such Blackout Notice
is delivered on or after the fifth (5th) Trading Day following such Settlement
Date, but prior to the tenth (10th) Trading Day following such Settlement Date;
(3) twenty-five percent (25%) if such Blackout Notice is delivered on or after
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the tenth (10th) Trading Day following such Settlement Date, but prior to the
fifteenth (15th) Trading Day following such Settlement Date; and (4) zero
percent (0%) thereafter of: the product of (i) the number of Registrable
Securities purchased by the Investor pursuant to the most recent Draw Down and
actually held by the Investor immediately prior to the Blackout Period and (ii)
the result obtained by subtracting the New VWAP from the Old VWAP; PROVIDED,
HOWEVER, that (a) no Blackout Amount in respect of any Blackout Period shall
exceed $1.75 million, (b) no Blackout Amount shall be payable under this Section
1.1(e) in the event that the Registrable Securities are eligible for resale
under Rule 144 during the Blackout Period and (c) no Blackout Amount shall be
payable under this Section 1.1(e) in the event that the Company offers to
repurchase from the Investor for a per share purchase price equal to the VWAP on
the Trading Day immediately preceding the day on which any such Ineffective
Period began. For any Blackout Period in respect of which a Blackout Amount
becomes due and payable, rather than paying the Blackout Amount, the Company may
at is sole discretion, issue to the Investor shares of Common Stock with an
aggregate market value determined as of the first Trading Day following such
Blackout Period equal to the Blackout Amount ("BLACKOUT SHARES").
(f) LIQUIDATED DAMAGES. The Company and the Investor hereto acknowledge
and agree that the amounts payable under Sections 1.1(d) and 1.1(e) and the
Blackout Shares deliverable under Section 1.1(e) above shall constitute
liquidated damages and not penalties. The parties further acknowledge that (i)
the amount of loss or damages likely to be incurred by the Investor is incapable
or is difficult to precisely estimate, (ii) the amounts specified in such
subsections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of the
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.
(g) SOLE REMEDY. The Company and the Investor agree and acknowledge
that, subject to the penultimate sentence of Section 9.03 of the Purchase
Agreement, the amounts payable under Sections 1.1(d) and 1.1(e), as applicable,
constitute the Investor's sole remedy with respect to the Company's failure to
maintain the effectiveness for the Registration Statement or for any deferral or
suspension of the Registration Statement during a Blackout Period as discussed
in such Sections. The Investor further agrees and acknowledges that assuming the
payment of any amount by the Company, as set forth in such Sections, the
Company's failure to maintain the effectiveness of the Registration Statement or
for any deferral or suspension of the Registration Statement during a Blackout
Period, as applicable, shall not constitute a material breach or default of any
obligation of the Company to the Investor.
(h) ADDITIONAL REGISTRATION STATEMENTS. In the event and to the extent
that the Registration Statement fails to register a sufficient amount of Common
Stock necessary for the Company to issue and sell to the Investor and the
Investor to purchase from the Company all of the Registrable Securities to be
issued, sold and purchased under the Purchase Agreement and the Warrant, the
Company shall prepare and file with the Commission an additional registration
statement or statements in order to effectuate the purpose of this Agreement,
the Purchase Agreement, and the Warrant.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company shall use commercially reasonable
efforts to effect the registration with respect to the sale of the Registrable
Securities by the Investor in accordance with the intended methods of
disposition thereof. Without limiting the foregoing, the Company in each such
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case will use commercially reasonable efforts to do the following as
expeditiously as possible, but in no event later than the deadline, if any,
prescribed therefor in this Agreement:
(a) Subject to Section 1.1(e), the Company shall (i) prepare and file
with the Commission the Registration Statement; (ii) use commercially reasonable
efforts to cause such filed Registration Statement to become and to remain
effective (pursuant to Rule 415 under the Securities Act or otherwise); (iii)
prepare and file with the Commission such amendments and supplements to the
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for the time period
prescribed by Section 4.2 and in order to effectuate the purpose of this
Agreement, the Purchase Agreement, and the Warrant; and (iv) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the Investor set forth in
such Registration Statement; PROVIDED, HOWEVER, that the Investor shall be
responsible for the delivery of the Prospectus to the Persons to whom the
Investor sells the Shares, the Warrant Shares, and the Blackout Shares, if any,
and the Investor agrees to dispose of Registrable Securities in compliance with
the plan of distribution described in the Registration Statement and otherwise
in compliance with applicable federal and state securities laws.
(b) Two (2) Trading Days prior to filing the Registration Statement or
Prospectus, or any amendment or supplement thereto (excluding amendments or
supplements deemed to result from the filing of documents incorporated by
reference therein), the Company shall deliver to the Investor and to counsel
representing the Investor, in accordance with the notice provisions of Section
4.8, copies of the Registration Statement, Prospectus and/or any amendments or
supplements thereto as proposed to be filed, together with exhibits thereto,
which documents will be subject to review by the Investor and such counsel, and
thereafter deliver to the Investor and such counsel, in accordance with the
notice provisions of Section 4.8, such number of copies of the Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the Prospectus (including each preliminary prospectus) and
such other documents or information as the Investor or counsel may reasonably
request in order to facilitate the disposition of the Registrable Securities.
(c) The Company shall deliver, in accordance with the notice provisions
of Section 4.8, to each seller of Registrable Securities covered by the
Registration Statement such number of conformed copies of the Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the Prospectus (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 promulgated under the
Securities Act relating to such seller's Registrable Securities, and such other
documents, as such seller may reasonably request to facilitate the disposition
of its Registrable Securities.
(d) After the filing of the Registration Statement, the Company shall
promptly notify the Investor of any stop order issued or threatened by the
Commission in connection therewith and take all commercially reasonable actions
required to prevent the entry of such stop order or to remove it if entered.
(e) The Company shall use commercially reasonable efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of each jurisdiction in the United States as the Investor may
reasonably (in light of its intended plan of distribution) request, and (ii)
cause the Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
customary acts and things that may be reasonably necessary or advisable to
enable the Investor to consummate the disposition of the Registrable Securities;
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PROVIDED, HOWEVER, that the Company will not be required to qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 2.1(g), subject itself to taxation in any such
jurisdiction, consent or subject itself to general service of process in any
such jurisdiction, change any existing business practices, benefit plans or
outstanding securities or amend or otherwise modify the Charter or Bylaws.
(f) The Company shall make available to the Investor (and will deliver
to Investor's counsel), (A) subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof, copies of all
public correspondence between the Commission and the Company concerning the
Registration Statement and will also make available for inspection by the
Investor and any attorney, accountant or other professional retained by the
Investor (collectively, the "INSPECTORS"), (B) upon reasonable advance notice
during normal business hours all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "RECORDS")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with the
Registration Statement; PROVIDED, HOWEVER, that any such Inspectors must agree
in writing for the benefit of the Company not to use or disclose any such
Records except as provided in this Section 2.1(i). Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless the
disclosure or release of such Records is requested or required pursuant to oral
questions, interrogatories, requests for information or documents or a subpoena
or other order from a court of competent jurisdiction or other judicial or
governmental process; PROVIDED, HOWEVER, that prior to any disclosure or release
pursuant to the immediately preceding clause, the Inspectors shall provide the
Company with prompt notice of any such request or requirement so that the
Company may seek an appropriate protective order or waive such Inspectors'
obligation not to disclose such Records; and, PROVIDED, FURTHER, that if failing
the entry of a protective order or the waiver by the Company permitting the
disclosure or release of such Records, the Inspectors, upon advice of counsel,
are compelled to disclose such Records, the Inspectors may disclose that portion
of the Records that counsel has advised the Inspectors that the Inspectors are
compelled to disclose; PROVIDED, HOWEVER, that upon any such required
disclosure, such Inspector shall use his or her best efforts to obtain
reasonable assurances that confidential treatment will be afforded such
information. The Investor agrees that information obtained by it solely as a
result of such inspections (not including any information obtained from a third
party who, insofar as is known to the Investor after reasonable inquiry, is not
prohibited from providing such information by a contractual, legal or fiduciary
obligation to the Company) shall be deemed confidential and shall not be used
for any purposes other than as indicated above or by it as the basis for any
market transactions in the securities of the Company or its affiliates unless
and until such information is made generally available to the public. The
Investor further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
(g) The Company shall otherwise comply with all applicable rules and
regulations of the Commission, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.
(h) The Company shall appoint a transfer agent and registrar for all of
the Registrable Securities covered by such Registration Statement not later than
the effective date of such Registration Statement.
(i) The Investor shall cooperate with the Company, as reasonably
requested by the Company, in connection with the preparation and filing of any
Registration Statement hereunder. The Company may require the Investor to
promptly furnish in writing to the Company such information as may be required
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in connection with such registration including, without limitation, all such
information as may be requested by the Commission or the NASD or any state
securities commission and all such information regarding the Investor, the
Registrable Securities held by the Investor and the intended method of
disposition of the Registrable Securities. The Investor agrees to provide such
information requested in connection with such registration within two (2)
Trading Days after receiving such written request and the Company shall not be
responsible for any delays in obtaining or maintaining the effectiveness of the
Registration Statement caused by the Investor's failure to timely provide such
information.
(j) Upon receipt of a Blackout Notice from the Company, the Investor
shall immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities until (i) the
Company advises the Investor that the Blackout Period has terminated and (ii)
the Investor receives copies of a supplemented or amended prospectus, if
necessary. If so directed by the Company, the Investor will deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor's possession (other than
a limited number of file copies) of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice.
(k) The Investor shall not take any action with respect to any
distribution deemed to be made pursuant to the Registration Statement, which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
Section 2.2. REGISTRATION EXPENSES. The Company shall pay all registration
expenses incurred in connection with the Registration Statement (the
"REGISTRATION EXPENSES"), including, without limitation: (i) all registration,
filing, securities exchange listing and fees required by the NASD, (ii) all
registration, filing, qualification and other fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), (iii) all word processing, duplicating, printing, messenger and
delivery expenses, (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred by the Company
in connection with the listing of the Registrable Securities, (vi) reasonable
fees and disbursements of counsel for the Company and customary fees and
expenses for independent certified public accountants retained by the Company
(including the expenses of any special audits or comfort letters or costs
associated with the delivery by independent certified public accountants of such
special audit(s) or comfort letter(s) requested pursuant to Section 2.1(k)
hereof), (vii) the fees and expenses of any special experts retained by the
Company in connection with such registration and amendments and supplements to
the Registration Statement and Prospectus, and (viii) all reasonable fees and
expenses of counsel for the Investor to the extent incurred in connection with
the review, and assistance in preparation, of the Registration Statement,
correspondence with the Commission and amendments and supplements to the
Registration Statement and Prospectus. Any fees and disbursements of
underwriters, broker-dealers or investment bankers, including without limitation
underwriting fees, discounts, transfer taxes or commissions, and any other fees
or expenses (including legal fees and expenses) if any, attributable to the sale
of Registrable Securities, shall be payable by each holder of Registrable
Securities pro rata on the basis of the number of Registrable Securities of each
such holder that are included in a registration under this Agreement.
ARTICLE III
INDEMNIFICATION
Section 3.1. INDEMNIFICATION.
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(a) COMPANY INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Investor, its partners, Affiliates, officers, directors, employees
and duly authorized agents, and each Person or entity, if any, who controls the
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively, the "CONTROLLING PERSONS"), from and against any
loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements and costs and expenses
of investigating and defending any such claim) (collectively, "DAMAGES"), joint
or several, and any action or proceeding in respect thereof to which the
Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, and any Controlling Person, may become subject under the
Securities Act or otherwise, as incurred, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arises out of, or are based upon, any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein under the circumstances not misleading, and shall
reimburse the Investor and each such Controlling Person, for any legal and other
expenses reasonably incurred by the Investor or any such Controlling Person, as
incurred, in investigating or defending or preparing to defend against any such
Damages or actions or proceedings; PROVIDED, HOWEVER, that the Company shall not
be liable (i) to the extent that any such Damages arise out of the Investor's
(or any other indemnified Person's) failure to send or give a copy of the final
prospectus or supplement (as then amended or supplemented) to the persons
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such person if such statement or omission was corrected in such
final prospectus or supplement; (ii) to the extent that any such Damages arise
out of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement, or any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Investor or any other person who
participates as an underwriter in the offering or sale of such securities, in
either case, specifically stating that it is for use in the preparation thereof;
or (iii) to the extent any such Damages arise out of the sale by the Investor of
Registrable Securities during a Blackout Period.
(b) INVESTOR INDEMNIFICATION. In connection with any Registration
Statement with respect to which the Investor is participating, such Investor
will indemnify and hold harmless, to the same extent and in the same manner as
set forth in the preceding paragraph, the Company, each of its directors,
officers, each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act (each a
"COMPANY INDEMNIFIED PERSON") against any Damages to which any Company
Indemnified Person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such Damages arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arising out of, or are based upon, any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein under the circumstances not misleading
to the extent that such violation occurs in reliance upon and in conformity with
written information furnished to the Company by the Investor or on behalf of the
Investor expressly for use in connection with such Registration Statement, (ii)
any failure by the Investor to comply with prospectus delivery requirements of
the Securities Act, the Exchange Act or any other law or legal requirement
applicable to sales under the Registration Statement or (iii) any sale by the
Investor of Registrable Securities during a Blackout Period.
Section 3.2. CONDUCT OF INDEMNIFICATION PROCEEDINGS. All claims for
indemnification under Section 3.1 shall be asserted and resolved in accordance
with the provisions of Section 11.02 and 11.03 of the Purchase Agreement.
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Section 3.3. ADDITIONAL INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party or a
Company Indemnified Person may have pursuant to law, equity, contract or
otherwise.
To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will make the maximum contribution with
respect to any amounts for which it would otherwise be liable under this Article
III to the fullest extent permitted by law. However, (a) no contribution will be
make under circumstances where maker of such contribution would not have been
required to indemnify the indemnified party under the fault standards set forth
in this Article III, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation, and (c) contribution (together with
any indemnification obligations under this Agreement) by any seller of
Registrable Securities will be limited in amount of proceeds received by such
seller from the sale of such Registrable Securities.
ARTICLE IV
MISCELLANEOUS
Section 4.1. NO OUTSTANDING REGISTRATION RIGHTS. Except as otherwise disclosed
in accordance with the Purchase Agreement or in the Commission Documents, the
Company represents and warrants to the Investor that there is not in effect on
the date hereof any agreement by the Company pursuant to which any holders of
securities of the Company have a right to cause the Company to register or
qualify such securities under the Securities Act or any securities or blue sky
laws of any jurisdiction.
Section 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder, and the Company's obligation to keep the
Registration Statement effective, shall terminate at the earlier of (i) such
time that is two years following the termination of the Purchase Agreement, (ii)
such time as all Registrable Securities have been issued and have ceased to be
Registrable Securities, or (iii) upon the consummation of an "Excluded Merger or
Sale" as defined in the Warrant. Notwithstanding the foregoing, paragraphs (c)
and (d) of Section 1.1, Article III, Section 4.8, and Section 4.9 shall survive
the termination of this Agreement.
Section 4.3. RULE 144. The Company will, at its expense, promptly take such
action as holders of Registrable Securities may reasonably request to enable
such holders of Registrable Securities to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act ("RULE 144"), as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. If at any time the Company is not required to file
such reports, it will, at its expense, forthwith upon the written request of any
holder of Registrable Securities, make available adequate current public
information with respect to the Company within the meaning of paragraph (c)(2)
of Rule 144 or such other information as necessary to permit sales pursuant to
Rule 144. Upon the request of the Investor, the Company will deliver to the
Investor a written statement, signed by the Company's principal financial
officer, as to whether it has complied with such requirements.
Section 4.4. CERTIFICATE. The Company will, at its expense, forthwith upon the
request of any holder of Registrable Securities, deliver to such holder a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
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Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of each class of Stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this Agreement may be
waived, provided that such waiver is set forth in a writing executed by both
parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder of the
Registrable Securities (unless sold pursuant to an effective registration
statement or in accordance with Rule 144 under the Securities Act), provided
that the Company shall have the right to require any holder of Registrable
Securities to execute a counterpart of this Agreement as a condition to such
holder's claim to any rights hereunder. The Company may assign this Agreement at
any time in connection with a sale or acquisition of the Company, whether by
merger, consolidation, sale of all or substantially all of the Company's assets,
or similar transaction, without the consent of the Investor or other holders of
Registrable Securities, provided that the successor or acquiring Person or
entity agrees in writing to assume all of the Company's rights and obligations
under this Agreement. This Agreement, together with the Purchase Agreement and
the Warrant(s) sets forth the entire agreement and understanding between the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among them.
Section 4.7. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party
hereto.
Section 4.8. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be given in
accordance with Section 12.04 of the Purchase Agreement.
Section 4.9. GOVERNING LAW; DISPUTE RESOLUTION. This Agreement shall be
construed under the laws of the State of New York. Any dispute arising out of or
relating to this Agreement shall be resolved by means of arbitration pursuant to
the provisions of Article X of the Purchase Agreement.
Section 4.10. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
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Section 4.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
KINGSBRIDGE CAPITAL LIMITED
By: /s/ Valentine X'Xxxxxxxx
Valentine X'Xxxxxxxx
Director
AMERICAN TECHNOLOGY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Chief Financial Officer
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