PIGGYBACK REGISTRATION RIGHTS AGREEMENT
Exhibit
4.10
THIS PIGGYBACK REGISTRATION RIGHTS
AGREEMENT (this "Agreement"), dated as of the same date as
the Warrant to which it is attached as Exhibit 1, is made by
and between FOCUS ENHANCEMENTS,
INC., a Delaware corporation, with headquarters located at 0000 Xxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (the “Company”), and Xxxxxxx/Heishorn &
Associates (“Consultant”).
W
I T N E S S E T H:
WHEREAS, the Company has
agreed to issue the Warrant to the Consultant in connection with the performance
of certain services, and the Warrant may be exercised for the purchase of shares
of Common Stock (the “Warrant Shares”) upon certain terms and
conditions; and
WHEREAS, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, (the “1933 Act”) with respect to the Warrant.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Holder hereby agree as
follows:
1. Definitions. As used in
this Agreement, the following terms shall have the following
meanings:
(a) “Effective
Date” means any date after the date hereof that the
Securities and Exchange Commission (“SEC”) declares effective a Registration
Statement covering Registrable Securities and otherwise meeting the conditions
contemplated hereby to be effective.
(b) “Holder”
means Consultant and any permitted transferee or assignee who agrees to become
bound by the provisions of this Agreement in accordance with Section 3 hereof
and who holds Registrable Securities, as the context may require.
(c) “Register,”
“Registered,” and “Registration” refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis (“Rule
415"), and the SEC’s declaration or ordering of effectiveness of such
Registration Statement.
(d) "Registrable
Securities" means the Warrant and the Warrant Shares purchased upon exercise of
the Warrant as set forth in the document to which this Agreement is Exhibit
1.
(e) “Registration
Statement” means a registration statement of the Company under the 1933 Act
covering Registrable Securities on Form S-3, if the Company is then eligible to
file using such form, and if not eligible, then on Form SB-2 or other
appropriate form.
2.
Piggy-back
Registration Rights. If, after the date hereof (but without
any obligation to do so), the Company proposes to register (including for this
purpose a registration effected by the Company for persons other than the
Holders) any of its securities under the 1933 Act in connection with the public
offering of such securities (other than a registration (i) with respect to an
employee benefit plan, or (ii) in connection with a Rule 145
transaction under the 1933 Act), the Company shall, each such time, promptly
give each Holder written notice of such registration together with a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under applicable state securities laws. Upon the written request of
each Holder given within twenty (20) business days after delivery of such
written notice by the Company to Holder, the Company shall, subject to the
provisions hereof, use its reasonable efforts to cause to be registered under
the 1933 Act all of the Registrable Securities that each such Holder has
requested to be registered. If a Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth
herein.
2.1
Obligations
of the Company. Whenever required to effect the registration
of any Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its reasonable efforts to cause such registration statement
to become effective, and, upon the request of the holders of a majority of the
securities registered thereunder, keep such registration statement effective for
up to one hundred twenty (120) days.
(b) Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the 1933 Act with respect
to the disposition of all securities covered by such registration statement for
a period set forth in Section 2.1 (a) above.
(c) Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.
(d) In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement with terms generally satisfactory to
the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
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(e) Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the 1933 Act, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. In such instance, Company shall use
its best efforts to amend or supplement such prospectus to cure any such
statement or omission so as to render such statement or omission not
misleading.
(f)
Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and
(ii) a letter, dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.
2.2
Furnish
Information. In connection
with any action pursuant to this Section 2, the selling Holders shall furnish to
the Company such information regarding themselves, the Registrable Securities
held by them, and the intended method of disposition of such securities as shall
be required to effect the registration of their Registrable
Securities. In that connection, each selling Holder shall be required
to represent to the Company that all such information which is given is both
complete and accurate in all material respects when made.
2.3
Definition
of Expenses.
(a) “Registration
Expenses” shall mean all expenses incurred by the Company, except for
“Selling Expenses,” in complying herewith including, without
limitation, all registration, filing and qualification fees, underwriters’
expense allowances, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and disbursements, and the expense of any
special audits incident to or required by any registration.
(b) “Selling Expenses”
shall mean all underwriting discounts and selling commissions applicable to the
sale of the Registrable Securities in the registration, all stock transfer taxes
and all fees and disbursements of any additional special counsel in connection
with each such registration attributable to the Registrable Securities being
registered.
2.4
Expenses
of Registration. The Company shall
bear all Registration Expenses incurred in connection with any registration,
qualification or compliance, All Selling Expenses shall be borne by
the Holders of the securities so registered, pro rata on the basis of the number
of Registrable Securities so registered.
2.5
Underwriting
Requirements in Piggy-back Registration. The right of any
Holder to registration pursuant to an underwriting shall be conditioned upon
such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company and any other persons
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected by the Company. Notwithstanding any other provision of this
Agreement, if the underwriter determines that market factors require a
limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities from such registration
and underwriting. Notwithstanding anything to the contrary herein, no
reduction shall be made with respect to securities offered by the Company for
its own account in connection with any Company offering. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
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2.6
Delay
of Registration. No Holder shall
have any right to obtain or seek an injunction restraining or otherwise delaying
any such registration as a result of any controversy that might arise with
respect to the interpretation or implementation of this Section 2.
2.7
Indemnification. In the event any
Registrable Securities are included in a registration statement under this
Section 2:
(a) To
the extent permitted by law, the Company will indemnify and hold harmless each
Holder, the officers, directors and partners of each Holder, any underwriter (as
defined in the 0000 Xxx) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the “1934 Act”) against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) 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) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any
state securities law; and the Company will reimburse each such Holder, officer,
director or partner, underwriter or controlling person for any reasonable legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the Company’s indemnity contained in this Section 2.7(a) 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
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing
and expressly stated for use in connection with such registration by any such
Holder, or such Holder’s officers, directors or partners, underwriter, or
controlling person. The Company shall not be required to indemnify
any person against any liability arising out of the failure of any Holder or
person acting on behalf of a Holder to deliver a prospectus as required by the
1993 Act. The
indemnity provided for in this Section 2.7(a) shall remain in full force and
effect regardless of any investigation made by or on behalf of such seller,
underwriter, participating person or controlling person and shall survive
transfer of such securities by such seller.
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(b) To
the extent permitted by law, each selling Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter (within the meaning of the
0000 Xxx) for the Company, any person who controls such underwriter, and any
other Holder selling securities in such registration statement or any of its
partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly stated in a writing for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses, as incurred, where same are reasonably incurred by any person intended
to be indemnified pursuant to this Section 2.7(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 2.7(b)
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
Holder, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the liability of each Holder
under this Section 2.7(b) shall be limited to an amount equal to the net
proceeds from the offering price of the shares sold by such Holder.
(c) Promptly
after receipt by an indemnified party under this Section 2.7 of notice of the
commencement of any action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 2.7, notify the indemnifying party in writing of the
commencement thereof, and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the reasonable fees and expenses to be paid by the indemnifying party if the
indemnified party reasonably determines that representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding. The failure to notify an indemnifying party within a
reasonable time of the commencement of any such action, to the extent
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.7, but the omission so to notify the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 2.7.
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(d) In
order to provide for just and equitable contribution to joint liability under
the 1933 Act in any case in which either (i) any indemnified party makes a claim
under this Section 2.7 or any controlling person of such indemnified party makes
such a claim but is judicially determined (by entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.7 provides
for indemnification in such case, or (ii) contribution under the 1933 Act may be
required on the part of any such person seeking indemnity under the terms of
this Section 2.7; then, and in each such case, the Company and such person will
contribute to the aggregate losses, claims, damages, or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) no such person shall be required to contribute any
amount in excess of the net proceeds from the offering price of all such
Registrable Securities sold by it pursuant to such registration statement and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any person or entity who was not guilty of such fraudulent
misrepresentation.
2.8
Reports
Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the 1933 Act
and any other rule or regulation of the SEC that may at any time permit a Holder
to sell securities of the Company to the public without registration, the
Company agrees to:
(a)
use its reasonable efforts to
make and keep public information available, as those terms are understood and
defined in Rule 144, at all times after ninety (90) days after the closing date
of the first registration statement filed by the Company;
(b) use
its reasonable efforts to file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934 Act;
and
(c) furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request: (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144 (at any time after ninety (90) days after
the closing date of the first registration statement filed by the Company), the
1933 Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company; and (iii) such other information as may be reasonably requested in
order to permit any Holder to avail itself of any rule or regulation of the SEC
or any state securities authority which permits the selling of any such
securities without registration or pursuant to such form.
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3.
Assignment
of Registration Rights.
The
piggyback registration rights hereunder may be assigned by a Holder to a
transferee or assignee of such securities: (i) if such transfer is made in
connection with the transfer of all Registrable Securities held by the
transferor; (ii) if such transferee or assignee acquires at least
thirty thousand (30,000) shares of the then outstanding Registrable Securities
held by such Holder, (iii) to any Affiliate (as defined in Regulation D of the
0000 Xxx) of such Holder; (iv) to any family member or trust established for the
benefit of an individual Holder; or (v) in connection with a distribution by
such Holder to any partner, member, former partner, or member or the estate of
such partner or member; provided in each case that the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; provided, however, that such
assignment shall be effective only if the transferee agrees in writing at the
time of transfer to be bound by the terms and conditions of this
Agreement and such transfer of any Registrable Securities is lawful under all
applicable securities laws.
4.
Termination of the Company’s
Obligations.
The
Company shall have no obligations hereunder with respect to any registration
request or requests made by any Holder (a) more than three years following the
date of the Warrants are issued or (b) all Registrable Securities held by and
issuable to such Holder (and its affiliates) may be sold under Rule 144 during
any ninety (90) day period.
5.
Obligations
of the Investors. In connection
with the registration of the Registrable Securities, any Holder shall
have the following obligations:
(a) Such
Holder shall cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of any
respective Registration Statement hereunder, unless such Holder has
notified the Company in writing of such Holder's election to exclude all of such
Holder's Registrable Securities from the Registration Statement;
and
(b) Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any material event which, in the Company’s opinion justifies the cessation of
the distribution of the Registrable Securities, such Holder will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder's receipt of
the copies of any supplemented or amended prospectus which addresses such
material event, and, if so directed by the Company, such Holder shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Holder's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
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6.
Amendment
of Registration Rights.
Any
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Holders who
hold a fifty (50%) percent interest of the Warrant Shares as of such
date. Any amendment or waiver effected in accordance with this
Section 6 shall be binding upon each Holder and the Company.
7.
Miscellaneous.
(a) A
person or entity is deemed to be a holder of Registrable Securities whenever
such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Notices
required or permitted to be given hereunder shall be given in the manner
contemplated by the Warrant: if to the Company or to the Holder, to
their respective address contemplated by the Warrant or at such other address as
each such party furnishes by notice given in accordance with this clause
(b).
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.
(d) This
Agreement shall be deemed to be a contract made under the laws of the State of
Delaware for contracts to be wholly performed in such state and without giving
effect to the principles thereof regarding the conflict of laws. Each
of the parties consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of the State of California, Santa Xxxxx
County in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non
conveniens, to the bringing of any such proceeding in such
jurisdiction.
(e) The
Company and the Holder hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other in
respect of any matter arising out of or in connection with this
Agreement.
(f)
If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
(g)
This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties
hereto.
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(h) All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
(i)
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
thereof.
(j)
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may
be delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
(k) This
Agreement constitutes the entire agreement among the parties hereto with respect
to the Holder’s registration rights with respect to the Warrant and Warrant
Shares There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to its subject matter.
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IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above
written.
| COMPANY: | |||
| FOCUS ENHANCEMENTS, INC. | |||
| By: |
Xxxx Xxxxxxxx
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| Name: |
Xxxx Xxxxxxxx
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| Title: |
EVP of Finance & CFO
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XXXXXXX/XXXXXXXXX
& ASSOCIATES, INC.
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| By: |
/s/ Xxxx Xxxxxxxxx
|
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| Name: |
Xxxx Xxxxxxxxx
|
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| Title: |
Partner
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