EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT, by and between Augment
Systems Incorporated, a Delaware corporation (the "Company"), and the person
whose name appears on the signature page attached hereto (individually a
"Holder" and collectively, with the holders of other Units issued in the private
placement offering, (the "Holders").
WHEREAS, pursuant to a subscription agreement between the
Company and the Holders (the "Subscription Agreement"), in connection with the
proposed private placement (the "Private Placement") of the Company's $50,000
units ("Units"), each Unit comprised of (i) 15,842 shares of common stock
("Common Stock") of the Company (the "Unit Shares") and (ii) a 10% secured
convertible promissory note in the principal amount of $38,595 (the "Notes");
and
WHEREAS, the principal and accrued interest of the Notes may
be converted into Common Stock under certain circumstances (the "Conversion
Shares"); and
WHEREAS, pursuant to the terms of and in order to induce the
Holders to enter into the Subscription Agreement, the Company and the Holders
have agreed to enter into this Agreement; and
WHEREAS, it is intended by the Company and the Holders that
this Agreement shall become effective immediately upon the acquisition by the
Holders of the Notes.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the Company hereby agrees as follows:
1. Piggyback Registration. If the Company at any time proposes
to register any of its securities under the Securities Act of 1933, as amended
(the "1933 Act"), including its contemplated initial public offering (other than
pursuant to Form S-8 or other comparable form), the Company shall use its best
efforts to include the Unit Shares and the Conversion Shares (collectively
referred to as the "Registerable Securities"), in such registration. The Company
shall at such time give prompt
written notice to all Holders of its intention to effect such registration and
of such Holders' rights under such proposed registration, and upon the request
of any Holder delivered to the Company within twenty (20) days after giving of
such notice (which request shall specify the Registerable Securities intended to
be disposed of by such Holder and the intended method of disposition thereof),
the Company shall include such Registerable Securities held by each such Holder
requested to be included in such registration; provided, however, that if, at
any time after giving such written notice of the Company's intention to register
any of the Holder's Registerable Securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay the
registration of such Registerable Securities, the Company may give written
notice of such determination to each Holder and thereupon shall be relieved of
its obligation to register any Registerable Securities issued or issuable in
connection with such registration (but not from its obligation to pay
registration expenses in connection therewith or to register the Registerable
Securities in a subsequent registration); and in the case of a determination to
delay a registration shall thereupon be permitted to delay registering any
Registerable Securities for the same period as the delay in respect of
securities being registered for the Company's own account, provided however,
that no such delay may exceed thirty days after written notice has been sent to
the Holder. Notwithstanding any other provisions of this Agreement, the Holder
shall not be required to request that his Registrable Securities be included in
the registration of securities by the Company in connection with its initial
public offering.
2. Option to Include Registrable Securities in Offering.
Notwithstanding anything contained in Section 1 of this Agreement, the Company
shall not be required to include any of the Holders' Registerable Securities in
an underwritten offering of the Company's securities unless such Holders accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (provided such terms are usual and customary for
selling stockholders) and the Holders agree to execute and/or deliver such
documents in connection with such registration as the Company or the managing
underwriter may reasonably request. Nothing contained herein however, shall
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require any Holder to execute an agreement to refrain from selling the
Registerable Securities for more than a period of twelve months from the
effective date of a Registration Statement.
3. Mandatory Registration. In the event the Holders have not
had all of their Registerable Securities registered in connection with a
registration statement pursuant to Sections 1 and 2 hereof, the Company shall
effect the registration of all remaining Registerable Securities as soon as
practicable, but not later than 365 days after the effective date of such
registration statement; provided, however, that such period may be extended or
delayed by the Company for one period of up to 30 days if, upon the advice of
counsel at the time such registration is required to be filed, or at the time
the Company is required to exercise its best efforts to cause such registration
statement to become effective, such delay is advisable and in the best interests
of the Company because of the existence of non-public material information, or
to allow the Company to complete any pending audit of its financial statements.
4. Cooperation with Company. Holders will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registerable Securities.
5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to use its best efforts to
effect the registration of any of the Registerable Securities under the 1933
Act, the Company shall (except as otherwise provided in this Agreement), as
expeditiously as possible:
a. prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement and shall use its best
efforts to cause such registration statement to become effective and remain
effective until all the Registerable Securities are sold or become capable of
being publicly sold without registration under the 1933 Act.
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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 and to comply with the provisions of the 1933 Act with respect to the
sale or other disposition of all securities covered by such registration
statement whenever the Holder or Holders of such securities shall desire to sell
or otherwise dispose of the same (including prospectus supplements with respect
to the sales of securities from time to time in connection with a registration
statement pursuant to Rule 415 of the Commission);
c. furnish to each Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such other documents, as such Holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by such Holder;
d. use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as each Holder shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition in such
jurisdiction of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
e. use its best efforts to list such securities on any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange;
f. enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
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g. notify each Holder of Registerable Securities
covered by such registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to be delivered under
the 1933 Act, of the happening of any event of which it has knowledge 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 the light of the circumstances then existing; and
h. furnish, at the request of any Holder on the date
such Registerable Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registerable Securities are not being sold
through underwriters, on the date the registration statement with respect to
such Registerable Securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registerable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registerable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registerable Securities may reasonably request and are
customarily included in such letters; and
i. take such other actions as shall be reasonably
requested by any Holder to facilitate the registration and sale of the
Registerable Securities; provided, however, that the Company shall not be
obligated to take any actions not specifically required elsewhere herein which
in the aggregate would cost in excess of $5,000.
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6. Restrictions on Transfer of Registerable Securities. The
Holder agrees that he will not sell or transfer any of the Registerable
Securities for a period of twelve months from the Effective Date of any
registration statement in which such Registrable Securities are included without
the prior written consent of Xxxxxx & Associates, Inc.
7. Expenses. All expenses incurred in any registration of the
Holders' Registerable Securities under this Agreement shall be paid by the
Company, including, without limitation, printing expenses, fees and
disbursements of counsel for the Company, expenses of any audits to which the
Company shall agree or which shall be necessary to comply with governmental
requirements in connection with any such registration, all registration and
filing fees for the Holders' Registerable Securities under federal and State
securities laws, and expenses of complying with the securities or blue sky laws
of any jurisdictions pursuant to Section 5(h)(i); provided, however, the Company
shall not be liable for (a) any discounts or commissions to any underwriter; (b)
any stock transfer taxes incurred with respect to Registerable Securities sold
in the Offering or (c) the fees and expenses of counsel for any Holder.
8. Indemnification. In the event any Registerable Securities
are included in a registration statement pursuant to this Agreement:
a. Company Indemnity. Without limitation of any other
indemnity provided to any Holder, either in connection with the Offering or
otherwise, to the extent permitted by law, the Company shall indemnify and hold
harmless each Holder, the affiliates, 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 (the "Exchange Act"),
against any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the 1933 Act, the Exchange 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
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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, (iii) any violation or alleged violation by the
Company of the 1933 Act, the Exchange Act, or (iv) any state securities law or
any rule or regulation promulgated under the 1933 Act, the Exchange Act or any
state securities law, and the Company shall reimburse each such Holder,
affiliate, officer or director or partner, underwriter or controlling person for
any legal or other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to any Holder 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
written information furnished expressly for use in connection with such
registration by any such Holder or any other officer, director or controlling
person thereof.
x. Xxxxxx Indemnity. Each Holder shall indemnify and
hold harmless the Company, its affiliates, its counsel, officers, directors,
shareholders and representatives, any underwriter (as defined in the 0000 Xxx)
and each person, if any, who controls the Company or the underwriter (within the
meaning of the 1933 Act or liabilities (joint or several) to which they may
become subject under the 1933 Act, the Exchange Act or any state securities law,
and the Holder shall reimburse the Company, affiliate, officer or director or
partner, underwriter or controlling person for any legal or other expenses
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; insofar as such losses, claims, damages or
liabilities (or actions and respect thereof) arise out of or are based upon any
statements or information provided by such Holder to the Company in connection
with the offer or sale of Registerable Securities.
c. Notice; Right to Defend. Promptly after receipt by
an indemnified party under this Section 8 of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect
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thereof is to be made against any indemnifying party under this Section 8,
deliver to the indemnifying party a written notice of the commencement thereof.
The indemnifying party shall have the right to participate in and, if the
indemnifying party agrees in writing that it will be responsible for any costs,
expenses, judgments, damages and losses incurred by the indemnified party with
respect to such claim, jointly with any other indemnifying party similarly
noticed, 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 fees and expenses to be paid by the
indemnifying party, if the indemnified party reasonably believes 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 deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Agreement only if and to the extent that such failure is
prejudicial to its ability to defend such action, and the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Agreement.
d. Contribution. If the indemnification provided for in
this Agreement is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other hand in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense as well as any other
relevant equitable considerations. The relevant fault of the indemnifying party
and 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
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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.
Notwithstanding the foregoing, the amount any Holder shall be obligated to
contribute pursuant to the Agreement shall be limited to an amount equal to the
proceeds to such Holder of the Registerable Securities sold pursuant to the
registration statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Holder has otherwise been required
to pay in respect of such loss, claim, damage, liability or action or any
substantially similar loss, claim, damage, liability or action arising from the
sale of such Registerable Securities).
e. Survival of Indemnity. The indemnification provided
by this Agreement shall be a continuing right to indemnification and shall
survive the registration and sale of any Registerable Securities by any person
entitled to indemnification hereunder and the expiration or termination of this
Agreement.
9. Limitation on Other Registration Rights. Except as
otherwise allowed by this Agreement, the Company shall not, without the prior
written consent of the Holders of Registerable Securities representing a
majority thereof held by all the Holders, file any registration statement on
behalf of any person (including the Company) other than a Holder during any
period when the Company is not in compliance with this Agreement.
10. Remedies.
a. Time is of Essence. The Company agrees that time is
of the essence of each of the covenants contained herein and that, in the event
of a dispute hereunder, this Agreement is to be interpreted and construed in a
manner that will enable the Holders to sell their Registerable Securities as
quickly as possible after such Holders have indicated to the Company that they
desire their Registerable Securities to be registered. Any delay on the part of
the Company not expressly permitted under this Agreement, whether material or
not, shall be deemed a material breach of this Agreement.
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b. Remedies Upon Default or Delay. The Company
acknowledges the breach of any part of this Agreement may cause irreparable harm
to a Holder and that monetary damages alone may be inadequate. The Company
therefore agrees that the Holder shall be entitled to injunctive relief or such
other applicable remedy as a court of competent jurisdiction may provide.
Nothing contained herein will be construed to limit a Holder's right to any
remedies at law, including recovery of damages for breach of any part of this
Agreement.
11. Notices.
a. All communications under this Agreement shall be in
writing and shall be mailed by first class mail, postage prepaid, or telegraphed
or telexed with confirmation of receipt or delivered by hand or by overnight
delivery service,
b. If to the Company, at:
Augment Systems Incorporated
0 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxx, President
with a copy to:
Warner & Xxxxxxxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Xxxxxx & Associates, Inc., at:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
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or at such other address as may be furnished in writing
to the Holders of Registerable Securities at the time outstanding, or
c. if to any Holder of any Registerable Securities, to
the address of such Holder as it appears in the stock or warrant ledger of the
Company.
d. Any notice so addressed, when mailed by registered
or certified mail shall be deemed to be given three days after so mailed, when
telegraphed or telexed shall be deemed to be given when transmitted, or when
delivered by hand or overnight shall be deemed to be given when delivered.
12. Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and each of the
Holders.
13. Amendment and Waiver. This Agreement may be amended, and
the observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holders of securities representing a
majority of the Registerable Securities; provided, however, that no such
amendment or waiver shall take away any registration right of any Holder of
Registerable Securities or reduce the amount of reimbursable costs to any Holder
of Registerable Securities in connection with any registration hereunder without
the consent of such Holder; further provided, however, that without the consent
of any other Holder of Registerable Securities, any Holder may from time to time
enter into one or more agreements amending, modifying or waiving the provisions
of this Agreement if such action does not adversely affect the rights or
interest of any other Holder of Registerable Securities. No delay on the part of
any party in the exercise of any right, power or remedy shall operate as a
waiver thereof, nor shall any single or partial exercise by any party of any
right, power or remedy preclude any other or further exercise thereof, or the
exercise of any other right, power or remedy.
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14. Counterparts. One or more counterparts of this Agreement
may be signed by the parties, each of which shall be an original but all of
which together shall constitute one and same instrument.
15. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of New York,
without giving effect to conflicts of law principles.
16. Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
17. Headings. The headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provisions hereof.
IN WITNESS WHEREOF, the Company and the Holder
undersigned have executed this Agreement as of the day of ,1996.
AUGMENT SYSTEMS INCORPORATED
By:
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Xxxxxx Xxxx, Print Name of Holder
President
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Signature of Holder
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