REGISTRATION RIGHTS AGREEMENT
Exhibit
10.15 Registration Rights Agreement
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of June 29, 2006, among Chembio
Diagnostics, Inc., a
Nevada corporation (the “Company”),
and
the several purchasers signatory hereto (each such purchaser
is a “Purchaser”
and
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the
date hereof between the Company and each Purchaser (the
“Purchase
Agreement”).
The
Company and each Purchaser hereby agrees as follows:
1.
Definitions
Capitalized
terms used and not otherwise defined herein that are defined
in the Purchase
Agreement shall have the meanings given such terms in the
Purchase
Agreement.
As used
in this Agreement, the following terms shall have the following
meanings:
“Advice”
shall
have the meaning set forth in Section 6(d).
“Effectiveness
Date”
means,
with respect to the initial Registration Statement required
to be filed
hereunder, the earlier of (i) 90 calendar days following
the date when the
Company completes a private placement of at least $2,000,000
of the Company’s
securities (the 120th
calendar
day in the case of a “full review” by the Commission of the initial Registration
Statement) and (ii) the 180th
calendar
day following the date hereof (the 210th
calendar
day in the case of a “full review” by the Commission of the initial Registration
Statement) and, with respect to any additional Registration
Statements which may
be required pursuant to Section 3(c), the 60th
calendar
day following the date on which the Company first knows,
or reasonably should
have known, that such additional Registration Statement
is required hereunder;
provided,
however,
in the
event the Company is notified by the Commission that one
of the above
Registration Statements will not be reviewed or is no longer
subject to further
review and comments, the Effectiveness Date as to such
Registration Statement
shall be the fifth Trading Day following the date on which
the Company is so
notified if such date precedes the dates required above.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(a).
“Event”
shall
have the meaning set forth in Section 2(b).
“Event
Date”
shall
have the meaning set forth in Section 2(b).
“Filing
Date”
means,
with respect to the initial Registration Statement required
hereunder, the
earlier of (i) 30 calendar days following the date when
the Company
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completes
a private placement of at least $2,000,000 of the Company’s securities and (ii)
the 120th
calendar
day following the date hereof and, with respect to any
additional Registration
Statements which may be required pursuant to Section 3(c),
the 30th
day
following the date on which the Company first knows, or
reasonably should have
known that such additional Registration Statement is required
hereunder.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to
time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Losses”
shall
have the meaning set forth in Section 5(a).
“Plan
of Distribution”
shall
have the meaning set forth in Section 2(a).
“Prospectus”
means
the prospectus included in a Registration Statement (including,
without
limitation, a prospectus that includes any information
previously omitted from a
prospectus filed as part of an effective registration statement
in reliance upon
Rule 430A promulgated under the Securities Act), as amended
or supplemented by
any prospectus supplement, with respect to the terms of
the offering of any
portion of the Registrable Securities covered by a Registration
Statement, and
all other amendments and supplements to the Prospectus,
including post-effective
amendments, and all material incorporated by reference
or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities”
means
(i) all Warrant Shares, (ii) any additional shares issuable
in connection with
any anti-dilution provisions in the Warrants (without giving
effect to any
limitations on exercise set forth in the Warrant) and (iii)
any securities
issued or issuable upon any stock split, dividend or other
distribution,
recapitalization or similar event with respect to the foregoing.
“Registration
Statement”
means
the registration statements required to be filed hereunder
and any additional
registration statements contemplated by Section 3(c), including
(in each case)
the Prospectus, amendments and supplements to such registration
statement or
Prospectus, including pre- and post-effective amendments,
all exhibits thereto,
and all material incorporated by reference or deemed to
be incorporated by
reference in such registration statement.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such
Rule may be amended from time to time, or any similar rule
or regulation
hereafter adopted by the Commission having substantially
the same purpose and
effect as such Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such
Rule may be amended from time to time, or any similar rule
or
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regulation
hereafter adopted by the Commission having substantially
the same purpose and
effect as such Rule.
“Selling
Shareholder Questionnaire”
shall
have the meaning set forth in Section 3(a).
2.
Shelf
Registration
(a) On
or
prior to each Filing Date, the Company shall prepare and
file with the
Commission a “Shelf” Registration Statement covering the resale of 130% of the
Registrable Securities on such Filing Date for an offering
to be made on a
continuous basis pursuant to Rule 415. The Registration
Statement shall be on
Form SB-2 (except if the Company is not then eligible to
register for resale the
Registrable Securities on Form SB-2, in which case such
registration shall be on
another appropriate form in accordance herewith) and shall
contain (unless
otherwise directed by at least an 85% majority in interest
of the Holders)
substantially the “Plan
of Distribution”
attached hereto as Annex
A.
Subject
to the terms of this Agreement, the Company shall use its
best efforts to cause
a Registration Statement to be declared effective under
the Securities Act as
promptly as possible after the filing thereof, but in any
event prior to the
applicable Effectiveness Date, and shall use its best efforts
to keep such
Registration Statement continuously effective under the
Securities Act until all
Registrable Securities covered by such Registration Statement
have been sold, or
may be sold without volume restrictions pursuant to Rule
144(k), as determined
by the counsel to the Company pursuant to a written opinion
letter to such
effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders (the “Effectiveness
Period”).
The
Company shall telephonically request effectiveness of a
Registration Statement
as of 5:00 p.m. New York City time on a Trading Day. The
Company shall
immediately notify the Holders via facsimile of the effectiveness
of a
Registration Statement on the same Trading Day that the
Company telephonically
confirms effectiveness with the Commission, which shall
be the date requested
for effectiveness of a Registration Statement. The Company
shall, by 9:30 a.m.
New York City time on the Trading Day after the Effective
Date (as defined in
the Purchase Agreement), file a final Prospectus with the
Commission as required
by Rule 424. Failure to so notify the Holder within 1 Trading
Day of such
notification of effectiveness or failure to file a final
Prospectus as a
foresaid shall be deemed an Event under Section 2(b).
(b) If:
(i) a
Registration Statement is not filed on or prior to its
Filing Date (if the
Company files a Registration Statement without affording
the Holders the
opportunity to review and comment on the same as required
by Section 3(a), the
Company shall not be deemed to have satisfied this clause
(i)), or (ii) the
Company fails to file with the Commission a request for
acceleration in
accordance with Rule 461 promulgated under the Securities
Act, within five
Trading Days of the date that the Company is notified (orally
or in writing,
whichever is earlier) by the Commission that a Registration
Statement will not
be “reviewed,” or not subject to further review, or (iii) prior to its
Effectiveness Date, the Company fails to file a pre-effective
amendment and
otherwise respond in writing to comments made by the Commission
in respect of
such Registration
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Statement
within 18 calendar days after the receipt of comments by
or notice from the
Commission that such amendment is required in order for
a Registration Statement
to be declared effective, or (iv) a Registration Statement
filed or required to
be filed hereunder is not declared effective by the Commission
by its
Effectiveness Date, or (v) after the Effectiveness Date,
a Registration
Statement ceases for any reason to remain continuously
effective as to all
Registrable Securities for which it is required to be effective,
or the Holders
are otherwise not permitted to utilize the Prospectus therein
to resell such
Registrable Securities for more than 15 consecutive calendar
days or more than
an aggregate of 20 calendar days during any 12-month period
(which need not be
consecutive calendar days) (any such failure or breach
being referred to as an
“Event”,
and
for purposes of clause (i) or (iv) the date on which such
Event occurs, or for
purposes of clause (ii) the date on which such five Trading
Day period is
exceeded, or for purposes of clause (iii) the date which
such 15 calendar day
period is exceeded, or for purposes of clause (v) the date
on which such 15 or
20 calendar day period, as applicable, is exceeded being
referred to as
“Event
Date”),
then
in addition to any other rights the Holders may have hereunder
or under
applicable law, on each such Event Date and on each monthly
anniversary of each
such Event Date (if the applicable Event shall not have
been cured by such date)
until the applicable Event is cured, the Company shall
pay to each Holder an
amount in cash, as partial liquidated damages and not as
a penalty, equal to 1%
of the aggregate Subscription Amount paid by such Holder
pursuant to the
Purchase Agreement. The parties agree that the maximum
aggregate liquidated
damages payable to a Holder under this Agreement shall
be 24% of the aggregate
Subscription Amount paid by such Holder pursuant to the
Purchase Agreement. If
the Company fails to pay any partial liquidated damages
pursuant to this Section
in full within seven days after the date payable, the Company
will pay interest
thereon at a rate of 18% per annum (or such lesser maximum
amount that is
permitted to be paid by applicable law) to the Holder,
accruing daily from the
date such partial liquidated damages are due until such
amounts, plus all such
interest thereon, are paid in full. The partial liquidated
damages pursuant to
the terms hereof shall apply on a daily pro-rata basis
for any portion of a
month prior to the cure of an Event.
3.
Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) Not
less
than five Trading Days prior to the filing of each Registration
Statement and
not less than one Trading Day prior to the filing of any
related Prospectus or
any amendment or supplement thereto (including any document
that would be
incorporated or deemed to be incorporated therein by reference),
the Company
shall, (i) furnish to each Holder copies of all such documents
proposed to be
filed, which documents (other than those incorporated or
deemed to be
incorporated by reference) will be subject to the review
of such Holders, and
(ii) cause its officers and directors, counsel and independent
certified public
accountants to respond to such inquiries as shall be necessary,
in the
reasonable opinion of respective counsel to each Holder
to conduct a reasonable
investigation within the meaning of the Securities Act.
The Company shall not
4
file
a
Registration Statement or any such Prospectus or any amendments
or supplements
thereto to which the Holders of a majority of the Registrable
Securities shall
reasonably object in good faith, provided that, the Company
is notified of such
objection in writing no later than 5 Trading Days after
the Holders have been so
furnished copies of a Registration Statement or 1 Trading
Day after the Holders
have been so furnished copies of any related Prospectus
or amendments or
supplements thereto. Each Holder agrees to furnish to the
Company a completed
Questionnaire in the form attached to this Agreement as
Annex B (a “Selling
Shareholder Questionnaire”)
not
less than two Trading Days prior to the Filing Date or
by the end of the fourth
Trading Day following the date on which such Holder receives
draft materials in
accordance with this Section.
(b) (i)
Prepare and file with the Commission such amendments, including
post-effective
amendments, to a Registration Statement and the Prospectus
used in connection
therewith as may be necessary to keep a Registration Statement
continuously
effective as to the applicable Registrable Securities for
the Effectiveness
Period and prepare and file with the Commission such additional
Registration
Statements in order to register for resale under the Securities
Act all of the
Registrable Securities; (ii) cause the related Prospectus
to be amended or
supplemented by any required Prospectus supplement (subject
to the terms of this
Agreement), and as so supplemented or amended to be filed
pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any
comments received from
the Commission with respect to a Registration Statement
or any amendment thereto
and as promptly as reasonably possible provide the Holders
true and complete
copies of all correspondence from and to the Commission
relating to a
Registration Statement (provided that the Company may excise
any information
contained therein which would constitute material non-public
information as to
any Holder which has not executed a confidentiality agreement
with the Company);
and (iv) comply in all material respects with the provisions
of the Securities
Act and the Exchange Act with respect to the disposition
of all Registrable
Securities covered by a Registration Statement during the
applicable period in
accordance (subject to the terms of this Agreement) with
the intended methods of
disposition by the Holders thereof set forth in such Registration
Statement as
so amended or in such Prospectus as so supplemented.
(c) If
during
the Effectiveness Period, the number of Registrable Securities
at any time
exceeds 90% of the number of shares of Common Stock then
registered in a
Registration Statement, then the Company shall file as
soon as reasonably
practicable but in any case prior to the applicable Filing
Date, an additional
Registration Statement covering the resale by the Holders
of not less than 130%
of the number of such Registrable Securities.
(d) Notify
the Holders of Registrable Securities to be sold (which
notice shall, pursuant
to clauses (iii) through (vi) hereof, be accompanied by
an instruction to
suspend the use of the Prospectus until the requisite changes
have been made) as
promptly as reasonably possible (and, in the case of (i)(A)
below, not less than
one Trading Day prior to such filing) and (if requested
by any such Person)
confirm such notice in writing no later than one Trading
Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or
post-effective
amendment to a Registration Statement is proposed to be
5
filed;
(B) when the Commission notifies the Company whether there
will be a “review” of
such Registration Statement and whenever the Commission
comments in writing on
such Registration Statement; and (C) with respect to a
Registration Statement or
any post-effective amendment, when the same has become
effective; (ii) of any
request by the Commission or any other Federal or state
governmental authority
for amendments or supplements to a Registration Statement
or Prospectus or for
additional information; (iii) of the issuance by the Commission
or any other
federal or state governmental authority of any stop order
suspending the
effectiveness of a Registration Statement covering any
or all of the Registrable
Securities or the initiation of any Proceedings for that
purpose; (iv) of the
receipt by the Company of any notification with respect
to the suspension of the
qualification or exemption from qualification of any of
the Registrable
Securities for sale in any jurisdiction, or the initiation
or threatening of any
Proceeding for such purpose; (v) of the occurrence of any
event or passage of
time that makes the financial statements included in a
Registration Statement
ineligible for inclusion therein or any statement made
in a Registration
Statement or Prospectus or any document incorporated or
deemed to be
incorporated therein by reference untrue in any material
respect or that
requires any revisions to a Registration Statement, Prospectus
or other
documents so that, in the case of a Registration Statement
or the Prospectus, as
the case may be, it will not contain any untrue statement
of a material fact or
omit to state any material fact required to be stated therein
or necessary to
make the statements therein, in light of the circumstances
under which they were
made, not misleading; and (vi) the occurrence or existence
of any pending
corporate development with respect to the Company that
the Company believes may
be material and that, in the determination of the Company,
makes it not in the
best interest of the Company to allow continued availability
of a Registration
Statement or Prospectus; provided that any and all of such
information shall
remain confidential to each Holder until such information
otherwise becomes
public, unless disclosure by a Holder is required by law;
provided,
further,
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information
is material,
non-public information.
(e) Use
its
best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of
(i) any order suspending the effectiveness of a Registration
Statement, or (ii)
any suspension of the qualification (or exemption from
qualification) of any of
the Registrable Securities for sale in any jurisdiction,
at the earliest
practicable moment.
(f) Furnish
to each Holder, without charge, at least one conformed
copy of each such
Registration Statement and each amendment thereto, including
financial
statements and schedules, all documents incorporated or
deemed to be
incorporated therein by reference to the extent requested
by such Person, and
all exhibits to the extent requested by such Person (including
those previously
furnished or incorporated by reference) promptly after
the filing of such
documents with the Commission.
(g) Subject
to the terms of this Agreement, the Company hereby consents
to the use of such
Prospectus and each amendment or supplement thereto by
each of the selling
Holders in connection with the offering and sale of the
Registrable Securities
6
covered
by such Prospectus and any amendment or supplement thereto,
except after the
giving of any notice pursuant to Section 3(d).
(h) If
NASDR
Rule 2710 requires any broker-dealer to make a filing prior
to executing a sale
by a Holder, the Company shall (i) make an Issuer Filing
with the NASDR, Inc.
Corporate Financing Department pursuant to proposed NASDR
Rule
2710(b)(10)(A)(i), (ii) respond within five Trading Days
to any comments
received from NASDR in connection therewith, (iii) and
pay the filing fee
required in connection therewith.
(i) Prior
to
any resale of Registrable Securities by a Holder, use its
commercially
reasonable efforts to register or qualify or cooperate
with the selling Holders
in connection with the registration or qualification (or
exemption from the
Registration or qualification) of such Registrable Securities
for the resale by
the Holder under the securities or Blue Sky laws of such
jurisdictions within
the United States as any Holder reasonably requests in
writing, to keep each
registration or qualification (or exemption therefrom)
effective during the
Effectiveness Period and to do any and all other acts or
things reasonably
necessary to enable the disposition in such jurisdictions
of the Registrable
Securities covered by each Registration Statement, provided
that the Company
shall not be required to qualify generally to do business
in any jurisdiction
where it is not then so qualified, subject the Company
to any material tax in
any such jurisdiction where it is not then so subject or
file a general consent
to service of process in any such jurisdiction.
(j) If
requested by the Holders, cooperate with the Holders to
facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to
be delivered to a transferee pursuant to a Registration
Statement, which
certificates shall be free, to the extent permitted by
the Purchase Agreement,
of all restrictive legends, and to enable such Registrable
Securities to be in
such denominations and registered in such names as any
such Holders may
request.
(k) Upon
the
occurrence of any event contemplated by this Section 3,
as promptly as
reasonably possible under the circumstances taking into
account the Company’s
good faith assessment of any adverse consequences to the
Company and its
stockholders of the premature disclosure of such event,
prepare a supplement or
amendment, including a post-effective amendment, to a Registration
Statement or
a supplement to the related Prospectus or any document
incorporated or deemed to
be incorporated therein by reference, and file any other
required document so
that, as thereafter delivered, neither a Registration Statement
nor such
Prospectus will contain an untrue statement of a material
fact or omit to state
a material fact required to be stated therein or necessary
to make the
statements therein, in light of the circumstances under
which they were made,
not misleading. If
the
Company notifies the Holders in accordance with clauses
(iii) through (vi) of
Section 3(d) above to suspend the use of any Prospectus
until the requisite
changes to such Prospectus have been made, then the Holders
shall suspend use of
such Prospectus. The Company will use its best efforts
to ensure that the use of
the Prospectus may be resumed as promptly as is practicable.
The
7
Company
shall be entitled to exercise its right under this Section
3(k) to suspend the
availability of a Registration Statement and Prospectus,
subject to the payment
of partial liquidated damages pursuant to Section 2(b),
for a period not to
exceed 60 calendar days (which need not be consecutive
days) in any 12 month
period.
(l) Comply
with all applicable rules and regulations of the Commission.
(m) The
Company may require each selling Holder to furnish to the
Company a certified
statement as to the number of shares of Common Stock beneficially
owned by such
Holder and, if required by the Commission, the natural
persons thereof that have
voting and dispositive control over the Shares. During
any periods that the
Company is unable to meet its obligations hereunder with
respect to the
registration of the Registrable Securities solely because
any Holder fails to
furnish such information within three Trading Days of the
Company’s request, any
liquidated damages that are accruing at such time as to
such Holder only shall
be tolled and any Event that may otherwise occur solely
because of such delay
shall be suspended as to such Holder only, until such information
is delivered
to the Company.
4.
Registration
Expenses.
All
fees and expenses incident to the performance of or compliance
with this
Agreement by the Company shall be borne by the Company
whether or not any
Registrable Securities are sold pursuant to a Registration
Statement. The fees
and expenses referred to in the foregoing sentence shall
include, without
limitation, (i) all registration and filing fees (including,
without limitation,
fees and expenses (A) with respect to filings required
to be made with any
Trading Market on which the Common Stock is then listed
for trading, (B) in
compliance with applicable state securities or Blue Sky
laws reasonably agreed
to by the Company in writing (including, without limitation,
fees and
disbursements of counsel for the Company in connection
with Blue Sky
qualifications or exemptions of the Registrable Securities)
and (C) if not
previously paid by the Company in connection with an Issuer
Filing, with respect
to any filing that may be required to be made by any broker
through which a
Holder intends to make sales of Registrable Securities
with NASD Regulation,
Inc. pursuant to the NASD Rule 2710, so long as the broker
is receiving no more
than a customary brokerage commission in connection with
such sale, (ii)
printing expenses (including, without limitation, expenses
of printing
certificates for Registrable Securities), (iii) messenger,
telephone and
delivery expenses, (iv) fees and disbursements of counsel
for the Company, (v)
Securities Act liability insurance, if the Company so desires
such insurance,
and (vi) fees and expenses of all other Persons retained
by the Company in
connection with the consummation of the transactions contemplated
by this
Agreement. In addition, the Company shall be responsible
for all of its internal
expenses incurred in connection with the consummation of
the transactions
contemplated by this Agreement (including, without limitation,
all salaries and
expenses of its officers and employees performing legal
or accounting duties),
the expense of any annual audit and the fees and expenses
incurred in connection
with the listing of the Registrable Securities on any securities
exchange as
required hereunder. In no event shall the Company be responsible
for any broker
or similar commissions of any Holder or, except to the
extent provided for in
the Transaction Documents, any legal fees or other costs
of the
Holders.
5.
Indemnification
8
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this
Agreement, indemnify and
hold harmless each Holder, the officers, directors, members,
partners, agents,
brokers (including brokers who offer and sell Registrable
Securities as
principal as a result of a pledge or any failure to perform
under a margin call
of Common Stock), investment advisors and employees (and
any other Persons with
a functionally equivalent role of a Person holding such
titles, notwithstanding
a lack of such title or any other title) of each of them,
each Person who
controls any such Holder (within the meaning of Section
15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors,
members,
shareholders, partners, agents and employees (and any other
Persons with a
functionally equivalent role of a Person holding such titles,
notwithstanding a
lack of such title or any other title) of each such controlling
Person, to the
fullest extent permitted by applicable law, from and against
any and all losses,
claims, damages, liabilities, costs (including, without
limitation, reasonable
attorneys’ fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or relating to (1) any untrue
or alleged untrue
statement of a material fact contained in a Registration
Statement, any
Prospectus or any form of prospectus or in any amendment
or supplement thereto
or in any preliminary prospectus, or arising out of or
relating to any omission
or alleged omission of a material fact required to be stated
therein or
necessary to make the statements therein (in the case of
any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances
under which
they were made) not misleading or (2) any violation or
alleged violation by the
Company of the Securities Act, the Exchange Act or any
state securities law, or
any rule or regulation thereunder, in connection with the
performance of its
obligations under this Agreement, except to the extent,
but only to the extent,
that (i) such untrue statements or omissions are based
solely upon information
regarding such Holder furnished in writing to the Company
by such Holder
expressly for use therein, or to the extent that such information
relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing
by such Holder
expressly for use in a Registration Statement, such Prospectus
or such form of
Prospectus or in any amendment or supplement thereto (it
being understood that
the Holder has approved Annex A hereto for this purpose)
or (ii) in the case of
an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the
use by such Holder of an outdated or defective Prospectus
after the Company has
notified such Holder in writing that the Prospectus is
outdated or defective and
prior to the receipt by such Holder of the Advice contemplated
in Section 6(d).
The Company shall notify the Holders promptly of the institution,
threat or
assertion of any Proceeding arising from or in connection
with the transactions
contemplated by this Agreement of which the Company is
aware.
(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and
hold harmless the
Company, its directors, officers, agents and employees,
each Person who controls
the Company (within the meaning of Section 15 of the Securities
Act and Section
20 of the Exchange Act), and the directors, officers, agents
or employees of
such controlling Persons, to the fullest extent permitted
by applicable law,
from and against all Losses, as incurred, to the extent
arising out of or based
solely upon: (x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue or
alleged untrue statement
of a material fact contained in
9
any
Registration Statement, any Prospectus, or any form of
prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out
of or relating to any omission or alleged omission of a
material fact required
to be stated therein or necessary to make the statements
therein not misleading
(i) to the extent, but only to the extent, that such untrue
statement or
omission is contained in any information so furnished in
writing by such Holder
to the Company specifically for inclusion in such Registration
Statement or such
Prospectus or (ii) to the extent that such information
relates to such Holder’s
proposed method of distribution of Registrable Securities
and was reviewed and
expressly approved in writing by such Holder expressly
for use in a Registration
Statement (it being understood that the Holder has approved
Annex A hereto for
this purpose), such Prospectus or such form of Prospectus
or in any amendment or
supplement thereto or (ii) in the case of an occurrence
of an event of the type
specified in Section 3(d)(iii)-(vi), the use by such Holder
of an outdated or
defective Prospectus after the Company has notified such
Holder in writing that
the Prospectus is outdated or defective and prior to the
receipt by such Holder
of the Advice contemplated in Section 6(d). In no event
shall the liability of
any selling Holder hereunder be greater in amount than
the dollar amount of the
net proceeds received by such Holder upon the sale of the
Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person
entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from
whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall have the right
to assume the defense
thereof, including the employment of counsel reasonably
satisfactory to the
Indemnified Party and the payment of all fees and expenses
incurred in
connection with defense thereof; provided, that the failure
of any Indemnified
Party to give such notice shall not relieve the Indemnifying
Party of its
obligations or liabilities pursuant to this Agreement,
except (and only) to the
extent that it shall be finally determined by a court of
competent jurisdiction
(which determination is not subject to appeal or further
review) that such
failure shall have prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate
counsel in any such
Proceeding and to participate in the defense thereof, but
the fees and expenses
of such counsel shall be at the expense of such Indemnified
Party or Parties
unless: (1) the Indemnifying Party has agreed in writing
to pay such fees and
expenses; (2) the Indemnifying Party shall have failed
promptly to assume the
defense of such Proceeding and to employ counsel reasonably
satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named
parties to any such
Proceeding (including any impleaded parties) include both
such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified
Party shall
reasonably believe that a material conflict of interest
is likely to exist if
the same counsel were to represent such Indemnified Party
and the Indemnifying
Party (in which case, if such Indemnified Party notifies
the Indemnifying Party
in writing that it elects to employ separate counsel at
the expense of the
Indemnifying Party, the Indemnifying Party shall not have
the right to assume
the defense thereof and the reasonable fees and expenses
of no more than one
separate counsel shall be at the expense of the Indemnifying
Party). The
Indemnifying Party shall not be liable
10
for
any
settlement of any such Proceeding effected without its
written consent, which
consent shall not be unreasonably withheld or delayed.
No Indemnifying Party
shall, without the prior written consent of the Indemnified
Party, effect any
settlement of any pending Proceeding in respect of which
any Indemnified Party
is a party, unless such settlement includes an unconditional
release of such
Indemnified Party from all liability on claims that are
the subject matter of
such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and
expenses of the
Indemnified Party (including reasonable fees and expenses
to the extent incurred
in connection with investigating or preparing to defend
such Proceeding in a
manner not inconsistent with this Section) shall be paid
to the Indemnified
Party, as incurred, within ten Trading Days of written
notice thereof to the
Indemnifying Party; provided, that the Indemnified Party
shall promptly
reimburse the Indemnifying Party for that portion of such
fees and expenses
applicable to such actions for which such Indemnified Party
is judicially
determined to be not entitled to indemnification hereunder.
(d) Contribution.
If the
indemnification under Section 5(a) or 5(b) is unavailable
to an Indemnified
Party or insufficient to hold an Indemnified Party harmless
for any Losses, then
each Indemnifying Party shall contribute to the amount
paid or payable by such
Indemnified Party, in such proportion as is appropriate
to reflect the relative
fault of the Indemnifying Party and Indemnified Party in
connection with the
actions, statements or omissions that resulted in such
Losses as well as any
other relevant equitable considerations. The relative fault
of such Indemnifying
Party and Indemnified Party shall be determined by reference
to, among other
things, whether any action in question, including any untrue
or alleged untrue
statement of a material fact or omission or alleged omission
of a material fact,
has been taken or made by, or relates to information supplied
by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct
or prevent such
action, statement or omission. The amount paid or payable
by a party as a result
of any Losses shall be deemed to include, subject to the
limitations set forth
in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any Proceeding to the
extent such party would
have been indemnified for such fees or expenses if the
indemnification provided
for in this Section was available to such party in accordance
with its
terms.
The
parties hereto agree that it would not be just and equitable
if contribution
pursuant to this Section 5(d) were determined by pro rata
allocation or by any
other method of allocation that does not take into account
the equitable
considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 5(d), no
Holder shall be required
to contribute, in the aggregate, any amount in excess of
the amount by which the
net proceeds actually received by such Holder from the
sale of the Registrable
Securities subject to the Proceeding exceeds the amount
of any damages that such
Holder has otherwise been required to pay by reason of
such untrue or alleged
untrue statement or omission or alleged omission.
11
The
indemnity and contribution agreements contained in this
Section are in addition
to any liability that the Indemnifying Parties may have
to the Indemnified
Parties.
6.
Miscellaneous
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any
of their respective
obligations under this Agreement, each Holder or the Company,
as the case may
be, in addition to being entitled to exercise all rights
granted by law and
under this Agreement, including recovery of damages, will
be entitled to
specific performance of its rights under this Agreement.
The Company and each
Holder agree that monetary damages would not provide adequate
compensation for
any losses incurred by reason of a breach by it of any
of the provisions of this
Agreement and hereby further agrees that, in the event
of any action for
specific performance in respect of such breach, it shall
not assert or shall
waive the defense that a remedy at law would be adequate.
(b) No
Piggyback on Registrations.
Except
as set forth on Schedule
6(b)
attached
hereto and securities of the Company issued in a private
placement of at least
$2,000,000 within 90 calendar days of the date hereof,
neither the Company nor
any of its security holders (other than the Holders in
such capacity pursuant
hereto) may include securities of the Company in the initial
Registration
Statement other than the Registrable Securities. The Company
shall not file any
other registration statements until the initial Registration
Statement required
hereunder is declared effective by the Commission, provided
that this Section
6(b) shall not prohibit the Company from filing amendments
to registration
statements already filed.
(c) Compliance.
Each
Holder covenants and agrees that it will comply with the
prospectus delivery
requirements of the Securities Act as applicable to it
in connection with sales
of Registrable Securities pursuant to a Registration Statement.
(d) Discontinued
Disposition.
Each
Holder agrees by its acquisition of Registrable Securities
that, upon receipt of
a notice from the Company of the occurrence of any event
of the kind described
in Section 3(d)(iii) through (vi), such Holder will forthwith
discontinue
disposition of such Registrable Securities under a Registration
Statement until
it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus (as it
may have been
supplemented or amended) may be resumed. The Company will
use its best efforts
to ensure that the use of the Prospectus may be resumed
as promptly as it
practicable. The Company agrees and acknowledges that any
periods during which
the Holder is required to discontinue the disposition of
the Registrable
Securities hereunder shall be subject to the provisions
of Section
2(b).
(e) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an
effective Registration
Statement covering all of the Registrable Securities and
the Company shall
determine to prepare and file with the Commission a registration
statement
relating to an offering for its own account or the account
of others under the
Securities Act of any of its equity securities, other than
on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their
then equivalents
relating to equity securities to be issued solely in
12
connection
with any acquisition of any entity or business or equity
securities issuable in
connection with the stock option or other employee benefit
plans, then the
Company shall send to each Holder a written notice of such
determination and, if
within fifteen days after the date of such notice, any
such Holder shall so
request in writing, the Company shall include in such registration
statement all
or any part of such Registrable Securities such Holder
requests to be
registered; provided,
however,
that,
the Company shall not be required to register any Registrable
Securities
pursuant to this Section 6(e) that are eligible for resale
pursuant to Rule
144(k) promulgated under the Securities Act or that are
the subject of a then
effective Registration Statement.
(f) Amendments
and Waivers.
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 same
shall be in writing and
signed by the Company and each Holder of the then outstanding
Registrable
Securities. Notwithstanding the foregoing, a waiver or
consent to depart from
the provisions hereof with respect to a matter that relates
exclusively to the
rights of Holders and that does not directly or indirectly
affect the rights of
other Holders may be given by Holders of all of the Registrable
Securities to
which such waiver or consent relates; provided,
however,
that
the provisions of this sentence may not be amended, modified,
or supplemented
except in accordance with the provisions of the immediately
preceding sentence.
(g) Notices.
Any and
all notices or other communications or deliveries required
or permitted to be
provided hereunder shall be delivered as set forth in the
Purchase Agreement.
(h) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding
upon the successors and
permitted assigns of each of the parties and shall inure
to the benefit of each
Holder. The Company may not assign (except by merger) its
rights or obligations
hereunder without the prior written consent of all of the
Holders of the
then-outstanding Registrable Securities. Each Holder may
assign their respective
rights hereunder in the manner and to the Persons as permitted
under the
Purchase Agreement.
(i) No
Inconsistent Agreements.
Neither
the Company nor any of its Subsidiaries has entered, as
of the date hereof, nor
shall the Company or any of its Subsidiaries, on or after
the date of this
Agreement, enter into any agreement with respect to its
securities, that would
have the effect of impairing the rights granted to the
Holders in this Agreement
or otherwise conflicts with the provisions hereof. Except
as set forth on
Schedule
6(i),
neither
the Company nor any of its subsidiaries has previously
entered into any
agreement granting any registration rights with respect
to any of its securities
to any Person that have not been satisfied in full.
(j) Execution
and Counterparts.
This
Agreement may be executed in two or more counterparts,
all of which when taken
together shall be considered one and the same agreement
and shall become
effective when counterparts have been signed by each party
and delivered to the
other party, it being understood that both parties need
not sign the same
counterpart. In the event that any signature is delivered
by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party
executing
13
(or
on
whose behalf such signature is executed) with the same
force and effect as if
such facsimile or “.pdf” signature page were an original thereof.
(k) Governing
Law.
All
questions concerning the construction, validity, enforcement
and interpretation
of this Agreement shall be determined in accordance with
the provisions of the
Purchase Agreement.
(l) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive
of any other remedies
provided by law.
(m) Severability.
If any
term, provision, covenant or restriction of this Agreement
is held by a court of
competent jurisdiction to be invalid, illegal, void or
unenforceable, the
remainder of the terms, provisions, covenants and restrictions
set forth herein
shall remain in full force and effect and shall in no way
be affected, impaired
or invalidated, and the parties hereto shall use their
commercially reasonable
efforts to find and employ an alternative means to achieve
the same or
substantially the same result as that contemplated by such
term, provision,
covenant or restriction. It is hereby stipulated and declared
to be the
intention of the parties that they would have executed
the remaining terms,
provisions, covenants and restrictions without including
any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(n) Headings.
The
headings in this Agreement are for convenience only, do
not constitute a part of
the Agreement and shall not be deemed to limit or affect
any of the provisions
hereof.
(o) Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder hereunder are several and not
joint with the
obligations of any other Holder hereunder, and no Holder
shall be responsible in
any way for the performance of the obligations of any other
Holder hereunder.
Nothing contained herein or in any other agreement or document
delivered at any
closing, and no action taken by any Holder pursuant hereto
or thereto, shall be
deemed to constitute the Holders as a partnership, an association,
a joint
venture or any other kind of entity, or create a presumption
that the Holders
are in any way acting in concert with respect to such obligations
or the
transactions contemplated by this Agreement. Each Holder
shall be entitled to
protect and enforce its rights, including without limitation
the rights arising
out of this Agreement, and it shall not be necessary for
any other Holder to be
joined as an additional party in any proceeding for such
purpose.
********************
14
IN
WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as
of the date first written above.
|
|
|
By:__________________________________________
Name:
Title:
|
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
15
[SIGNATURE
PAGE OF HOLDERS TO CEMI RRA]
Name
of
Holder: __________________________
Signature
of Authorized Signatory of Holder:
__________________________
Name
of
Authorized Signatory: _________________________
Title
of
Authorized Signatory: __________________________
[SIGNATURE
PAGES CONTINUE]
