XXXXXXX.XXX INC.
REGISTRATION RIGHTS AGREEMENT
DECEMBER 22, 2006
The parties to this agreement are XXXXXXX.XXX Inc., a Delaware
corporation (the "Company") and Vicis Capital Master Fund LLC, Xxxxxxx
Investments LLC, Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx XxXxxxx, Xxxxx
Xxxxxxxx, Xxx Xxxxxxxxxx, Xxxx Xxxxxx, CSFN I LLC and Xxxx Xxxxxxxx (the
"Investors").
The Investors own warrants ("Warrants") to purchase shares of
Common Stock, $0.001 par value per share, of the Company ("Common Stock").
The shares of Common Stock that the Investors may hereafter
acquire upon exercise of their Warrants are entitled to the rights and benefits,
and subject to the terms and conditions, of this agreement, and are collectively
referred to as, the "Registrable Shares."
The Company desires to provide the Investors with certain
rights regarding the registration of the Shares, all upon the terms and
conditions set forth below.
The parties agree as follows:
1. PIGGYBACK REGISTRATIONS.
1.1 RIGHT TO INCLUDE REGISTRABLE SECURITIES. If at any time
following the date hereof, the Company shall propose to register any shares of
its Common Stock by means of a registration statement filed by the Company with
the Securities and Exchange Commission ("SEC") for sale in a public offering for
its own account, or for the account of any other Person by registration on Form
XX-0, X-0, X-0 or S-3 (but not Form S-4 or S-8) or any successor or similar
forms (except for any registrations in connection with (x) an employee benefit
plan or dividend reinvestment plan or a merger, consolidation or other business
combination or (y) debt securities that are not convertible into Common Stock),
it shall give written notice to the Investors of its intention to do so and of
the Investors' rights under this Section 1 at least 15 days prior to the filing
of a registration statement with respect to such registration with the SEC. Upon
the written request of the Investors made within 10 days after the receipt of
that notice, which request shall specify the Registrable Securities intended to
be registered and disposed of by the Investors, the Company shall, subject to
the provisions hereof and the prior rights of Laurus Master Fund, Ltd.
("Laurus") pursuant to the Registration Rights Agreement of the Company and
Laurus dated July 11, 2006, use its commercially reasonable efforts to include
in such registration statement all Registrable Securities that the Company has
been so requested to register by the Investors.
1.2 RIGHT TO ABANDON OR DELAY REGISTRATION. If, at any time
after giving written notice to the Investors pursuant to Section 1.1 of its
intention to register any 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 registration of such
securities, the Company may, at its election, give written notice of such
determination to the Investors and upon giving that notice: (a) in the case of a
determination not to register, the Company shall be relieved of its obligation
to register any Registrable Securities in connection with such registration
without prejudice; and (b) in the case of a determination to delay registering,
the Company shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities.
1.3 "REGISTRABLE SECURITIES" means Registrable Shares that:
(a) have not been previously registered and sold pursuant to a registration
statement that shall have become effective under the Securities Act of 1933, as
amended ("Securities Act"); and (b) may not be sold without restriction pursuant
to Rule 144(k) (or successor provisions) under the Securities Act, together with
any additional shares of Common Stock issued in a stock split or stock dividend.
2. REGISTRATION PROCEDURES; LISTINg.
2.1 OBLIGATIONS OF THE COMPANY. In connection with the
registration of any Registrable Securities under the Securities Act pursuant to
the provisions of this agreement, the Company shall, as expeditiously as
possible:
(a) prepare and file with the SEC the requisite registration
statement to effect such registration and thereafter use its commercially
reasonable efforts to cause such registration statement to become and remain
effective (subject to Section 1.2 and clause (b) below); PROVIDED, HOWEVER, that
the Company may discontinue any registration of its securities that are not
Registrable Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) use its commercially reasonable efforts to prepare and
file with the SEC 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
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement for such period as shall be required for
the disposition of all of such Registrable Securities;
(c) furnish to the Investors such number of conformed copies
of such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as the Investors may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the Investors;
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(d) use its commercially reasonable efforts (x) to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of such
states of the United States of America where an exemption is not available and
as the Investors shall reasonably request, (y) to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and (z) to take any other action that may reasonably be necessary or
advisable to enable the Investors to consummate the public sale or other
disposition in such jurisdictions of the Registrable Shares owned and to be sold
by the Investors, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not, but for the requirements of this Section
2.1(d), be obligated to be so qualified or to so consent to general service of
process in any such jurisdiction;
(e) notify the Investors when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or upon
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 any material fact required to be stated therein
or necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made, and at the request of the Investors
promptly prepare and furnish to them a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include 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
not misleading in the light of the circumstances under which they were made;
(f) pay all expenses incident to the Company's performance of
or compliance with its obligations hereunder, including, without limitation, all
listing fees, all printing expenses, the fees, expenses and disbursements of
counsel for the Company and of its independent public accountants and all fees,
expenses and disbursements of one outside counsel to the Investors; PROVIDED,
HOWEVER, that the foregoing obligation of the Company shall exclude, and the
Investors shall pay, underwriters fees and underwriting discounts and
commissions in respect of the Registrable Securities being registered hereunder
as well as any fees and expenses of any second or other additional outside
counsel to the Investors hereunder;
(g) in connection with any registration of Registrable Shares,
the Company shall enter into all customary agreements (including in connection
with an underwritten offering, an underwriting agreement) and shall take all
other reasonable actions requested by the managing underwriter in order to
expedite or facilitate the disposition of Registrable Shares, including making
presentations at any "road shows" or analyst presentations (which are reasonable
in scope and duration and consistent with market practice for comparable
offerings), providing reasonable access to the Company, its books and records,
and its personnel and advisers and furnishing information to the stockholders,
the underwriter(s) and their agents and representatives to enable them to
undertake due diligence and furnishing to them such opinions, comfort letters
and the like as are customary in connection with the applicable offering of
securities; and
(h) cause the Registrable Securities covered by such
registration statement to be listed on a national securities exchange or on the
Nasdaq Stock Market, as applicable.
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2.2 OBLIGATIONS OF THE INVESTORS.
(a) The Company may require the Investors, after receipt
thereby of a written request from the Investors pursuant to Section 1.1, to
furnish the Company such information regarding the Investors and the
distribution of the Investors' Registrable Securities as the Company may from
time to time reasonably request in writing, based on its belief that such
information is required to be disclosed in the relevant registration statement
pursuant to the Securities Act and applicable state securities laws.
(b) Upon receipt of any notice from the Company of the
happening of an event of the kind described in Section 2.1(e), the Investors
shall forthwith discontinue their disposition of Registrable Securities pursuant
to the registration statement relating to such Registrable Securities until the
Investors' receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.1(e) and, if so directed by the Company, the Investors
shall deliver to the Company all copies, then in the Investors' possession, of
the prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
3. CUTBACKS.
3.1 GENERALLY. If in the good faith judgment of the Company,
it shall determine after consultation with the managing underwriter that the
registration of the number of Registrable Securities to be included in an
offering that is registered pursuant to Section 1 would materially and adversely
affect such public offering, then the Company may reduce the number of
Registrable Shares to be included in the offering to the extent necessary to
alleviate such adverse effect. If, in accordance with the preceding sentence,
the number of shares to be included in the underwriting (pursuant to this
agreement or otherwise) is less than the total number of shares that such
holders have requested to be included, the holders of other shares who have
requested to include such shares shall participate on a PRO RATA basis based on
the relative aggregate holdings of the holders who seek to have shares
registered under such registration statement (or in any other proportion as may
be agreed upon by all stockholders seeking to exercise such rights).
3.2 UNDERWRITING AGREEMENT. The Investors shall become a party
to any underwriting agreement negotiated between the Company and the
underwriters in any underwritten public offering hereunder (which agreement
shall be in a form and contain provisions that are normal and customary) and
shall make all representations and warranties to and shall enter into all
agreements with the Company and the underwriters and shall deliver all opinions
of counsel and other documents as shall be reasonably requested of them and
shall make all representations and warranties required by law, customarily given
or reasonably requested of selling shareholders by an underwriter in an
underwritten public offering.
4. INDEMNIFICATION.
4.1 INDEMNIFICATION BY THE COMPANY. In the event of any
registration statement filed pursuant to this Agreement, the Company shall
indemnify and hold harmless the Investors, each underwriter of such Registrable
Shares and their respective directors, officers and affiliates and each other
individual or entity, if any, who controls (within the meaning of the
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Securities Act) the Investors (each of the foregoing, a "Holder Indemnitee"),
against any losses, claims, damages, or liabilities, joint or several (or
actions or proceedings, whether commenced or threatened, in respect thereof)
("Losses") to a Holder Indemnitee arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus, final prospectus, or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse each Holder Indemnitee for any legal or any other fees, costs and
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or omission made in reliance upon and in conformity with information relating to
the Investors furnished to the Company in writing by or on behalf of the
Investors or such underwriter, as the case may be, for use in the preparation
thereof; and PROVIDED, FURTHER, HOWEVER, that the Company shall not be liable to
any Holder Indemnitee in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus so
long as such final prospectus, and any amendments or supplements thereto, have
been furnished to such underwriter or the Investors, as applicable.
4.2 INDEMNIFICATION BY THE INVESTORS. If any Registrable
Securities are included in any registration statement, each seller of such
Registrable Securities so registered shall, severally and not jointly, indemnify
and hold harmless the Company and each director, officer and affiliate of the
Company, and each other individual or entity, if any, who controls (within the
meaning of the Securities Act) the Company (each of the foregoing, a "Company
Indemnitee") insofar as Losses to a Company Indemnitee arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or an omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which there were made not misleading,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information pertaining to the
Investors and furnished to the Company by the Investors specifically for use in
the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, PROVIDED, HOWEVER, that
the Investors shall have no liability under this Section 4.2 for any amount in
excess of the net proceeds actually received by the Investors from the sale of
the Registrable Securities included in such registration statement.
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4.3 NOTICE OF CLAIMS, ETC.
(a) Promptly after receipt by an indemnified party of notice
of the commencement of any action or proceeding involving a claim referred to in
Sections 4.1 or 4.2, such indemnified party will, if a claim in respect thereof
is to be made against an indemnifying party, immediately give written notice to
the latter of the commencement of such action; PROVIDED, HOWEVER, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its indemnity obligations, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in the reasonable judgment of counsel for such indemnified party, a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim (in which case the indemnified party shall be entitled
to retain separate counsel as provided below), the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish and
at any time, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs related to the indemnified party's cooperation with the
indemnifying party; PROVIDED, HOWEVER, that the indemnified party may, at its
own expense, retain separate counsel to participate in such defense.
(b) No indemnifying party shall be liable for any settlement
of any action or proceeding effected without its written consent, which consent
shall not be unreasonably withheld. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
4.4 CONTRIBUTION. If indemnification shall for any reason be
held by a court to be unavailable to an indemnified party in respect of any
loss, claim, damage or liability, or any action in respect thereof, then, in
lieu of the amount paid or payable under Section 4.1 or Section 4.2, as
applicable, the indemnified party and the indemnifying party shall contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (a) in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and the Investors on the other hand that resulted in such loss,
claim, damage or liability, or action in respect thereof, with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations or (b) if the allocation provided by item (a) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Investors on the other, as determined by a court of competent jurisdiction. No
individual or entity guilty of fraudulent misrepresentation (within the meaning
of the Securities Act) shall be entitled to contribution from any individual or
entity who was not guilty of such fraudulent misrepresentation. In addition, no
individual or entity shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim, effected without such
individual or entity's consent, which consent shall not be unreasonably
withheld.
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5. INFORMATION BY THE INVESTORS. If any information relating
to the Investors is included in any registration statement, the Investors shall
furnish to the Company such information regarding the Investors and the method
of distribution proposed by the Investors as the Company may request in writing
and as shall be required in connection with any registration, qualification or
compliance referred to in Section 1.
6. RULE 144 REQUIREMENTS. The Company agrees that it will: (a)
use its best efforts to make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act; (b) use
its best efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and (c) furnish to any
holder of Registrable Shares upon request a written statement by the Company as
to its compliance with the information requirements of said Rule 144, and of the
reporting requirements of the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as such holder may reasonably request to avail itself of any similar
rule or regulation of the SEC allowing it to sell any such securities without
registration.
7. CERTAIN RIGHTS. The rights granted to the Investors
hereunder may not be transferred except with the written consent of the Company
or as otherwise set forth in Section 8.6 hereof.
8. MISCELLANEOUS.
8.1 NOTICES, ETC. All notices, consents, instructions,
requests and other communications required or permitted hereunder must be in
writing and shall be deemed to have been duly given only if delivered
personally, by facsimile transmission, by first-class mail (postage prepaid,
return receipt requested), or by delivery by a recognized international courier
service (all costs prepaid) to the parties at the following addresses or
facsimile numbers (or as amended in accordance with this Section 8.1):
If to the Company, to:
XXXXXXX.XXX, INC.
000 Xxxxxxx 0, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
and a copy to:
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
If to the Investors, to the address or telecopier number of
the Investors set forth on the signature page below.
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8.2 NO WAIVER. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
8.3 ENTIRE AGREEMENT. This agreement supersedes all prior
and/or contemporaneous negotiations, understandings, discussions and agreements
(written or oral) between the parties with respect to the subject matter hereof
(all of which are merged herein and therein) and contains the sole and entire
agreement among the parties hereto with respect to the subject matter hereof.
8.4 GOVERNING LAW. This agreement shall be construed,
interpreted and enforced in accordance with, and shall be governed by, the laws
of the state of New York without regard to principles of conflicts of laws.
8.5 JURISDICTION; VENUE. Each of the parties hereto hereby
irrevocably consents and submits to the exclusive jurisdiction of the United
States District Court for the Southern District of New York in connection with
any dispute arising out of or relating to this agreement or the transactions
contemplated hereby, waives any objection to venue in such District (unless such
court lacks jurisdiction with respect to such dispute, in which case, each of
the parties hereto irrevocably consents to the jurisdiction of the courts of the
State of New York located in New York County in connection with such dispute and
waives any objection to venue in the County of New York), and agrees that
service of any summons, complaint, notice or other process relating to such
dispute may be effected in the manner provided by Section 9.1.
8.6 ASSIGNMENT; BINDING EFFECT. The Investors shall not assign
their rights or duties hereunder to any party other than (i) an entity
controlled by, under common control with, or controlling, the Investors, (ii)
any person or entity to which an Investor transfers its Warrant in accordance
with Section 7 thereof. This agreement shall be binding upon and, except as
otherwise provided herein, shall inure to the benefit of the parties hereto and
their permitted successors and assigns.
8.7 AMENDMENT AND WAIVER. No term or provision of this
agreement may be amended, waived, altered, modified, rescinded or terminated
except by a written instrument signed by the party against whom the same is
sought to be enforced.
8.8 NO THIRD PARTY BENEFICIARIES. Nothing contained in this
agreement, whether express or implied, is intended, or shall be deemed, to
create or confer any right, interest or remedy for the benefit of any person or
entity other than as otherwise provided in this agreement.
8.9 SEVERABILITY. If any provision of this agreement is found
to be void or unenforceable by a court of competent jurisdiction, the remaining
provisions of this agreement shall nevertheless be binding upon the parties with
the same force and effect as though the void or unenforceable part had been
severed and deleted.
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8.10 SPECIFIC PERFORMANCE. The parties agree that irreparable
damage will result in the event that this agreement is not specifically enforced
and the parties hereto agree that any damages available at law for a breach of
this agreement would not be an adequate remedy. Therefore, the provisions hereof
and the obligations of the parties hereunder shall be enforceable in a court of
equity, or other tribunal having jurisdiction, by a decree of specific
performance, and appropriate injunctive relief may be applied for and granted in
connection therewith.
8.11 COUNTERPARTS; EFFECTIVENESS. This agreement may be
executed in one or more counterparts (including signature pages delivered by
facsimile transmission), each of which shall be deemed an original but all of
which together will constitute one and the same agreement. This agreement shall
become effective when each party hereto shall have received counterparts hereof
signed by all of the other parties hereto.
The parties have executed and delivered this Registration
Rights Agreement as of the date first written above.
XXXXXXX.XXX, INC.
By:
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Name:
Title:
XXXXXXX INVESTMENTS LLC
By:
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Name:
Title:
VICIS CAPITAL MASTER FUND LLC
By:
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Xxxxxx X. Xxxxxx
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Xxxxxxx Xxxxxxxx
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Xxxxxx XxXxxxx
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Xxxxx Xxxxxxxx
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Xxx Xxxxxxxxxx
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Xxxx Xxxxxx
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CSFN I LLC
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Xxxx Xxxxxxxx
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