EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of March 17,
2000, by and among PRECISION OPTICS CORPORATION, INC., a corporation organized
under the laws of the Commonwealth of Massachusetts (the "COMPANY"), and the
undersigned (the "INITIAL INVESTORS").
WHEREAS:
A. The Company and the Initial Investors have entered into a Securities
Purchase Agreement dated as of March 13, 2000 (the "SECURITIES PURCHASE
AGREEMENT;" capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement). In
connection with the Securities Purchase Agreement, the Company has agreed, upon
the terms and subject to the conditions contained therein, to issue and sell to
the Initial Investors (i) shares of the Company's common stock, $0.01 par value
(the "COMMON STOCK"), and (ii) warrants to purchase Common Stock (the
"WARRANTS"). The shares of Common Stock issued on the Closing Date under the
Securities Purchase Agreement are referred to herein as the "SHARES" and the
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as the "WARRANT SHARES."
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investors, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(i) "INVESTORS" means the Initial Investors and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis ("RULE
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means (i) the Shares,
(ii) the Warrant Shares, (iii) any shares of Common Stock issued to an Investor
at such Investor's option pursuant to Section 2(b) hereof, (iv) any shares of
Common Stock issued to First Security Xxx Xxxxxx ("FSVK") upon exercise of the
warrant issued to FSVK pursuant to the engagement letter dated February 25, 2000
between FSVK and the Company and (v) any shares of capital stock issued or
issuable, from time to time (with any adjustments), as a distribution on or in
exchange for or otherwise with respect to any of the foregoing, provided that
any such shares shall cease to be Registrable Securities if (i) such shares are
previously sold pursuant to an effective Registration Statement or pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "1933 Act") or (ii)
such shares may be sold under 144(k) under the 1933 Act (without regard as to
whether the holder is an affiliate of the Company.)
(iv) "REGISTRATION STATEMENT" means one or more
registration statements of the Company under the Securities Act registering all
of the Registrable Securities, including the Initial Registration Statement, any
Uncovered Shares Amendments and Uncovered Shares Registration Statements (each,
as defined below).
2. REGISTRATION.
a. MANDATORY REGISTRATION. Within 45 days following the
Closing Date (the "FILING DEADLINE"), the Company shall file with the United
States Securities and Exchange Commission ("SEC"), a Registration Statement on
Form S-3 (or, if Form S-3 is not then available, on such form of Registration
Statement as is then available to effect a registration of all of the
Registrable Securities) covering the resale of all of the Registrable
Securities, which Registration Statement, to the extent allowable under the
Securities Act and the rules promulgated thereunder shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon exercise of the Warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transactions (the "INITIAL REGISTRATION Statement"). The Registrable Securities
included in the Initial Registration Statement shall be registered on behalf of
the Investors as set forth in Section 11(k) hereof. The Initial Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to (and subject to the
review by) the Initial Investors and their counsel at least three (3) business
days prior to its filing or other submission. If for any reason (including, but
not limited to, a determination by the staff of the SEC that all or any portion
of the Warrant Shares or any other Registrable Securities cannot be included in
the Initial Registration Statement (an "SEC DETERMINATION")), or if the Initial
Registration Statement declared effective by the SEC does not include all of the
Registrable Securities then outstanding (any such shares that are not included
being the "UNCOVERED SHARES"), the Company shall prepare and file with the SEC,
as soon as practicable, but in any event within 45 days after becoming aware of
the existence of any
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Uncovered Shares (such date referred to herein as the "UNCOVERED SHARE FILING
DEADLINE"), either (a) an amendment (the "UNCOVERED SHARES AMENDMENT") to the
Initial Registration Statement effecting a registration of the Uncovered
Shares or (b) a registration statement which registers the Uncovered Shares
(the "UNCOVERED SHARES REGISTRATION STATEMENT"). The Uncovered Shares
Amendment or the Uncovered Shares Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided to the Initial Investors and their counsel for
review and comment at least three (3) business days prior to its filing or
other submission. The Company shall use its best efforts to cause each of the
Initial Registration Statement and the Uncovered Shares Amendment or the
Uncovered Shares Registration Statement to become effective as soon as
practicable after the filing thereof.
b. PAYMENTS BY THE COMPANY. The Company shall use its best
efforts to cause each Registration Statement required to be filed pursuant to
Section 2(a) hereof to become effective as soon as practicable, but, as to the
Initial Registration Statement filed pursuant to Section 2(a), in no event later
than the one hundred and twentieth (120th) day after the Closing Date (the
"REGISTRATION DEADLINE"), and as to any Uncovered Shares Amendment or Uncovered
Shares Registration Statement, in no event later than the sixtieth (60th) day
after the Uncovered Share Filing Deadline (the "UNCOVERED SHARE REGISTRATION
DEADLINE"). If (i) the Registration Statement(s) covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) hereof
is not filed with the SEC by the Filing Deadline or the Uncovered Share Filing
Deadline, as applicable, or declared effective by the SEC on or before the
Registration Deadline or the Uncovered Share Registration Deadline, as
applicable, or if, after a Registration Statement has been declared effective by
the SEC, sales of all the Registrable Securities required to be included therein
(except, in the case of the Initial Registration Statement, for Uncovered Shares
which are the subject of an SEC Determination) cannot be made pursuant to the
Registration Statement (by reason of a stop order, the Company's failure to
update a Registration Statement, any reason resulting in Uncovered Shares or any
other reason outside the control of the Investors) for a period in excess of 90
days in any 365-day period (the "PERMITTED BLACKOUT PERIOD") or (ii) the Common
Stock is not listed or included for quotation on either the Nasdaq National
Market or the Small Cap Market (the "NASDAQ MARKETS"), or the New York Stock
Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") at any time
after the Registration Deadline, then the Company will make payments to the
Investors in such amounts and at such times as shall be determined pursuant to
this Section 2(b) as liquidated damages to the Investors by reason of any such
delay in or reduction of their ability to sell the Registrable Securities (which
remedy shall be the sole and exclusive remedy for such delay or reduction of
their ability to sell the Registrable Securities).
The Company shall pay to each Investor an amount equal to (i) the
Investment Amount (as defined in the Securities Purchase Agreement) paid by such
Investor (or if such Investor is not an Initial Investor, the Investment Amount
paid by such Investor's transferor or assignor of such Shares and Warrants) for
the Shares and Warrants purchased by such Investor (or such Investor's
transferor or assignor) pursuant to the Securities Purchase Agreement (the
"AGGREGATE PURCHASE PRICE"), multiplied by (ii) three quarters of one percent
(0.75%) (with respect to the period commencing on the Filing Deadline, the
Uncovered Filing Deadline, the Registration Deadline or the Uncovered Share
Registration Deadline, as applicable; provided that such percentage shall
increase to and
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remain at one and one quarter percent (1.25%) for purposes of all
calculations to the extent that such calculations apply to time periods after
the sixtieth (60th) day after the Filing Deadline, the Uncovered Filing
Deadline, the Registration Deadline or the Uncovered Registration Deadline,
as applicable), multiplied by (iii) the sum of (x) the quotient calculated by
dividing (A) the number of days after the Filing Deadline or Uncovered Share
Filing Deadline, as applicable, and prior to the date the Registration
Statement or Uncovered Share Amendment or Uncovered Share Registration
Statement, as applicable, in each case as required to be filed pursuant to
Section 2(a), is filed with the SEC by (B) thirty, plus (y) the quotient
calculated by dividing (A) the number of days after the Registration Deadline
or Uncovered Share Registration Deadline, as applicable, and prior to the
date the Registration Statement or Uncovered Share Amendment or Uncovered
Share Registration Statement, as applicable, in each case as filed pursuant
to Section 2(a), is declared effective by the SEC by (B) thirty, plus (z) the
quotient calculated by dividing (A) the sum of the number of additional days
in excess of the Permitted Blackout Period that (I) sales of any Registrable
Securities required to be included in a Registration Statement (except, in
the case of the Initial Registration Statement, for any Uncovered Shares
which are the subject of an SEC Determination) cannot be made pursuant to a
Registration Statement after such Registration Statement has been declared
effective, or (II) the Common Stock is not listed or included for quotation
on the Nasdaq Markets, the NYSE or AMEX by (B) thirty. For example, if the
Initial Registration Statement becomes effective thirty (30) days after the
Registration Deadline, the Company would pay $7,500 for each $1,000,000 of
Aggregate Purchase Price; thereafter, for the next period of thirty (30) days
that sales cannot be made pursuant to the Initial Registration Statement
(except as to Uncovered Shares which are the subject of an SEC
Determination), the Company would pay an additional $7,500 for each
$1,000,000 of Aggregate Purchase Price and for each additional period of
thirty (30) days that sales cannot be made pursuant to the Initial
Registration Statement (except as to Uncovered Shares which are subject to an
SEC Determination), the Company would pay $12,500 for each $1,000,000 of
Aggregate Purchase Price. Such amounts shall be paid in cash or, at each
Investor's option, in shares of Common Stock which shall be deemed for this
purpose to have a value equal to the Market Price (as defined in the
Securities Purchase Agreement) as of the date such payment is due. Any shares
of Common Stock issued pursuant to this Section 2(b) shall be Registrable
Securities. If the Investor desires to be paid the amounts due hereunder in
Common Stock, it shall so notify the Company in writing within four (4)
business days of the date on which such amounts are first payable in cash.
Payments of cash pursuant hereto shall be made within five (5) Business Days
after the end of each period that gives rise to such obligation, provided
that, if any such period extends for more than thirty (30) days, interim
payments shall be made for each such thirty (30) day period. Delivery of
shares of Common Stock pursuant to this Section 2(b) shall be made within
five (5) business days after the Investor's delivery of a written notice to
the Company requesting payment in Common Stock. If such payment is not made
within such five (5) day period the Investor thereafter shall be entitled to
interest on the unpaid amount at a rate equal of two percent (2%) per month
until such amount is paid in full to the Investor. If the Company is unable
to pay all amounts due and payable with respect to the penalties, the Company
will pay the Investors such amounts pro rata based upon the total amounts
payable to each Investor as a percentage of the total amounts payable to all
Investors. Notwithstanding any other provision of this Section 2(b), no
amount shall accrue or be payable hereunder in respect of any failure of the
Company to fulfill any of its obligations under this Agreement (i) during the
180 day period immediately following the Closing Date under the
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Securities Purchase Agreement or (ii) as a result of any act or omission by
the Securities and Exchange Commission, any state governmental or regulatory
body or any Investor.
c. PIGGY BACK REGISTRATIONS. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the Company shall
file with the SEC 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 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor who continues to hold Registrable Securities written
notice of such determination and, if within fifteen (15) days after the date of
such notice, such Investor shall so request in writing, the Company shall
include in such registration statement all or any part of the Registrable
Securities such Investor requests to be registered, except that if in connection
with any underwritten public offering for the account of the Company the
managing underwriter(s) thereof shall impose a limitation on the number of
shares of Common Stock which may be included in the registration statement
because, in such underwriter(s)' judgment, marketing or other factors dictate
such limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such registration statement only such limited
portion, if any of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit. Any
exclusion of Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such registration statement
or are not entitled to pro rata inclusion with the Registrable Securities; and
PROVIDED FURTHER, HOWEVER, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the registration statement other than holders of securities
entitled to inclusion of their securities in such registration statement by
reason of demand registration rights (except to the extent any existing
agreements otherwise provide). No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any registration
required under Section 2(a) hereof. If an offering in connection with which an
Investor is entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included in such
registration statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering.
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d. ELIGIBILITY FOR FORM S-3. The Company represents and
warrants that it is eligible to register the resale of Registrable Securities on
a registration statement on Form S-3 under the Securities Act, and that there
exist no facts or circumstances (including without limitation any required
approvals or waivers or any circumstances that may delay or prevent the
obtaining of accountant's consents) that would prohibit or delay the preparation
and filing of a registration statement on Form S-3 with respect to the
Registrable Securities. The Company shall file all reports required to be filed
by the Company with the SEC in a timely manner so as to maintain or, if
applicable, regain its eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC, on or
before the Filing Deadline or the Uncovered Share Filing Deadline, as
applicable, the applicable Registration Statement required by Section 2(a) and
shall use its best efforts to cause such Registration Statement to become
effective as soon as practicable after such filing (but in no event later than
the Registration Deadline or the Uncovered Share Registration Deadline, as
applicable). The Company shall keep such Registration Statement effective
pursuant to Rule 415 at all times until the date on which all of the Registrable
Securities may (in the reasonable opinion of counsel to the Initial Investors)
be immediately sold to the public without registration or restriction pursuant
to Rule 144(k) under the Securities Act, without regard as to whether an
Investor is an affiliate of the Company (the "REGISTRATION PERIOD"). In the
event that the sale of Registrable Securities by one or more Investors is
determined by the SEC to constitute a primary offering, upon the written request
from time to time of any such Investor, the Company shall as promptly as
practicable: cause a Registration Statement to be amended and/or one or more
additional Registration Statements (which may be requested on a sequential
basis) to be filed (as specified by the applicable Investors) and to be declared
effective; and take all other actions reasonably requested by such Investors to
effectuate the offering of Registrable Securities. If the Initial Registration
Statement is not filed on Form S-3, the Company shall, as soon as it is eligible
to do so, file a post-effective amendment on Form S-3 to the Initial
Registration Statement to the extent permitted by the SEC or, if not so
permitted, file a new Registration Statement on Form S-3 to permit sales of the
Registrable Securities under the Securities Act; and the Company shall use its
best efforts to cause such post-effective amendment or Registration Statement to
become effective as soon as possible. Each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) filed pursuant to this Agreement at
the time filed (i) shall comply in all material respects with the requirements
of the Securities Act and the rules and regulations of the SEC promulgated
thereunder and (ii) shall not contain any 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. The financial statements of the
Company included in the Registration Statement or incorporated by reference
therein will comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto. Such financial statements shall be prepared in
accordance with U.S.
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generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and shall fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to immaterial year-end adjustments).
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by the Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement.
c. The Company shall upon request furnish to each Investor
whose Registrable Securities are included in the Registration Statement and its
legal counsel (i) promptly after the same is prepared and publicly distributed,
filed with the SEC, or received by the Company, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and prospectus
and each amendment or supplement thereto. In the case of the Registration
Statement referred to in Section 2(a), the Company shall upon request furnish to
each Investor a copy of each letter written by or on behalf of the Company to
the SEC or the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of any Registration Statement or amendment
thereto), and each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than any portion, if
any, thereof which contains information for which the Company has sought
confidential treatment), (A) on the date of effectiveness of the Registration
Statement or any amendment thereto, a notice stating that the Registration
Statement or amendment has been declared effective, and (B) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor. In responding to comments from the staff of the SEC, the
Company shall cooperate with any Investor that notifies the Company that it
desires to be consulted with respect to such process. Such cooperation shall
include without limitation providing any such Investor with: at least a two (2)
business day period in which to comment on the text and substance of proposed
written responses; and an opportunity to be included in all substantive
telephone conversations and meetings with the staff of the SEC. To the extent
that issues raised by the staff of the SEC have an impact primarily on any such
Investor rather than the Company, the Company shall give reasonable deference to
such Investor's requests with respect to the process and substance of responses
with respect to such issues.
d. The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or "blue
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sky" laws of such jurisdictions in the United States as each Investor who
holds Registrable Securities being offered reasonably requests, (ii) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may
be necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such
jurisdictions; PROVIDED, HOWEVER, that the Company shall not be required in
connection therewith or as a condition thereto to (a) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but
for this Section 3(d), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company undue
expense or burden, or (e) make any change in its certificate of incorporation
or bylaws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders.
e. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor by telephone, facsimile or e-mail
of the happening of any event, of which the Company has knowledge, as a result
of which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and promptly prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission and deliver
such number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
f. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable date (including in each
case by amending or supplementing such Registration Statement) and to notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request).
g. The Company shall permit a single counsel designated by the
Initial Investors to review the Registration Statement and all amendments and
supplements thereto. Any of the foregoing shall be provided to such counsel at
least three (3) business days prior to their filing with the SEC.
h. The Company shall make available for inspection by (i) any
Investor whose Registrable Securities are included in a Registration Statement,
(ii) any underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of attorneys and one firm of accountants or other
agents retained by the Investors, and (iv) one firm of attorneys retained by all
such underwriters (collectively, the "INSPECTORS") all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall
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be reasonably deemed necessary by each Inspector to enable each Inspector to
exercise its due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence.
i. The Company shall hold in confidence and not make any
disclosure of confidential information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement, or
(v) such Investor consents to the form and content of any such disclosure. The
Company agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor prior to making such disclosure, and allow the Investor, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
j. The Company shall use its best efforts to promptly either
(i) secure the designation and quotation, of all the Registrable Securities
covered by the Registration Statement on the Nasdaq National Market or the
Nasdaq Small Cap Market, or (ii) cause all the Registrable Securities covered by
the Registration Statement to be listed on the NYSE or the AMEX or another
national securities exchange and on each additional national securities exchange
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange.
k. The Company shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
l. At the request of an Initial Investor or Investors who
holds a majority-in-interest of the Registrable Securities, the Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with the Registration Statement as may be necessary in order to
change the plan of distribution set forth in such Registration Statement,
provided such a change is not contrary to the best interests of the Company and
its stockholders.
m. The Company shall comply with applicable federal and state
securities laws and regulations related to a Registration Statement and offering
and sale of securities.
n. From and after the date of this Agreement, the Company
shall not, and shall not agree to, allow the holders of any securities of the
Company (except to the extent existing agreements may otherwise provide) to
include any of their securities in any Registration Statement under Section 2(a)
hereof or any amendment or supplement thereto under Section 3(b) hereof
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without the consent of the holders of a majority in interest of the
Registrable Securities.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least ten (10)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of any information the Company
requires from each such Investor.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
c. No Investor may participate in any underwritten
distribution hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements in
usual and customary form entered into by the Company, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses in excess of those
payable by the Company pursuant to Section 5 below. Notwithstanding anything in
this Section 4(c) to the contrary, this Section 4(c) is not intended to limit an
Investor's rights under Section 2(a) or 3(b) hereof.
d. Each Investor agrees that upon receipt of a notice from the
Company pursuant to Section 3(e) that the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, each Investor agrees
not to sell any Registrable Securities pursuant to the Registration Statement
until such Investor receives notice from the Company that such Investor may
resume sales under the Registration Statement and copies of any additional or
supplemental filings that are incorporated into such prospectus.
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5. EXPENSES OF REGISTRATION.
All reasonable expenses incurred by the Company or the Investors in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3 above (excluding brokers' fees, underwriting discounts and commissions,
and similar selling expenses), including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees and the fees and
disbursements of counsel for the Company, and the fees and disbursements of one
counsel selected in writing by a majority in interest of the Initial Investors,
shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in and sold under
a Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify,
hold harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees and
agents of such Investor and each person who controls any Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), if any (each, an
"INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement of a material fact in a Registration Statement or the omission to
state therein a material fact required to be stated or necessary to make the
statements therein not misleading, (ii) any untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date of
such Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS").
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (iii) with
respect to any prospectus, shall not inure to the benefit of any Indemnified
Person if the untrue statement or omission of material fact contained in such
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented, if such corrected prospectus was timely made available by the
Company pursuant to Section 3(c) hereof, and the Indemnified Person
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was promptly advised in writing not to use the incorrect prospectus prior to
the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not jointly
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, its employees, agents and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and subject to Section 6(c) such
Investor will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor; PROVIDED, FURTHER, HOWEVER, that the Investor
shall be liable under this Agreement (including this Section 6(b) and Section 7)
for only that amount as does not exceed the net proceeds actually received by
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact by the
Investor contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented, and the Indemnified Party
failed to utilize such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; PROVIDED, HOWEVER, that such
indemnifying party shall not be entitled to assume such defense and an
Indemnified Person or Indemnified Party
12
shall have the right to retain its own counsel with the reasonable fees and
expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential conflicts of interest
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding or the actual or potential
defendants in, or targets of, any such action include both the Indemnified
Person or the Indemnified Party and the indemnifying party and any such
Indemnified Person or Indemnified Party reasonably determines that there may
be legal defenses available to such Indemnified Person or Indemnified Party
which are in conflict with those available to such indemnifying party. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by Investors holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to which the
Claim relates (with the approval of the Initial Investors if any of them
holds Registrable Securities included in such Registration Statement), if the
Investors are entitled to indemnification hereunder, or by the Company, if
the Company is entitled to indemnification hereunder, as applicable. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party
is actually prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as
such expense, loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; PROVIDED, HOWEVER, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
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a. file with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 5(c) of the Securities Purchase Agreement)
and the filing and availability of such reports and other documents as is
required for the applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable by each Investor to any transferee of all or any portion of the
Registrable Securities with an aggregate Market Price (as defined in the
Securities Purchase Agreement) of $500,000 if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company after such assignment, (ii) the
Company is furnished with written notice of (a) the name and address of such
transferee or assignee and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (iv) the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement. In addition, and notwithstanding anything to
the contrary contained in this Agreement, the Securities Purchase Agreement or
the Warrants, (i) the Securities (as defined in the Securities Purchase
Agreement) may be pledged, and all rights of the Investors under this Agreement
or any other agreement or document related to the transaction contemplated
hereby may be assigned, without further consent of the Company, to a bona fide
pledgee in connection with an Investor's margin or brokerage accounts and (ii)
any Investor may assign its rights under this Agreement to any of its employees,
partners and managers in connection with the transfer to any such person of any
Registrable Securities held by such Investor; PROVIDED, HOWEVER, that by its
execution of this Agreement, each Investor agrees that in connection with any
such assignment such Investor shall remain responsible for the performance of
each of such assignee's obligations as a holder of Registrable Securities
hereunder.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively) by a writing
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signed by the Company, and Investors (excluding Investors who are affiliates
of the Company) who hold fifty percent (50%) in interest of the Registrable
Securities (excluding Registrable Securities held by affiliates of the
Company) or, in the case of a waiver, with the written consent of the party
charged with the enforcement of any such provision. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five (5) days after being placed in the mail,
if mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
Precision Optics Corporation, Inc.
00 Xxxx Xxxxxxxx
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X'Xxxxx
15
If to an Investor, at such address as such Investor shall have provided in
writing to the Company or such other address as such Investor furnishes by
notice given in accordance with this Section 11(b), with a copy to:
First Security Xxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
Managing Director, Corporate Finance
Each party hereto may from time to time change its address or facsimile
number for notices under this Section 11(b) by giving at least ten (10) days'
prior written notice of such changed address or facsimile number, in the case of
the Investors to the Company, and in the case of the Company to all of the
Investors.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York.
e. This Agreement, the Securities Purchase Agreement and the
Warrants (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement, the
Securities Purchase Agreement and the Warrants supersede all prior agreements
and understandings among the parties hereto and thereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
16
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. All consents, approvals and other determinations to be made
by the Investors pursuant to this Agreement shall be made by the Investors
holding fifty percent (50%) of the Registrable Securities (determined as if all
Warrants then outstanding had been exercised by the payment of cash) then held
by all Investors.
k. The initial number of Registrable Securities included on
any Registration Statement and each increase to the number of Registrable
Securities included thereon shall be registered on behalf of each Investor pro
rata based on the number of Registrable Securities held by each Investor at the
time of such establishment or increase, as the case may be. In the event an
Investor shall sell or otherwise transfer any of such holder's Registrable
Securities, each transferee shall be deemed to have registered on its behalf a
pro rata portion of the number of Registrable Securities included on a
Registration Statement for such transferor. Any shares of Common Stock included
on a Registration Statement on behalf of any person or entity which does not
hold any Registrable Securities shall be deemed registered on behalf of the
remaining Investors, pro rata based on the number of shares of Registrable
Securities then held by such Investors. For the avoidance of doubt, (A) the
number of Registrable Securities held by an Investor shall be determined as if
all Warrants then outstanding and held by an Investor were exercised by the
payment of cash and (B) no provision of this subsection shall operate to reduce
the number of Registrable Securities registered on behalf of any Investor
pursuant to the first sentence of this subsection.
l. For purposes of this Agreement, the term "business day"
means any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law,
regulation or executive order to close.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PRECISION OPTICS CORPORATION, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxx
Its: Senior Vice President, Finance, Chief Financial Officer and Clerk
INITIAL INVESTORS:
[Name of Initial Investor]
---------------------------------
By: [Signature of Signing Party]
------------------------------
Name: [Name of Signing Party]
----------------------------
Its: [Title of Signing Party]
-----------------------------
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