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Exhibit 10.04
EXHIBIT C
to
Securities
Purchase
Agreement
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of February
24, 2000, by and among ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Colorado corporation, with its
headquarters located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇
▇▇▇ (the "COMPANY"), and each of the undersigned (together with their respective
affiliates and any assignee or transferee of all of their respective rights
hereunder, the "INITIAL INVESTORS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (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) convertible debentures
(the "Debentures") that are convertible into shares of the Company's common
stock, no par value per share (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in such Debentures and (ii) warrants
(the "Warrants") to acquire 330,000 shares of Common Stock, upon the terms and
conditions and subject to the limitations and conditions set forth in the
Warrants dated February 24, 2000; and
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
"1933 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 each
of the Initial Investors hereby agree as follows:
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1. DEFINITIONS.
a. As used in this Agreement, the following terms
shall have the following meanings:
(i) "INVESTORS" means the Initial Investors
and any transferee or assignee who agrees 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 1933 Act and pursuant to Rule 415 under
the 1933 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 (a) the
Conversion Shares issued or issuable upon conversion of or
otherwise pursuant to the Debentures (including, without
limitation, any shares issued or issuable upon exercise of the
Investment Options (as defined in the Debenture) or pursuant
to Articles I, II.D.3 and II.F of the Debentures and Section
2(c) herein) issued and issuable, (b) Warrant Shares issued or
issuable upon exercise of or otherwise pursuant to the
Warrants issued or issuable and (c) any shares of capital
stock issued or issuable as a dividend on or in exchange for
or otherwise with respect to any of the foregoing.
(iv) "REGISTRATION STATEMENT(S)" means a
registration statement(s) of the Company under the ▇▇▇▇ ▇▇▇.
b. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the
Securities Purchase Agreement.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall
prepare, and, on or prior to the date (the "FILING DATE") which is
thirty (30) days after the date of the Closing under the Securities
Purchase Agreement (the "CLOSING DATE"), file with the SEC a
Registration Statement on Form SB-2 or Form S-1 (or, if Form SB-2 or
Form S-1 is not then available, on such form of Registration Statement
as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Initial Investors, which
consent will not be unreasonably withheld) covering the resale of the
Registrable Securities, which Registration Statement, to the extent
allowable under the 1933 Act and the rules and regulations promulgated
thereunder (including Rule 416), shall state that such Registration
Statement also covers such indeterminate number of additional shares of
Common Stock as
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may become issuable upon conversion of or otherwise pursuant to the
Debentures (including, but not limited to, shares issued or issuable
upon exercise of the Investment Options) and exercise of or otherwise
pursuant to the Warrants to prevent dilution resulting from stock
splits, stock dividends or similar transactions. The number of shares
of Common Stock initially included in such Registration Statement shall
be no less than two (2) times the sum of (i) the aggregate number of
Conversion Shares that are then issuable upon conversion of or
otherwise pursuant to the Debentures (including upon exercise of the
Investment Options under the Debentures) (in each case based on the
lesser of the Applicable Percentage (as defined in the Debentures)
multiplied by the Variable Conversion Price (as defined in the
Debentures) and the Applicable Percentage multiplied by the Fixed
Conversion Price (as defined in the Debentures) then in effect) and
(ii) the Warrant Shares that are then issuable upon exercise of or
otherwise pursuant to the Warrants, without regard to any limitation on
the Investor's ability to convert the Debentures or exercise the
Warrants. The Company acknowledges that the number of shares initially
included in the Registration Statement represents a good faith estimate
of the maximum number of shares issuable upon conversion of or
otherwise pursuant to the Debentures (including upon exercise of the
Investment Options under the Debentures) and exercise of or otherwise
pursuant to the Warrants. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the
approval of) the Initial Investors and their counsel prior to its
filing or other submission.
b. UNDERWRITTEN OFFERING. If any offering pursuant
to a Registration Statement pursuant to Section 2(a) hereof involves an
underwritten offering, the Investors who hold a majority-in-interest of
the Registrable Securities subject to such underwritten offering, with
the consent of a majority-in-interest of the Initial Investors, shall
have the right to select, at their own expense, one legal counsel and
an investment banker or bankers and manager or managers to administer
the offering, which investment banker or bankers or manager or managers
shall be reasonably satisfactory to the Company. In the event that any
Investors elect not to participate in such underwritten offering, the
Registration Statement covering all of the Registrable Securities shall
contain appropriate plans of distribution reasonably satisfactory to
the Investors participating in such underwritten offering and the
Investors electing not to participate in such underwritten offering
(including, without limitation, the ability of non-participating
Investors to sell from time to time at any time during the
effectiveness of such Registration Statement).
c. PAYMENTS BY THE COMPANY. The Company shall use
its best efforts to obtain effectiveness of the Registration Statement
as soon as practicable, but in any event not later than the one hundred
twentieth (120th) day after the Closing Date (the "REGISTRATION
DEADLINE"). If (i) the Registration Statement covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a)
hereof is not declared effective by the SEC by the Registration
Deadline, or (ii) after the Registration Statement has been declared
effective by the SEC, sales of all of the Registrable Securities cannot
be made pursuant to the Registration Statement, (iii) the Common Stock
is not listed or included for
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quotation on the Nasdaq National Market ("NASDAQ"), the Nasdaq SmallCap
Market ("NASDAQ SMALLCAP"), the New York Stock Exchange (the "NYSE") or
the American Stock Exchange (the "AMEX") after being so listed or
included for quotation on one of such markets or (iv) the Common Stock
ceases to be traded on the Over-the-Counter Bulletin Board (the "OTC
BB") prior to being listed or included for quotation on one of the
aforementioned markets, 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(c) as partial relief for the damages to the
Investors by reason of any such delay in or reduction of their ability
to sell the Registrable Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity). The Company shall
pay to each holder of the Debentures or Registerable Securities an
amount equal to the then outstanding principal amount of the Debentures
(and, in the case of holders of Registrable Securities, the principal
amount of Debentures from which such Registrable Securities were
converted) ("OUTSTANDING PRINCIPAL AMOUNT") multiplied by twenty-five
thousandths (0.25) times the sum of: (i) the number of months (prorated
for partial months) after the end of the Registration Deadline and
prior to the date the Registration Statement is declared effective by
the SEC; provided, however, that there shall be excluded from such
period any delays which are solely attributable to changes required by
the Investors in the Registration Statement with respect to information
relating to the Investors, including, without limitation, changes to
the plan of distribution, or to the failure of the Investors to conduct
their review of the Registration Statement pursuant to Section 3(h)
below in a reasonably prompt manner; (ii) the number of months
(prorated for partial months) during the Registration Period (as
defined below) that sales of all of the Registrable Securities cannot
be made pursuant to the Registration Statement after the Registration
Statement has been declared effective (including, without limitation,
when sales cannot be made by reason of the Company's failure to
properly supplement or amend the prospectus included therein in
accordance with the terms of this Agreement (including Section 3(b)
hereof or otherwise), but excluding any days during an Allowed Delay
(as defined in Section 3(f)); and (iii) the number of months (prorated
for partial months) that the Common Stock is not listed or included for
quotation on the OTC BB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX or that
trading thereon is halted after the Registration Statement has been
declared effective (each of such monthly periods described in clauses
(i), (ii) and (iii) being referred to herein as a "DEFAULT PERIOD").
(For example, if the Registration Statement becomes effective one (1)
month after the Registration Deadline, the Company would pay $25,000
for each $1,000,000 of Outstanding Principal Amount. If thereafter,
sales of all of the Registrable Securities could not be made pursuant
to the Registration Statement for an additional period of one (1)
month, the Company would pay an additional $25,000 for each $1,000,000
of Outstanding Principal Amount.) In addition, the Applicable
Percentage (as defined in the Debenture) shall be reduced by 2.5% for
each Default Period (prorated for partial periods) as described in the
Debentures. Such amounts shall be paid in cash or, at each Investor's
option, may be added to the Conversion Amount (as defined in the
Debentures) of the Debentures pursuant to Section II.A.1. of the
Debentures and thereafter be convertible into Common Stock at the
"CONVERSION PRICE" (as defined in the Debentures) in accordance with
the terms of the
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Debentures. Any shares of Common Stock issued upon conversion of such
amounts shall be Registrable Securities. If the Investor desires to
convert the amounts due hereunder into Registrable Securities, it shall
so notify the Company in writing within two (2) business days of the
date on which such amounts are first payable in cash and such amounts
shall be so convertible (pursuant to the mechanics set forth under
Article I of the Debentures), beginning on the last day upon which the
cash amount would otherwise be due in accordance with the following
sentence. Payments of cash pursuant hereto shall be made within five
(5) 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.
d. PIGGY-BACK REGISTRATIONS. Subject to the last
sentence of this Section 2(d), if at any time prior to the expiration
of the Registration Period (as hereinafter defined) the Company shall
determine to file with the SEC a Registration Statement relating to an
offering for its own account or the account of others under the 1933
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 is
entitled to registration rights under this Section 2(d) written notice
of such determination and, if within fifteen (15) days after the
effective 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 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 for which the holders of such
securities are not entitled by contract 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 contractual 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. No
right to registration of Registrable Securities under this Section 2(d)
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(d) is an
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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. Notwithstanding anything to the contrary set
forth herein, the registration rights of the Investors pursuant to this
Section 2(d) shall only be available in the event the Company fails to
timely file, obtain effectiveness or maintain effectiveness of any
Registration Statement to be filed pursuant to Section 2(a) in
accordance with the terms of this Agreement.
e. ELIGIBILITY FOR FORM SB-2 OR FORM S-1;
CONVERSION TO FORM S-3. The Company represents and warrants that it (i)
meets the registrant eligibility and transaction requirements for the
use of Form SB-2 or Form S-1 for registration of the sale by the
Initial Investors and any other Investors of the Registrable
Securities. The Company agrees to file all reports required to be filed
by the Company with the SEC in a timely manner so as to become eligible
and thereafter to maintain its eligibility for the use of Form S-3. Not
later than ten (10) days after the Company first meets the registration
eligibility and transaction requirements for the use of Form S-3 (or
any successor form) for registration of the offer and sale by the
Initial Investors and any other Investors of Registrable Securities,
the Company shall file a Registration Statement on Form S-3 (or such
successor form) with respect to the Registrable Securities covered by
the Registration Statement filed on Form SB-2 or Form S-1, whichever
is applicable, filed pursuant to Section 2(a) (and include in such
Registration Statement on Form S-3 the information required by Rule 429
under the ▇▇▇▇ ▇▇▇) or convert the Registration Statement filed on Form
SB-2 or Form S-1 pursuant to Section 2(a) to a Form S-3 pursuant to
Rule 429 under the 1933 Act and use its best efforts to have such
Registration Statement (or such amendment) declared effective as soon
as practicable thereafter.
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 promptly, and file
with the SEC as soon as practicable after the Closing Date (but no
later than the Filing Date), a Registration Statement with respect to
the number of Registrable Securities provided in Section 2(a), and
thereafter use its best efforts to cause such Registration Statement
relating to Registrable Securities to become effective as soon as
possible after such filing (but in no event later than the Registration
Deadline), and keep the Registration Statement (and, following the
effectiveness of the Registration Statement on Form S-3 referred to in
Section 2(a), such later Registration Statement) effective pursuant to
Rule 415 at all times until such date as is the earlier of (i) the date
on which all of the Registrable Securities have been sold and (ii) the
date on which the Registrable Securities (in the opinion of counsel to
the Initial Investors)
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may be immediately sold to the public without registration or
restriction (including without limitation as to volume by each holder
thereof) under the 1933 Act (the "REGISTRATION PERIOD"), which
Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) 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.
b. The Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and supplements
to the Registration Statements and the prospectus used in connection
with the Registration Statements as may be necessary to keep the
Registration Statements effective at all times during the Registration
Period, and, during such period, comply with the provisions of the 1933
Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statements 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 Statements. In the event that
on any Trading Day (as defined in the Debentures) (the "REGISTRATION
TRIGGER DATE") the number of shares available under a Registration
Statement filed pursuant to this Agreement is insufficient to cover all
of the Registrable Securities issued or issuable upon conversion of or
otherwise pursuant to the Debentures (including upon exercise of the
Investment Options under the Debentures) (based on the lesser of the
Applicable Percentage multiplied by the Variable Conversion Price and
the Applicable Percentage multiplied by the Fixed Conversion Price
(each as defined in the Debentures) then in effect) and exercise of or
otherwise pursuant to the Warrants, in each case without giving effect
to any limitations on the Investors' ability to convert the Debentures
or exercise the Warrants, the Company shall amend the Registration
Statement, or file a new Registration Statement (on the short form
available therefore, if applicable), or both, so as to cover two
hundred percent (200%) of all of the Registrable Securities so issued
or issuable (without giving effect to any limitations on conversion
contained in the Debentures or exercise contained in the Warrants) as
of the Registration Trigger Date, in each case, as soon as practicable,
but in any event within twenty (20) business days after the necessity
therefor arises (based on the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to rely).
The Company shall use its best efforts to cause such amendment and/or
new Registration Statement to become effective as soon as practicable
following the filing thereof, but in any event within sixty (60) days
of the Registration Trigger Date. The provisions of Section 2(c) above
shall be applicable with respect to the Company's obligations under
this Section 3(b).
c. The Company shall furnish to each Investor whose
Registrable Securities are included in a Registration Statement and
such Investor's legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the
Company, one copy of each Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement
referred to in Section 2(a), each letter written by or on
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behalf of the Company to the SEC or the staff of the SEC, 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 of any
thereof which contains information for which the Company has sought
confidential treatment), and (ii) 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. The Company will
immediately notify each Investor by facsimile of the effectiveness of
each Registration Statement or any post-effective amendment. The
Company will promptly respond to any and all comments received from the
SEC, with a view towards causing each Registration Statement or any
amendment thereto to be declared effective by the SEC as soon as
practicable and shall file an acceleration request as soon as
practicable following the resolution or clearance of all SEC comments
or, if applicable, following notification by the SEC that any such
Registration Statement or any amendment thereto will not be subject to
review.
d. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statements under such other securities or "blue sky" laws
of such jurisdictions in the United States as the Investors who hold a
majority in interest of the Registrable Securities being offered
reasonably request, (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 charter 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. In the event Investors who hold a
majority-in-interest of the Registrable Securities being offered in the
offering (with the approval of a majority-in-interest of the Initial
Investors) select underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting agreement,
in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of
such offering.
f. As promptly as practicable after becoming aware
of such event, the Company shall notify each Investor of the happening
of any event, of which the Company has knowledge, as a result of which
the prospectus included in any Registration Statement,
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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 use its
best efforts promptly to prepare a supplement or amendment to any
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; provided that,
for not more than ten (10) consecutive trading days (or a total of not
more than thirty (30) trading days in any twelve (12) month period),
the Company may delay the disclosure of material non-public information
concerning the Company (as well as prospectus or Registration Statement
updating) the disclosure of which at the time is not, in the good faith
opinion of the Company, in the best interests of the Company (an
"ALLOWED DELAY"); provided, further, that the Company shall promptly
(i) notify the Investors in writing of the existence of (but in no
event, without the prior written consent of an Investor, shall the
Company disclose to such Investor any of the facts or circumstances
regarding) material non-public information giving rise to an Allowed
Delay and (ii) advise the Investors in writing to cease all sales under
such Registration Statement until the end of the Allowed Delay. Upon
expiration of the Allowed Delay, the Company shall again be bound by
the first sentence of this Section 3(f) with respect to the information
giving rise thereto.
g. The Company shall use its best efforts to
prevent the issuance of any stop order or other suspension of
effectiveness of any Registration Statement, and, if such an order is
issued, to obtain the withdrawal of such order at the earliest possible
moment 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.
h. The Company shall permit a single firm of
counsel designated by the Initial Investors (with the fees of such
counsel being paid pursuant to the expense allowance set forth in
Section 4(f) of the Securities Purchase Agreement) to review such
Registration Statement and all amendments and supplements thereto (as
well as all requests for acceleration or effectiveness thereof) a
reasonable period of time prior to their filing with the SEC, and not
file any document in a form to which such counsel reasonably objects
and will not request acceleration of such Registration Statement
without prior notice to such counsel. The sections of such Registration
Statement covering information with respect to the Investors, the
Investor's beneficial ownership of securities of the Company or the
Investors intended method of disposition of Registrable Securities
shall conform to the information provided to the Company by each of the
Investors.
i. The Company shall make generally available to
its security holders as soon as practicable, but not later than ninety
(90) days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158 under the
▇▇▇▇ ▇▇▇) covering a twelve-month period beginning not later than the
first day of the Company's fiscal quarter next following the effective
date of the Registration Statement.
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j. At the request of any Investor, the Company
shall furnish, on the date that Registrable Securities are delivered to
an underwriter, if any, for sale in connection with any Registration
Statement or, if such securities are not being sold by an underwriter,
on the date of effectiveness thereof (i) an opinion, dated as of such
date, from counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters, if any, and the Investors and (ii) a letter, dated such
date, from the Company's independent certified public accountants in
form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and the Investors.
k. The Company shall make available for inspection
by (i) any Investor, (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
Initial Investors, (iv) one firm of attorneys and one firm of
accountants or other agents retained by all other Investors, and (v)
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 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; provided,
however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other
information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such Records is ordered pursuant to a
subpoena or other order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation
of this or any other agreement. The Company shall not be required to
disclose any confidential information in such Records to any Inspector
until and unless such Inspector shall have entered into confidentiality
agreements (in form and substance satisfactory to the Company) with the
Company with respect thereto, substantially in the form of this Section
3(k). Each Investor agrees that it shall, upon learning that disclosure
of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to
the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein (or in any
other confidentiality agreement between the Company and any Investor)
shall be deemed to limit the Investor's ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable
laws and regulations.
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l. The Company shall hold in confidence and not
make any disclosure of 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, or (iv) such
information has been made generally available to the public other than
by disclosure in violation of this or any other agreement. 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.
m. The Company shall (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on each
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, or (ii) to the extent the securities of the same class or
series are not then listed on a national securities exchange, secure
the designation and quotation, of all the Registrable Securities
covered by the Registration Statement on Nasdaq or the Nasdaq SmallCap
or, if not eligible for Nasdaq or the Nasdaq SmallCap, on the OTC BB
and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities.
n. 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.
o. The Company shall cooperate with the Investors
who hold Registrable Securities being offered and the managing
underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to
such Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three
(3) business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel selected by the Company to
deliver, to the transfer agent for the Registrable Securities (with
copies to the Investors whose Registrable Securities are included in
such Registration Statement) an instruction in the form attached hereto
as EXHIBIT 1 and an opinion of such counsel in the form attached hereto
as EXHIBIT 2.
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p. At the request of the holders of 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 any
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.
q. Except for those commitments of the Company to
register its Common Stock set forth on Schedule 3(q) of this Agreement,
the Company shall not, and shall not agree to, allow the holders of any
securities of the Company 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 without the consent of the
holders of a majority-in-interest of the Registrable Securities. In
addition, the Company shall not offer any securities for its own
account or the account of others in any Registration Statement under
Section 2(a) hereof or any amendment or supplement thereto under
Section 3(b) hereof without the consent of the holders of a
majority-in-interest of the Registrable Securities.
r. The Company shall take all other reasonable
actions necessary to expedite and facilitate disposition by the
Investors of Registrable Securities pursuant to a Registration
Statement.
s. The Company shall comply with all applicable
laws related to a Registration Statement and offering and sale of
securities and all applicable rules and regulations of governmental
authorities in connection therewith (including without limitation the
1933 Act and or the Securities Exchange Act of 1934, as amended (the
"1934 ACT") and the rules and regulations promulgated by the SEC).
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 three (3) business days prior to the first
anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires from
each such Investor.
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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 Statements 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 Statements.
c. In the event Investors holding a
majority-in-interest of the Registrable Securities being registered
(with the approval of the Initial Investors) determine to engage the
services of an underwriter, each Investor agrees to enter into and
perform such Investor's obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from such Registration Statement.
d. Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 3(f) or 3(g), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense
of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the time of
receipt of such notice.
e. No Investor may participate in any underwritten
registration 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.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualification fees, printers and accounting fees, the
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel selected by the Initial Investors pursuant to
Sections 2(b) and 3(h) hereof shall be borne by the Company.
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6. INDEMNIFICATION.
In the event any Registrable Securities are included in 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, (ii) the directors, officers, partners,
employees, agents and each person who controls any Investor within the
meaning of the 1933 Act or the 1934 Act, if any, (iii) any underwriter
(as defined in the ▇▇▇▇ ▇▇▇) for the Investors, and (iv) the directors,
officers, partners, employees and each person who controls any such
underwriter within the meaning of the 1933 Act or the 1934 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 or
alleged untrue statement of a material fact in a Registration Statement
or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged 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 1933 Act, the 1934
Act, any other law, including, without limitation, 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"). Subject to the
restrictions set forth in Section 6(c) with respect to the number of
legal counsel, the Company shall reimburse the Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.
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 any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of such 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 preliminary
prospectus, shall not inure to the benefit of any Indemnified Person if
the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, such corrected
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prospectus was timely made available by the Company pursuant to Section
3(c) hereof, and the Indemnified Person 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, each person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act, any underwriter 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 1933 Act or the
1934 Act (collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim arises out of or is based upon any Violation by such Investor, 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, which consent shall not be unreasonably withheld;
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 to 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
contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented.
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
be made against any indemnifying party under this Section 6, deliver to
the indemnifying party a written notice of the commencement thereof,
and the indemnifying
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party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume 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 an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the 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 differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in
such proceeding. 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 a majority-in-interest of the Initial Investors), if the
Investors are entitled to indemnification hereunder, or 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 seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) 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 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the
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investors to sell securities of the Company to the public without registration
("RULE 144"), the Company agrees to:
a. make and keep current public information
available, as those terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports
and other documents required of the Company under the 1933 Act and the
1934 Act so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit the Company's
obligations under Section 4(c) of the Securities Purchase Agreement)
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. 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 1933 Act and the 1934 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 under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
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 within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, 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 1933 Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein, (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement, and (vi) such transferee shall be an "ACCREDITED INVESTOR" as that
term defined in Rule 501 of Regulation D promulgated under the 1933 Act.
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), only with written consent of the Company, each
of the Initial Investors (to the extent such Initial Investor still
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owns Registrable Securities) and Investors who hold a majority interest of the
Registrable Securities. 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 hereof shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile and
shall be effective five days after being placed in the mail, if mailed
by regular United States mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇ ▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With copy to:
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
3100 Bank One Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to an Investor: to the address set forth immediately below such Investor's
name on the signature pages to the Securities Purchase Agreement.
With copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Akerman, Senterfitt & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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 Delaware
applicable to agreements made and to be performed in the State of
Delaware (without regard to principles of conflict of laws). Both
parties irrevocably consent to the jurisdiction of the United States
federal courts and the state courts located in Delaware with respect to
any suit or proceeding based on or arising under this Agreement, the
agreements entered into in connection herewith or the transactions
contemplated hereby or thereby and irrevocably agree that all claims in
respect of such suit or proceeding may be determined in such courts.
Both parties irrevocably waive the defense of an inconvenient forum to
the maintenance of such suit or proceeding. Both parties further agree
that service of process upon a party mailed by first class mail shall
be deemed in every respect effective service of process upon the party
in any such suit or proceeding. Nothing herein shall affect either
party's right to serve process in any other manner permitted by law.
Both parties agree that a final non-appealable judgment in any such
suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
e. This Agreement and the Securities Purchase
Agreement (including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with
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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 and the
Securities Purchase Agreement supersede all prior agreements and
understandings among the parties hereto 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.
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. Except as otherwise provided herein, all
consents and other determinations to be made by the Investors pursuant
to this Agreement shall be made by Investors holding a majority of the
Registrable Securities, determined as if the all of the Debentures then
outstanding have been converted into for Registrable Securities.
k. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to each Investor
by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for breach of its obligations hereunder will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of any of
the provisions hereunder, that each Investor shall be entitled, in
addition to all other available remedies in law or in equity, to an
injunction or injunctions to prevent or cure breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions
hereof, without the necessity of showing economic loss and without any
bond or other security being required.
l. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any
party.
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m. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
n. The initial number of Registrable Securities
included in any Registration Statement and each increase to the number
of Registrable Securities included therein shall be allocated pro rata
among the Investors 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
allocated a pro rata portion of the number of Registrable Securities
included in a Registration Statement for such transferor. Any shares of
Common Stock included on a Registration Statement and which remain
allocated to any person or entity which does not hold any Registrable
Securities shall be allocated to the remaining Investors, pro rata
based on the number of shares of Registrable Securities then held by
such Investors. For the avoidance of doubt, the number of Registrable
Securities held by an Investor shall be determined as if all the
Debentures and Warrants then outstanding and held by an Investor were
converted into or exercised for Registrable Securities.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and the undersigned Initial
Investors have caused this Agreement to be duly executed as of the date first
above written.
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇,
Chief Financial Officer and Vice President - Finance
RGC INTERNATIONAL INVESTORS, LDC
By: ▇▇▇▇ ▇▇▇▇ Capital Management, L.P.,
Investment Manager
By: RGC General Partner Corp.,
as General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Managing Director
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