Exhibit 4.44
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August
13, 2001, by and between CONSTELLATION 3D, INC., a Delaware corporation, with
headquarters located at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Company"), and THE GLENEAGLES FUND COMPANY II, an exempted company
organized and existing under the laws of the Cayman Islands, having an office at
x/x Xxxxx Xxxx Xxxxxxxx (Xxxxxx Xxxxxxx) Ltd., Corporate Center, West Bay Road,
P.O. Box 31106 SMB, Grand Cayman, Cayman Islands, British West Indies (together
with its successors in interest and assigns or its designees, the "Purchaser").
WHEREAS:
A. In connection with the Common Stock Purchase Agreement by and
between the Company and the Purchaser of even date herewith (the "Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue and sell to the Purchaser (i)
certain shares of the Company's common stock, par value $0.00001 per share (the
"Common Stock"), pursuant to an effective Registration Statement (as defined
below), and (ii) warrants ("Warrants") to purchase shares of Common Stock;
B. The Company is filing a registration statement on Form S-3 with
the Securities and Exchange Commission (the "SEC") pursuant to the 1933 Act (as
defined below) and Rule 415 thereunder; and
C. To induce the Purchaser to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain rights with respect to the
Registration Statement 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 the
Purchaser hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Holder" means the Purchaser and any transferee or assignee
thereof to whom the Purchaser assigns its rights under this Agreement and the
Purchase Agreement and who agrees to become bound by the provisions of this
Agreement and the Purchase Agreement in accordance with Section 8.
(b) "Person" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
(c) "Register," "registered" and "registration" refer to a
registration effected by preparing and filing one or more Registration
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(s) by the SEC.
(d) "Registered Securities" means (i) all of the shares of
Common Stock issued or issuable pursuant to the Purchase Agreement and the
shares of Common Stock issued or issuable upon exercise of the Warrants; (ii)
securities issued or issuable upon any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise with respect to such
shares of Common Stock; and (iii) any other security issued as a dividend or
other distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses; in each case regardless of any
limitation on the Purchaser's right or obligation to purchase the maximum number
of shares of Common Stock provided for under the Purchase Agreement and the
Warrant.
(e) "Registration Statement" shall mean a registration
statement to be filed by the Company with the SEC pursuant to Rule 415 on
Form S-3 under the 1933 Act covering the resale of the Registered Securities.
(f) Capitalized terms used but not defined herein shall have
the meanings specified in the Purchase Agreement.
2. REGISTRATION.
(a) Mandatory Registration. The Company represents, warrants
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and covenants that it will file a Registration Statement on Form S-3 with the
SEC, all in compliance with the 1933 Act and Rule 415(a)(1)(i) and (iii)
thereunder, covering the resale by the Purchaser of the Registered Securities,
on or prior to the thirty (30) day anniversary of this Agreement and use its
commercially best efforts to have such Registration Statement declared effective
by the SEC as soon thereafter as possible.
(b) Counsel. Subject to Section 5 hereof, in connection with
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any offering of the Registered Securities pursuant to the Registration
Statement, the Holders shall have the right to select one legal counsel to
administer the interests of all the Holders in the offering. The Company shall
reasonably cooperate with any such counsel.
3. RELATED OBLIGATIONS.
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At all times that the Company is obligated to maintain the
Registration Statement effective, the Company will use its commercially best
efforts to effect and maintain the registration of the Registered Securities in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:
(a) The Company shall keep the Registration Statement (covering
all Registered Securities) effective pursuant to Rule 415 at all times during
the period beginning on the date ("Required Effective Date") on which the
Registration Statement is declared effective
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by the SEC and ending on the later of (I) the twenty-six (26) month anniversary
of the Required Effective Date, (II) the fifth (5th) anniversary of this
Agreement, and (III) the date on which all Registered Securities are able to be
sold publicly by the Holder pursuant to Rule 144(k) (or any successor
regulation) promulgated under the 1933 Act (collectively, 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, in light of the
circumstances in which they were made, not misleading.
(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 such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, shall comply with the provisions of the 1933 Act with respect to
the disposition of all Registered Securities of the Company covered by such
Registration Statement until such time as all of such Registered Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.
(c) Subject to Section 3(h)(ii), the Company shall furnish to
each Holder and one legal counsel representing all Holders without charge (i)
promptly after the same is prepared and filed with the SEC, such number of
copies as such Holder may reasonably request of such Registration Statement and
any amendment(s) and supplements thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits, the
prospectus included in such Registration Statement (including each prospectus
supplement) and, with regards to such Registration Statement(s), any
correspondence by or on behalf of the Company to the SEC or the staff of the SEC
and any correspondence from the SEC or the staff of the SEC to the Company or
its representatives and (ii) such other documents, including copies of any final
prospectus and supplements thereto, as such Holder may reasonably request from
time to time in order to facilitate the disposition of the Registered Securities
owned by such Holder.
(d) Immediately after becoming aware of the existence of such
event, the Company shall notify (subject to Section 3(h)(ii)) each Holder by
telephone and in writing (the "Materiality Notice") that the prospectus included
in a Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Thereafter, the Company shall either:
(A) promptly prepare a supplement or amendment to such
Registration Statement (which, if such Registration
Statement is on Form S-3, may consist of a document to be
filed by the Company with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and to be
incorporated by reference in the prospectus) to correct
such untrue statement or omission, and deliver ten (10)
copies of such supplement or amendment to each
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Holder (or such other number of copies as such Holder may
reasonably request), or
(B) immediately notify the Purchaser in writing and by
telephone that the Company does not intend to prepare and
file such a supplement or amendment to the Registration
Statement at the current time because, as certified by the
president of the Company, in the good faith judgment of the
Board of Directors of the Company (after consultation with
its appropriate professional advisors), it would be
seriously detrimental (assuming such detriment is the cause
of the Materiality Notice) to the Company for such
supplement or amendment to be filed in the near future and
is therefore essential to defer filing of such supplement
or amendment until such time (subject to the proviso in the
next sentence) as such deferment is no longer essential
(such notice being referred to herein as a "Suspension
Notice"). Upon the Company's delivery of a Suspension
Notice to the Purchaser, the Company's rights and
obligations to sell Shares to the Purchaser and the
Purchaser's obligation to buy Shares from the Company shall
each be suspended until such time as (i) the Company files
a supplement or amendment to the Registration Statement in
accordance with clause (A) above, or (ii) the filing of
such supplement or amendment is no longer necessary to
render the Registration Statement and prospectus current
and deliverable (the period beginning upon the delivery of
a Suspension Notice and ending upon the satisfaction of
clause (i) or (ii) above being a "Suspension Period");
provided that no such Suspension--------Period shall be
more than ten (10) consecutive Trading Days or an aggregate
of thirty (30) Trading Days in any twelve (12) month
period.
If a Suspension Notice is delivered by the Company to the
Purchaser during an existing Purchase Period, that Purchase Period shall
immediately terminate. The Company's obligation to deliver to the Purchaser any
Shares previously purchased by the Purchaser pursuant to the Purchase Agreement
with respect to which there has not been a Closing shall not be affected or
relieved in any way as a result of this Section 3(d). Without limiting the
foregoing, if the Company delivers a Suspension Notice either (i) within an
existing Purchase Period or (ii) within ten (10) Trading Days of the end of the
previous Purchase Period, and the Purchaser has purchased shares which the
Purchaser has not resold by the time the Suspension Notice is received, then the
Purchaser may (but shall not be obligated to) resell any or all of such shares
to the Company for cash at a price equal to the Payment Amount. Such resale
shall occur on the third Trading Day after the Purchaser gives notice to the
Company of its intention to resell Shares. The Purchaser may exercise this
resale right one or multiple times.
The Company shall immediately notify (subject to Section 3(h)(ii)
below) the Purchaser in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of
such effectiveness shall be delivered to the Purchaser by facsimile on the same
day of such effectiveness and by overnight mail), (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related prospectus
or related
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information, and (iii) of the Company's reasonable determination that a post-
effective amendment to a Registration Statement would be appropriate.
(e) The Company shall use its commercially best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registered Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify (subject to Section 3(h)(ii)) each
Holder who holds Registered Securities being sold of the issuance of such order
and the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.
(f) Subject to Section 3(h)(ii), the Company shall permit each
Holder, Inspector (as defined below) and/or Purchaser's counsel, to review and
comment upon a Registration Statement and all amendments and prospectus
supplements thereto at least three (3) business days prior to their filing with
the SEC, and not file any document in a form to which such counsel reasonably
objects. Without limiting Section 3(h)(iii), the Company shall not submit to the
SEC any Registration Statement, amendment or prospectus supplement thereto
without the prior approval of such Holder or its counsel.
(g) Subject to Section 3(h)(ii), the Company shall make
available for inspection by (i) any Holder and (ii) its attorneys and
accountants or other agents or Persons retained or designated by the Holders
(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, and cause
the Company's officers, directors and employees to supply all information which
any Holder or Inspector may reasonably request. The Purchaser agrees (to the
extent it has approved receipt of non-public information pursuant to Section
3(h)(ii)) to keep confidential (and to cause its Inspectors and counsel to keep
confidential and execute mutually acceptable non-disclosure agreements with the
Company that are not inconsistent with the terms of the Transaction Documents)
all non-public information and Records received pursuant to Section 3(h)(ii)
which the Company determines in good faith to be confidential, and of which
determination the Holder and Inspectors are so notified, unless such information
or Records are permitted to be disclosed under the standards specified in
clauses (i) to (iv) of Section 3(p) below.
(h) Due Diligence Review. (i) Subject to Section 3(h)(ii), the
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Company shall make available, during normal business hours, for inspection and
review by the Purchaser, its Inspectors (who may or may not be affiliated with
the Purchaser), any underwriter participating in any disposition of Common Stock
on behalf of the Purchaser pursuant to the Registration Statement or amendments
or prospectus supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Documents and other filings with the SEC,
and all other corporate documents and properties of the Company as the Purchaser
may request for the purpose of such review, and cause the Company's officers,
directors and employees to promptly supply all such information requested by the
Purchaser or its Inspectors or any underwriter in connection with such
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Purchaser and its
Inspectors and any underwriters and their
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respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.
(ii) Notwithstanding any other provision of any of the
Transaction Documents, the Company shall not directly or indirectly disclose
material nonpublic information to the Purchaser or its Inspectors unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information (without conveying the substance of such
nonpublic information) and provides the Purchaser and its Inspectors with the
opportunity to accept or refuse to accept such material nonpublic information
for review; except that the Company may disclose material nonpublic information
without such prior acceptance to Inspectors unaffiliated with the Purchaser who
are conducting diligence at the Company's facility(ies), so long as
simultaneously with such disclosure, the Company identifies to those Inspectors
the portions of such information which are material and nonpublic. If material
nonpublic information is provided by the Company or its representatives or
advisors in violation of this Section 3(h)(ii), the Purchaser may require that
the Company disclose such information to the public within 2 Trading Days of the
Purchaser's demand therefore. If the Purchaser accepts such material nonpublic
information, the Company will provide such information only to the Inspector
designated by the Purchaser. Nothing in the Transaction Documents shall entitle
the Company to withhold non-public information accepted pursuant to this Section
3(h)(ii).
(iii) Subject to Section 3(h)(ii), the Company will immediately
notify the Inspectors and, if any, underwriters, of any event or the existence
of any circumstance of which it becomes aware, constituting nonpublic
information (whether or not requested of the Company specifically or generally
during the course of due diligence or otherwise by any such persons or
entities), which, if not disclosed in the prospectus included in the
Registration Statement, would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements therein, in light of the circumstances in which they were
made, not misleading. In no event shall the Purchaser's Inspectors receiving
nonpublic information pursuant to Section 3(h)(ii) disclose to the Purchaser the
nature of the specific event or circumstances constituting any nonpublic
information discovered by such advisors or representatives in the course of
their due diligence without the written consent of the Purchaser prior to
disclosure of such information. The Purchaser's Inspectors shall make complete
disclosure to the Purchaser's independent counsel of all events or circumstances
constituting nonpublic information discovered by such Inspectors in the course
of their due diligence upon which such Inspectors form the opinion that the
Registration Statement contains an untrue statement of a material fact or omits
a material fact required to be stated in the Registration Statement or necessary
to make the statements contained therein, in the light of the circumstances in
which they were made, not misleading. Upon receipt of such disclosure, the
Purchaser's independent counsel shall consult with the Company's independent
counsel (who, for all purposes of this Agreement, must be an independent law
firm with substantial experience in underwritten offerings which is reasonably
acceptable to the Purchaser) in order to address the concern raised as to the
existence of a material misstatement or omission and to discuss appropriate
disclosure with respect thereto.
(i) Without limiting the Company's obligations under the
Purchase Agreement, the Company shall cooperate with the Holders to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registered
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Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Holders may reasonably request and registered in such names of the Persons as
the Holders may request.
(j) If requested by the Holders holding a majority of the
Registered Securities, the Company shall (i) as soon as practical incorporate in
a prospectus supplement or post-effective amendment such information as such
Holders reasonably determine should be included therein relating to the sale and
distribution of Registered Securities, including, without limitation,
information with respect to the offering of the Registered Securities to be sold
in such offering; (ii) make all required filings of such prospectus supplement
or post-effective amendment as soon as notified of such matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement if reasonably
requested by such Holders for such matters.
(k) The Company shall use its best efforts to cause the
Registered Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registered Securities.
(l) The Company shall make generally available to its security
holders as soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 0000 Xxx) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of any Registration Statement.
(m) The Company shall comply with all applicable rules and
regulations of the SEC and any other regulatory authorities of competent
jurisdiction in connection with any registration hereunder.
(n) Immediately after the Registration Statement is declared
effective the Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registered Securities (with
copies to the Holders whose Registered Securities are included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the SEC in the form attached hereto as Exhibit A.
(o) The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Holders of Registered
Securities pursuant to a Registration Statement.
(p) The Company shall hold in confidence and not make any
disclosure of information concerning a Holder provided to the Company unless and
except to the extent that (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 sought pursuant
to a legal process, including without limitation, subpoena, interrogatory,
request for documents or information, civil investigative demand, deposition or
similar process, or a court of competent jurisdiction or by a governmental,
quasi-governmental, regulatory or administrative entity,
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provided that the Company shall immediately notify such Holder of the existence,
terms and circumstances of such request, and the Company shall reasonably
cooperate with such Holder in attempting to (a) prevent or limit such disclosure
and (b) obtain confidential treatment of any information required to be
disclosed, or (iv) such information has been made generally available to the
public other than by disclosure in violation of the Company's obligations under
the Transaction Documents or any other agreement or otherwise. The Company
agrees that it shall, upon learning that disclosure of such information
concerning a Holder is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to such Holder
and allow such Holder, at the Holder's expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information.
(q) The Company shall engage a transfer agent and registrar
for all the Registered Securities not later than the effective date of the first
Registration Statement filed pursuant hereto.
4. OBLIGATIONS OF THE HOLDERS.
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Each Holder agrees that, upon receipt of any written notice from
the Company of the happening of any event of the kind described in Section 3(e)
or the first sentence of 3(d), such Holder will immediately discontinue
disposition of Registered Securities pursuant to any prospectus in the
Registration Statement(s) covering such Registered Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(e) or the first sentence of 3(d).
5. EXPENSES OF REGISTRATION.
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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, and
fees and disbursements of counsel for the Company and reasonable fees and
disbursements of one counsel for all the Holders shall be paid by the Company.
6. INDEMNIFICATION.
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(a) To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Holder, the directors,
officers, partners, employees, members, agents, representatives of, and each
Person, if any, who controls, any Holder within the meaning of the 1933 Act or
the Exchange Act, (each, an "Indemnified Person"), from and against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
attorneys' fees and disbursements, amounts paid in settlement or expenses, joint
or several, (collectively, "Claims") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto ("Indemnified
Damages"), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration
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Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registered Securities are offered
("Blue Sky Filing"), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact 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, (iii) any violation or alleged
violation by the Company of the 1933 Act, the Exchange 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 Registered Securities
pursuant to a Registration Statement (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"), or (iv) enforcement of this
indemnification. The Company shall reimburse the Holders and each such
controlling Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees and disbursements 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 to the extent 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 expressly for inclusion in the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c);
(ii) shall not be available to the extent such Claim is based on (a) a failure
of the Holder to deliver or to cause to be delivered the current prospectus made
available by the Company, (b) the Indemnified Person's use of an incorrect
prospectus after and despite being promptly advised in advance by the Company in
writing not to use such incorrect prospectus or (c) the failure of the
Indemnified Person to be registered with the SEC as a broker-dealer; and (iii)
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, delayed or conditioned. 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
Registered Securities by the Holders pursuant to Section 8.
(b) In connection with any Registration Statement in which a
Holder is participating, each such Holder agrees, severally and not jointly, to
indemnify, hold harmless and defend, to the same extent and in the same manner
as is 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 Exchange Act (collectively
and together with an Indemnified Person, an "Indemnified Party"), against any
Claim or Indemnified Damages to which any of them may become subject, under the
1933 Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are 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 Holder
expressly for inclusion in such Registration Statement; and, subject to Section
6(c), such Holder will reimburse the reasonably incurred legal expenses of one
counsel or other expenses reasonably incurred by them in connection with
investigating or defending any such
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Claim; provided, however, that the indemnity agreement contained in this Section
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6(b) and the agreement with respect to contribution contained in Section 7 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Holder, which consent shall
not be unreasonably withheld, delayed or conditioned; provided, further,
however, that the Holder shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net profits to
such Holder as a result of the sale of Registered Securities under 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 Registered Securities by the Holders
pursuant to Section 8. 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 or threat
of commencement of any action or proceeding (including any governmental action
or proceeding) involving a Claim, 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
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires and can reasonably establish its
financial ability to meet its indemnity obligations, 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 thereof 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 counsel shall be selected by
the Purchaser, if the Holders are entitled to indemnification hereunder, or the
Company, if the Company is entitled to indemnification hereunder, as applicable.
The Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
Claim by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or Indemnified Person
which relates to such Claim. The indemnifying party shall keep the Indemnified
Party or Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its written consent; provided, however, that the indemnifying
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party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim.
Following indemnification as provided for
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hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
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
materially prejudiced in its ability to defend such action.
(d) 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 and when bills are received or Indemnified Damages
are incurred.
(e) The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
------------
To the extent any indemnification by an indemnifying party is
prohibited or limited by law or otherwise, 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 or
otherwise; 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 Registered
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any seller of
Registered Securities who was not guilty of fraudulent misrepresentation; and
(iii) contribution by any Holder shall be limited in amount to the net amount of
profits received by such Holder from the sale of such Registered Securities
under such Registration Statement.
8. ASSIGNMENT OF REGISTRATION RIGHTS.
---------------------------------
The rights under this Agreement shall be automatically assignable
by any Holder in their entirety or in part to any transferee of all or any
portion of the Registered Securities owned by such Holder, provided that such
Holder gives prior notice to the Company of (a) the name and address of such
transferee or assignee, and (b) the Registered Securities with respect to which
such registration rights are being transferred or assigned, and such Holder
agrees to be bound by the terms and conditions of this Agreement with respect to
such Registered Securities. Notwithstanding anything to the contrary contained
in the Transaction Documents, the Purchaser shall be entitled to pledge the
Shares, the Warrant and the Warrant Shares in connection with a bona fide margin
account.
9. 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 the written consent of the Company,
the Purchaser and Holders who hold fifty percent
11
(50%) of the Registered Securities. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon each Holder and the
Company.
10. MISCELLANEOUS.
-------------
(a) A Person is deemed to be a Holder of Registered Securities
whenever such Person owns of record such Registered Securities. If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registered Securities, the Company shall act upon the
basis of instructions, notice or election received from the registered owner of
such Registered Securities.
(b) Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement (which must
be given subject to Section 3(h)(ii)) must be in writing, must be delivered by
(i) courier, mail or hand delivery or (ii) facsimile, and will be deemed to have
been delivered upon receipt. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
Constellation 3D, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xx. Xxxxxxxx Xxxxxxxxxx
with a copy to:
Blank Rome Xxxxxxxx & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esq.
If to the Purchaser:
The Gleneagles Fund Company II
c/o The Palladin Group, L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xx. Xxxxxxx Xxxxxxx
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with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-986-8866
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Each party shall provide five (5) days prior written notice to
the other party of any change in address, telephone number or facsimile number.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
(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 INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF
NEW YORK, CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED
HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH
NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW. IF ANY PROVISION OF THIS AGREEMENT SHALL BE INVALID OR
UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT THE VALIDITY OR ENFORCEABILITY OF THE REMAINDER OF THIS AGREEMENT IN THAT
JURISDICTION OR THE VALIDITY OR ENFORCEABILITY OF ANY PROVISION OF THIS
AGREEMENT IN ANY OTHER JURISDICTION.
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(e) This Agreement and the Purchase Agreement and the
documents contemplated hereby and thereby 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 and the Purchase
Agreement and the documents contemplated hereby and thereby 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 8, this Agreement
shall inure to the benefit of and be binding upon the permitted 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 identical
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) All consents and other determinations to be made by the
Holders pursuant to this Agreement shall be made, unless otherwise specified in
this Agreement, by Holders holding a majority of the Registered Securities.
(k) 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.
(l) Nothing in this Agreement shall confer any rights upon any
person or entity other than the parties hereto and their respective successors
and assigns.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: PURCHASER:
CONSTELLATION 3D, INC. THE GLENEAGLES FUND COMPANY II
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxxx
--------------------------- ------------------------------
Name: Xxxxxx Leviich Name: Xxxxxxx Xxxxxxx
Title: President Title: Counsel
The Palladin Group, L.P.
Investment Adviser
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EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
The Gleneagles Fund Company
c/o The Palladin Group, L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx
Re: CONSTELLATION 3D, INC.
----------------------
Ladies and Gentlemen:
We are counsel to Constellation 3D, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Common Stock Purchase Agreement (the "Purchase Agreement") dated July 30, 2001
entered into by and among the Company and The Gleneagles Fund Company (the
"Purchaser") pursuant to which the Company may, from time to time, issue to the
Purchaser shares (the "Shares") of the Company's common stock, par value $.00001
per share ("Common Stock"), and has issued Warrants to purchase shares of Common
Stock ("Warrant Shares"). On ____________ ___, 2001, the Company filed a
Registration Statement on Form S-3 (File No. ___-______) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") relating to
the Shares and Warrant Shares.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge as
of the date hereof, after telephonic inquiry of a member of the SEC's staff,
that any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC, and
the Shares are available for issuance and sale under the 1933 Act pursuant to
the Registration Statement.
Very truly yours,
[LAW FIRM]
By: ________________________
cc: Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
