THISREGISTRATION RIGHTS AGREEMENT (this “Agreement”)is made as of the [__] day of [___________],2005 by and among Millennium Cell Inc., a Delaware corporation (the“Company”),and The Dow Chemical Company, a Delaware corporation (“TDCC”).
WHEREAS,the Company and TDCC are parties to that certain Stock Purchase Agreement datedFebruary 27, 2005 (the “PurchaseAgreement”),pursuant to which, among other things, at the First Closing (as defined in thePurchase Agreement) the parties hereto are to enter into this Agreement;and
WHEREAS,the First Closing has occurred and, simultaneously therewith, the parties heretoare entering into this Agreement pursuant to the PurchaseAgreement;
NOW,THEREFORE, in consideration of the mutual covenants set forth herein, and forother good and valuable consideration, the receipt and sufficiency of which areacknowledged, the parties agree as follows:
1. DefinedTerms Used in this Agreement. Capitalizedterms used but not defined herein shall have the meanings given to them in thePurchase Agreement. In addition to the terms specifically defined throughoutthis Agreement, the following terms used in this Agreement shall be construed tohave the meanings set forth or referenced below.
“Affiliate”means with respect to any individual, corporation, partnership, association,trust, or any other entity (in each case, a “Person”),any Person which, directly or indirectly, controls, is controlled by or is undercommon control with such Person, including, without limitation any generalpartner, officer or director of such Person; provided,however,that TDCC shall not be deemed an Affiliate of the Company.
“Board”means the Board of Directors of the Company.
“CommonStock”means the Company’s common stock, par value $0.001 per share.
“EffectiveDate”means, with respect to any Registration Statement, the date on which the SECfirst declares effective such Registration Statement.
“EffectivenessPeriod”means, with respect to any Registration Statement, the period of time suchRegistration Statement remains effective (beginning on the Effective Dateapplicable thereto), but in no event less than six (6) months.
“ExchangeAct”means the Securities Exchange Act of 1934, as amended, and the rules andregulations promulgated thereunder.
“FormS-3”meanssuch form under the Securities Act as in effect on the date hereof or anyregistration form under the Securities Act subsequently adopted by the SEC whichpermits inclusion or incorporation of substantial information by reference toother documents filed by the Company with the SEC.
“Holder”means any Person owning or having the right to acquire Registrable Securities orany assignee thereof in accordance with Section 4.1hereof.
“InitiatingHolders”means, collectively, any Holders who properly initiate a registration requestunder this Agreement.
“JointDevelopment Agreement”means that Joint Development Agreement between the Company and TDCC dated as ofthe date hereof.
“NewSecurities”means equity securities of the Company, whether now authorized or not, orrights, options, or warrants to purchase such equity securities, or securitiesof any type whatsoever that are, or may become, convertible or exchangeableinto, or exercisable for, such equity securities.
“PreferredStock”means the Series A Preferred Stock and Series B Preferred Stock.
“Prospectus”means the prospectus included in a Registration Statement (including, withoutlimitation, a prospectus that includes any information previously omitted from aprospectus filed as part of an effective registration statement in reliance uponRule 430A promulgated under the Securities Act), as amended or supplemented byany prospectus supplement, with respect to the terms of the offering of anyportion of the Registrable Securities covered by the Registration Statement, andall other amendments and supplements to the Prospectus, including post-effectiveamendments.
“Proceeding”means an action, claim, suit, investigation or proceeding (including, withoutlimitation, an investigation or partial proceeding, such as a deposition),whether commenced or threatened in writing.
“QualifiedPublic Offering”means an underwritten public offering of Common Stock pursuant to the SecuritiesAct in which the gross proceeds to the Company equal or exceed$3,000,000.
“register,”“registered,”and “registration”means a registration effected by preparing and filing a Registration Statementin compliance with the Securities Act, and the declaration or ordering ofeffectiveness of such Registration Statement by the SEC.
“RegistrableSecurities”means the Common Stock issued or issuable upon (i) conversion of any shares ofPreferred Stock or exercise of any Warrant, or (ii) the exercise of any otherright or security which is issued as a dividend or other distribution withrespect to, or in exchange for, or in replacement of the shares referenced inclause (i) above, excluding in all cases, however, any Registrable Securitiessold by a Person in a transaction where the registration rights underSection 2hereof are not assigned or any shares for which registration rights haveterminated pursuant to Section4.4of this Agreement.
“RegistrationStatement”means, collectively, any registration statement contemplated by Section2.1,Section2.2,or Section2.3to be filed with the SEC in connection with the registration of RegistrableSecurities pursuant to this Agreement, including in each case the Prospectus,amendments and supplements to such registration statement or Prospectus,including pre- and post- effective amendments, all exhibits thereto, and allmaterial documents incorporated by reference or deemed to be incorporated byreference in such registration statement.
“SEC”means the Securities and Exchange Commission.
“SECRule 144”means Rule 144 promulgated by the SEC under the Securities Act.
“SECRule 144(k)”means Rule 144(k) promulgated by the SEC under the Securities Act.
“SECRule 145”means Rule 145 promulgated by the SEC under the Securities Act.
“SECRule 424”means Rule 424 promulgated by the SEC under the Securities Act.
“SecuritiesAct”means the Securities Act of 1933, as amended, and the rules and regulationspromulgated thereunder.
“SeriesA Preferred Stock”means the Company’s Series A Convertible Preferred Stock, with the powers,preferences and special rights set forth in the Series A Certificate ofDesignation.
“SeriesB Preferred Stock”means the Company’s Series B Convertible Preferred Stock,with the powers, preferences and special rights set forth in the Series BCertificate of Designation.
“SpecialCounsel”means King & Spalding LLP.
“Violation”means losses, claims, damages or liabilities (joint or several) to which a partyhereto may become subject under the Securities Act, the Exchange Act or otherfederal or state law, insofar as such losses, claims, damages, or liabilities(or actions in respect thereof) arise out of or are based upon any of thefollowing statements, omissions or violations: (i) any untrue statement oralleged untrue statement of a material fact contained in any RegistrationStatement, including any preliminary prospectus or final prospectus containedtherein or any amendments or supplements thereto, (ii) the omission oralleged omission to state therein a material fact required to be stated therein,or necessary to make the statements therein not misleading, or (iii) anyviolation or alleged violation by any other party hereto, of the Securities Act,the Exchange Act, any state securities law or any rule or regulation promulgatedunder the Securities Act, the Exchange Act or any state securitieslaw.
“Warrant”means any and all warrants convertible into shares of Common Stock issuedby the Company to TDCC under the Purchase Agreement.
TheCompany covenants and agrees as follows:
2.1. Requestfor Registration.
(a) TDCC,or a transferee of the Registrable Securities, may request in writing at anytime prior to the fifth anniversary of the date hereof that the Company file aRegistration Statement under the Securities Act covering the registration of allor a portion of the Registrable Securities then outstanding (a “DemandRequest”).Upon receiving such Demand Request, the Company shall:
(i) withinten (10) days of the receipt thereof, give written notice of such request to allHolders (the “DemandNotice”);
(ii) assoon as practicable, file a Registration Statement under the Securities Act andall such qualifications and compliances as may be so requested and as wouldpermit or facilitate the sale and distribution of all the Registrable Securitieswhich the Initiating Holders request to be registered, together with suchportion of the Registrable Securities of any Holder joining in such request asis specified in a written request given within twenty (20) days after receipt ofthe Demand Notice, subject to the limitations of Sections 2.1(c)and 2.1(d)(provided however that the Company shall not be obligated to file aqualification in any jurisdiction described in the proviso to Section2.4(g));and
(iii) useits best efforts, to cause such Registration Statement to be declared effectiveby the SEC as soon as practicable and remain effective for the EffectivenessPeriod with respect to the Registrable Securities registered.
(b) Ifthe Initiating Holders intendto distribute the Registrable Securities covered by their Demand Request bymeans of an underwriting, they shall so advise the Company as a part of theirDemand Request made pursuant to Section 2.1(a)and the Company shall include such information in the Demand Notice. Theunderwriter shall be of nationally recognized standing and shall be selected andengaged by the Company and reasonably acceptable to a majority in interest ofthe Initiating Holders. In such event, the right of any Holder to include suchHolder’s Registrable Securities in such registration shall be conditioned uponsuch Holder’s participation in such underwriting and the inclusion of suchHolder’s Registrable Securities in the underwriting to the extent providedherein. All Holders proposing to distribute their securities through suchunderwriting shall enter into an underwriting agreement in customary form withthe underwriter or underwriters selected for such underwriting. Notwithstandingany other provision of this Section2.1,if the representative of the underwriters advises the Initiating Holders inwriting that market factors require a limitation on the number of shares to beunderwritten, the number of shares that may be included shall be allocated prorata among the Holders in proportion to the respective amounts of RegistrableSecurities that such Holders have requested to be included in the registration.The Company shall advise all Holders of securities requesting registration as tothe number of shares of securities that may be included in the registration andunderwriting as allocated in the foregoing manner. To facilitate the allocationof shares in accordance with the above provisions, the Company or theunderwriters may round the number of shares allocated to any Holderto the nearest 100 shares.
(c) TheCompany shall not be obligated to effect, or to take any action to effect, anyregistration pursuant to this Section 2.1after the Company has effected two (2) registrations pursuant to thisSection 2.1and such registrations have been declared or ordered effective. ARegistration Statement shall be deemed effective at the Effective Date and onlyif (i) all Registrable Securities requested to be registered are registeredthereunder or (ii) the registration is closed, or withdrawn, at the request ofthe Initiating Holder (other than as a result of information concerning thebusiness or financial condition of the Company which is made known to theInitiating Holders after the date on which such registration was requested andconstitutes a material adverse change in the Company).
(d) TheCompany shall not be obligated to effect any registrations pursuant to thisSection 2.1within ninety (90) days after the effective date of a previous registration;provided,however,that the Company shall be obligated to effect, during such period, theregistration of an aggregate of four percent (4%) or less of the then currentOwnership Interest (as defined in the Stock Purchase Agreement) of TDCC and itstransferees meeting the requirements described in Section 4.1. The Companyshall not be obligated to effect any registrations pursuant to this Section 2.1prior to one hundred eighty (180) days after the date of this Agreement.
(e) TheCompany may delay the filing or effectiveness of any registration statement fora period not to exceed ninety ( 90) days after the date of a request forregistration pursuant to this Section 2.1if (i) at the time of such request the Company is engaged, or has fixedplans to engage within ninety (90) days after the time of such request (whichninety (90) day period shall not in any event extend the ninety (90) periodpreviously specified in this Section2.1(e)),in a firm commitment underwritten public offering of shares of Common Stock, or(ii) the Company shall furnish to the Holders requesting registrationpursuant to this Section 2.1 acertificate signed by the Chairman of the Board stating that, in the good faithjudgment of the Board, it would be materially detrimental to the Company and itsstockholders for such registration statement to be filed.
(f) Registrationsunder this Section 2.1 shall be on such appropriate form of RegistrationStatement of the SEC as shall be selected by the Company and available to itunder the Securities Act. The Company agrees to include in any such RegistrationStatement all information which, in the opinion of counsel to the Company, isrequired to be included therein under the Securities Act.
(a) Piggy-BackRights.If the Company proposes to register (including for the purposes of thisAgreement a registration effected by the Company for stockholders other than theHolders) its Common Stock under the Securities Act in connection
withthe public offering of such securities solely for cash (other than aregistration statement on Form S-4 or S-8 (or any successor or similar formsunder the Securities Act), or otherwise relating either to the sale ofsecurities to employees, directors, officers, consultants or advisors of theCompany pursuant to a stock option, stock purchase or similar plan or a SEC Rule145 transaction), the Company shall, at such time, promptly give each Holderwritten notice of such registration (the “PiggybackNotice”).Upon the written request of each Holder given within twenty (20) days afterreceipt of the Piggyback Notice (each, a “PiggybackRequest”),the Company shall, subject to the provisions of Section 2.2(b)below, use best efforts to cause to be registered under the Securities Act allof the Registrable Securities that each such Holder has requested to beregistered. The Company shall have the right to delay (but in no event longerthan one hundred twenty (120) days), terminate or withdraw any registrationinitiated by it under this Section 2.2prior to the effectiveness of such registration whether or not any Holder haselected to include securities in such registration. The expenses of suchwithdrawn registration shall be borne by the Company in accordance withSection 2.6hereof.
(b) UnderwritingRequirements.In connection with any offering involving an underwriting of shares of theCompany’s Common Stock pursuant to this Section2.2,the Company shall not be required to include any of the Holders’ RegistrableSecurities in such underwriting unless they accept the terms of the underwritingas agreed upon between the Company and its underwriters, and then only in suchquantity as the underwriters determine in their sole discretion will notjeopardize the success of the offering by the Company in view of marketconditions. If the total number of securities, including Registrable Securities,requested by stockholders to be included in such offering exceeds the amount ofsecurities to be sold other than by the Company that the underwriters determinein their reasonable discretion is compatible with the success of the offering inview of market conditions, then (i) the Company shall be required toinclude in the offering only that number of such securities, includingRegistrable Securities, which the underwriters and the Company determine intheir sole discretion will not jeopardize the success of the offering, and(ii) the securities, including Registrable Securities, requested to beincluded in such offering by the holders thereof pursuant to a piggybackregistration right granted by the Company to such holders shall be reducedprorataamong all such holders based on the number of registrable securities of eachsuch holder that are subject to such piggyback registration rights;provided,that the Company shall cause its underwriters to consult with TDCC and exploreunderwriting alternatives prior to reducing the number of shares requested to beincluded by TDCC in any Registration Statement under this Section2.2to less than 30% of the number of shares requested by TDCC to be registered insuch Registration Statement under this Section2.2.
(a) TheCompany shall use its best efforts to remain qualified to register securities onForm S-3 under the Securities Act. So long as the Company shall be so qualified,the Holders shall have the right to request registrations on Form S-3. Upon thewritten request of each Holder (including a statement as to the number of sharesof Registrable Securities to be disposed of and the intended method ofdisposition of such shares by such Holder or Holders), to register all or aportion of its Registrable Securities on Form S-3 (the “FormS-3 Request”)the Company shall, as soon as practicable upon receipt of the Form S-3 Request,subject to the provisions of Section 2.3(b)below, use its best efforts to cause to be registered under the Securities Acton Form S-3 all of the Registrable Securities that each such Holder hasrequested to be registered.
(b) Notwithstandingthe foregoing, if the Company shall furnish to Holders requesting a Form S-3Registration Statement pursuant to this Section 2.3 acertificate signed by the Chairman of the Board, stating that in the good faithjudgment of the Board it would be materially detrimental to the Company and itsstockholders for such Registration Statement to become effective, the Companyshall have the right to defer taking action with respect to such filing to theextent of any such circumstances; provided,however,that under no circumstances shall the Company defer registration for more thanninety (90) days.
2.4. RegistrationProcedures.Inconnection with the Company’s registration obligations hereunder, the Companyshall as expeditiously as possible:
(a) Notless than four(4) Business Days prior to the filing of the Registration Statement or anyrelated Prospectus or any amendment or supplement thereto (except for anyreports filed under the Exchange Act), the Company shall furnish to the Holdersand the Special Counsel copies of the “SellingStockholders Section” and “Plan of Distribution” and any risk factor disclosurespecifically pertaining to the offering to which such Registration Statementrelates. Such documents will be subject to the review of such Holders and theSpecial Counsel but not to the extent any such information would containmaterial non-public information concerning the Company. The Company shall notfile the Registration Statement or any such Prospectus or any amendments orsupplements thereto to which the Holders shall reasonably object.
(b) (i)Prepare and file with the SEC, subject to Section2.4(a) aRegistration Statement with respect to such Registrable Securities, andthereafter prepare and file such amendments, including post-effectiveamendments, to the Registration Statement and the Prospectus used in connectiontherewith as may be necessary and use its best efforts to keep the RegistrationStatement continuously effective as to the applicable Registrable Securities forthe Effectiveness Period and prepare and file with the SEC such additionalRegistration Statements in order to register for resale under the Securities Actall of the Registrable Securities; (ii) cause the related Prospectus to beamended or supplemented by any required Prospectus supplement, and as sosupplemented or amended to be filed pursuant to SEC Rule 424; (iii) respond aspromptly as reasonably possible, and in any event within ten (10) Business Days,to any comments received from the SEC with respect to the Registration Statementor any amendment thereto and, as promptly as reasonably possible provide theHolders true and complete copies of all correspondence from and to the SECrelating to the Registration Statement to the extent that such disclosure wouldnot contain material and non-public information concerning the Company; and (iv)comply in all material respects with the provisions of the Securities Act andthe Exchange Act with respect to the disposition of all Registrable Securitiescovered by the Registration Statement during the applicable period in accordancewith the intended methods of disposition by the Holders thereof set forth in theRegistration Statement as so amended or in such Prospectus as sosupplemented.
(c) Notifythe Holders of Registrable Securities to be sold and the Special Counsel aspromptly as reasonably possible and (if requested by any such Person) confirmsuch notice in writing no later than one (1) Business Day following theday:
(i)(A)when a Prospectus or any Prospectus supplement or post-effective amendment tothe Registration Statement is proposed to be filed; (B) when the SEC notifiesthe Company whether there will be a “review” of the Registration Statement andwhenever the SEC comments in writing on such Registration Statement (the Companyshall provide true and complete copies thereof and all written responses theretoto each of the Holders, each to the extent such materials do not containmaterial non-public information concerning the Company); and (C) with respect tothe Registration Statement or any post-effective amendment, the Effective Date;
(ii)of any request by the SEC or any other Federal or state governmental authorityfor amendments or supplements to the Registration Statement or Prospectus or foradditional information;
(iii)of the issuance by the SEC of any stop order suspending the effectiveness of theRegistration Statement covering any or all of the Registrable Securities or theinitiation of any Proceedings for that purpose;
(iv)of the receipt by the Company of any notification with respect to the suspensionof the qualification or exemption from qualification of any of the RegistrableSecurities for sale in any jurisdiction, or the initiation or threatening of anyProceeding for such purpose; and
(v)of the occurrence of any event or passage of time that makes the financialstatements included in the Registration Statement ineligible for inclusiontherein or any statement made in the Registration Statement or Prospectus or anydocument incorporated or deemed to be incorporated therein by reference untruein any material respect or that requires any revisions to the RegistrationStatement, Prospectus or other documents so that, in the case of theRegistration Statement or the Prospectus, as the case may be, it will notcontain any untrue statement of a material fact (other in respect of the sellingstockholders or the plan of distribution) or omit to state any material factrequired to be stated therein or necessary to make the statements therein (otherthan in respect of the selling stockholders or the plan of distribution), inlight of the circumstances under which they were made, notmisleading.
(d) Useits best efforts to avoid the issuance of, or, if issued, obtain the withdrawalof (i) any order suspending the effectiveness of the Registration Statement, or(ii) any suspension of the qualification (or exemption from qualification) ofany of the Registrable Securities for sale in any jurisdiction, at the earliestpracticable moment.
(e) Furnishto each Holder and the Special Counsel, without charge, at least one conformedcopy of the Registration Statement and each amendment thereto, includingfinancial statements and schedules, all documents incorporated or deemed to beincorporated therein by reference, and all exhibits to the extent requested bysuch Person (including those previously furnished or incorporated by reference)promptly after the filing of such documents with the SEC.
(f) Promptlydeliver to each Holder and the Special Counsel, without charge, as many copiesof the Prospectus or Prospectuses (including each form of prospectus) and eachamendment or supplement thereto as such Persons may reasonably request. TheCompany hereby consents to the use of such Prospectus and each amendment orsupplement thereto by each of the selling Holders in connection with theoffering and sale of the Registrable Securities covered by such Prospectus andany amendment or supplement thereto.
(g) Priorto any public offering of Registrable Securities, use its best efforts toregister or qualify or cooperate with the selling Holders and the SpecialCounsel in connection with the registration or qualification (or exemption fromsuch registration or qualification) of such Registrable Securities for offer andsale under the securities or Blue Sky laws of such jurisdictions within theUnited States as any Holder requests in writing, to keep each such registrationor qualification (or exemption therefrom) effective during the EffectivenessPeriod and to do any and all other acts or things necessary or advisable toenable the disposition in such jurisdictions of the Registrable Securitiescovered by the Registration Statement; provided, that, with the exception ofMichigan, the Company shall not be required to qualify to do business in anyjurisdiction where it is not then so qualified or subject the Company to any taxin any such jurisdiction where it is not then so subject or to consent togeneral service of process in any jurisdiction.
(h) Cooperatewith the Holders to facilitate the timely preparation and delivery ofcertificates representing Registrable Securities to be delivered to a transfereepursuant to the Registration Statement, which certificates shall be free, to theextent permitted by the Purchase Agreement, of all restrictive legends, and toenable such Registrable Securities to be in such denominations and registered insuch names as any such Holders may request.
(i) Uponthe occurrence of any event contemplated by Section2.4(c)(v),as promptly as reasonably possible, prepare a supplement or amendment, includinga post-effective amendment, to the Registration Statement or a supplement to therelated Prospectus or any document incorporated or deemed to be incorporatedtherein by reference, and file any other required document so that, asthereafter delivered, neither a Registration Statement nor such Prospectus willcontain an untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary to make the statements therein, inlight of the circumstances under which they were made, not misleading.
(j) Complywith all applicable rules and regulations of the SEC.
2.5. Furnish Information. Itshall be a condition precedent to the obligations of the Company to take anyaction pursuant to this Section 2with respect to the Registrable Securities of any selling Holder that suchHolder shall furnish to the Company such information regarding itself, theRegistrable Securities held by it, and the intended method of disposition ofsuch securities as shall be reasonably required to effect the registration ofsuch Holder’s Registrable Securities.
2.6. Expensesof Registration.The Company shall bear (i) all expenses, other than underwriting discounts,commissions and attorneys’ fees and expenses in excess of those described inclause (ii) below, incurred in connection with any registrations, filings orqualifications pursuant to this Section 2,including (without limitation) all registration, filing and qualification fees,printer’s and accounting fees, and (ii) up to $50,000.00 of fees and expenses ofone external counsel for the selling Holders selected by them for eachregistration or filing, in each case, whether or not any Registrable Securitiesare sold pursuant to a Registration Statement.
3. Indemnification.In the event any Registrable Securities are included in a Registration Statementunder Section 2:
3.1. Indemnificationby the Company.The Company shall, notwithstanding any termination of this Agreement, indemnifyand hold harmless each Holder, its Affiliates, the officers, directors, agentsand employees of each of them, each Person who controls any such Holder (withinthe meaning of Section 15 of the Securities Act or Section 20 of the ExchangeAct) and the officers, directors, agents and employees of each such controllingPerson, to the fullest extent permitted by applicable law, from and against anyand all losses, claims, damages, liabilities, costs (including, withoutlimitation, reasonable costs of preparation and reasonable ‘ fees of externalcounsel) and expenses (collectively, “Losses“),as incurred, arising out of or relating to any untrue or alleged untruestatement of a material fact contained in the Registration Statement, anyProspectus or any form of prospectus or in any amendment or supplement theretoor in any preliminary prospectus, or arising out of or relating to any omissionor alleged omission of a material fact required to be stated therein ornecessary to make the statements therein (in the case of any Prospectus or formof prospectus or supplement thereto, in light of the circumstances under whichthey were made) not misleading, except to the extent, but only to the extent,that (i) such untrue statements or omissions are based solely upon informationregarding such Holder furnished in writing to the Company by such Holderexpressly for use therein, or to the extent that such information relates tosuch Holder or such Holder’s proposed method of distribution of RegistrableSecurities and was reviewed and expressly approved in writing by such Holderexpressly for use in the Registration Statement, such Prospectus or such form ofProspectus or in any amendment or supplement thereto, or (ii) in the case of anoccurrence of an event of the type specified in Sections2.4(c)(ii)through 2.4(c)(v),the use by such Holder of an outdated or defective Prospectus after the Companyhas notified such Holder in writing that the Prospectus is outdated or defectiveand prior to the receipt by such Holder of the Advice contemplated inSection4.3or Section2.4.With respect to the prospectus delivery requirements under the Securities Act,this indemnity shall not inure to the benefit of such Holder on account of anyLoss arising from the sale of Registrable Securities to any Person if a copy ofthe Prospectus was not sent or given by or on behalf of such Holder to suchPerson with or prior to the written confirmation of the sale involved and thealleged omission or alleged untrue statement was corrected in the Prospectus atthe time of such confirmation, unless the failure to send or deliver theProspectus resulted from the Company’s failure to comply with Section2.4(j)hereof. The Company shall notify the Holders promptly of the institution,written threat or written assertion of any Proceeding of which the Company hasreceived written notification in connection with the transactions contemplatedby this Agreement.
3.2. Indemnificationby Holders.Each Holder shall, severally and not jointly, indemnify and hold harmless theCompany, its Affiliates, directors, officers, agents and employees, each Personwho controls the Company (within the meaning of Section 15 of the Securities Actand Section 20 of the Exchange Act), and the directors, officers, agents oremployees of such controlling Persons, to the fullest extent permitted byapplicable law, from and against all Losses, as incurred, arising solely out ofor based solely upon: (i) such Holder’s failure to comply with the prospectusdelivery and other requirements of the Securities Act in reselling RegistrableSecurities; or (ii) any untrue statement of a material fact contained in theRegistration Statement, any Prospectus, or any form of prospectus, or in anyamendment or supplement thereto, or arising solely out of or based solely uponany omission of a material fact required to be stated therein or necessary tomake the statements therein not misleading to the extent, but only to theextent, that: (A) such untrue statement or omission is based solely uponinformation regarding such Holder furnished in writing to the Company by suchHolder expressly for use therein, or to the extent that such information relatesto such Holder or such Holder’s proposed method of distribution of RegistrableSecurities and was reviewed and expressly approved in writing by such Holderexpressly for use in the Registration Statement such Prospectus or such form ofProspectus or in any amendment or supplement thereto; or (B) in the case of anoccurrence of an event of the type specified in Section2.4(c)(ii)through 2.4(c)(v),the use by such Holder of an outdated or defective Prospectus after the Companyhas notified such Holder in writing that the Prospectus is outdated or defectiveand prior to the receipt by such Holder of the Advice contemplated inSection4.3.In no event shall the liability of any selling Holder hereunder be greater inamount than the dollar amount of the aggregate proceeds received by such Holder upon the sale of the Registrable Securitiesgiving rise to such indemnification obligation.
(a) Ifany of theHolders or any of their Affiliates, directors, officers, employees and agents,seek indemnification pursuant to Section3.1,or the Company or any of its Affiliates, directors, officers, employees andagents, seek indemnification pursuant to Section3.2,the Person seeking indemnification (the “IndemnifiedParty”)shall give written notice to the party from whom such indemnification is sought(the “IndemnifyingParty”)promptly (and in any event within thirty (30) days) after the Indemnified Partybecomes aware of the facts giving rise to such claim for indemnification (an“IndemnifiedClaim”)specifying in reasonable detail the factual basis of the Indemnified Claim,stating the amount of the Losses, if known, the method of computation thereof,containing a reference to the provision of this Agreement in respect of whichsuch Indemnified Claim arises and demanding indemnification therefor. Thefailure of an Indemnified Party to provide notice in accordance with thisSection3.3shall not constitute a waiver of that party’s claims to indemnification pursuantto Section3.1or Section 3.2,as applicable, except to the extent that any such failure or delay in givingnotice causes the amounts paid by the Indemnifying Party to be greater than theyotherwise would have been or otherwise results in prejudice to the IndemnifyingParty. If the Indemnified Claim arises from the assertion of any claim, or thecommencement of any suit, action or proceeding brought by a Person that is not aparty hereto (a “ThirdParty Claim”),any such notice to the Indemnifying Party shall be accompanied by a copy of anypapers theretofore served on or delivered to the Indemnified Party in connectionwith such Third Party Claim.
(b) Upon receipt of notice of a Third Party Claim from an Indemnified Party pursuantto Section3.3(a),the Indemnifying Party will be entitled to assume the defense and control ofsuch Third Party Claim subject to the provisions of this Section3.3.After written notice by the Indemnifying Party to the Indemnified Party of itselection to assume the defense and control of a Third Party Claim, theIndemnifying Party shall not be liable to such Indemnified Party for any legalfees or expenses subsequently incurred by such Indemnified Party in connectiontherewith. Notwithstanding anything in this Section3.3to the contrary, if the Indemnifying Party does not assume defense and controlof a Third Party Claim as provided in this Section3.3,the Indemnified Party shall have the right to defend such Third Party Claim,subject to the limitations set forth in this Section3.3,in such manner as it may deem appropriate. Whether the Indemnifying Party or theIndemnified Party is defending and controlling any such Third Party Claim, theyshall select counsel, contractors, experts and consultants of recognizedstanding and competence, shall take all steps necessary in the investigation,defense or settlement thereof, and shall at all times diligently and promptlypursue the resolution thereof. The party conducting the defense thereof shall atall times act as if all Losses relating to the Third Party Claim were for itsown account and shall act in good faith and with reasonable prudence to minimizeDamages therefrom. The Indemnified Party shall, and shall cause each of itsdirectors, officers, employees, and agents to, cooperate fully with theIndemnifying Party in connection with any Third Party Claim.
(c) TheIndemnifying Party shall be authorized to consent to a settlement of, or theentry of any judgment arising from, any Third Party Claims, and the IndemnifiedParty shall consent to a settlement of, or the entry of any judgment arisingfrom, such Third Party Claims; provided, that the Indemnifying Party shall: (i)pay or cause to be paid all amounts arising out of such settlement or judgmentconcurrently with the effectiveness thereof; (ii) shall not encumber any of theassets of any Indemnified Party or agree to any restriction or condition thatwould apply to such Indemnified Party or to the conduct of that party’sbusiness; and (iii) shall obtain, as a condition of any settlement or otherresolution, a complete and irrevocable release of each Indemnified Party andsuch settlement or judgment (A) shall not require any admission of liability,fault or wrongdoing by any Indemnified Party or impose any non-monetaryobligation on an Indemnified Party (such as, by way of example, and not inlimitation, injunctive relief), and (B) shall not require any admission orstatement that could reasonably be expected to materially impair, disparage orotherwise adversely affect, the business reputation of the Indemnified Party.Except to the extent of the foregoing, no settlement or entry of judgment inrespect of any Third Party Claim shall be consented to by any Indemnifying Partyor Indemnified Party without the express written consent of the otherparty.
(d) Ifan Indemnifying Party makes any payment in respect of an Indemnified Claim, theIndemnifying Party shall be subrogated, to the extent of such payment, to allrights and remedies of the Indemnified Party to any insurance benefits or otherclaims or benefits of the Indemnified Party with respect to suchclaim.
(a) Ifa claim for indemnification under Section3.1or Section3.2is unavailable to an Indemnified Party (by reason of applicable law, publicpolicy or otherwise), then each Indemnifying Party, in lieu of indemnifying suchIndemnified Party, shall contribute to
theamount paid or payable by such Indemnified Party as a result of such Losses, insuch proportion as is appropriate to reflect the relative fault of theIndemnifying Party and Indemnified Party in connection with the actions,statements or omissions that resulted in such Losses as well as any otherrelevant equitable considerations. The relative fault of such Indemnifying Partyand Indemnified Party shall be determined by reference to, among other things,whether any action in question, including any untrue or alleged untrue statementof a material fact or omission or alleged omission of a material fact, has beentaken or made by, or relates to information supplied by, such Indemnifying Partyor Indemnified Party, and the parties’ relative intent, knowledge, access toinformation and opportunity to correct or prevent such action, statement oromission. The amount paid or payable by a party as a result of any Losses shallbe deemed to include any reasonable attorneys’ or other reasonable fees orexpenses incurred by such party in connection with any Proceeding to the extentsuch party would have been indemnified for such fees or expenses if theindemnification provided for in this Agreement was available to such party inaccordance with its terms. No person guilty of fraudulent misrepresentation(within the meaning of Section 11(f) of the Securities Act) shall be entitled tocontribution from any person who was not guilty of such fraudulentmisrepresentation.
(b) Theparties hereto agree that it would not be just and equitable if contributionpursuant to this Section3.4were determined by pro rata allocation or by any other method of allocation thatdoes not take into account the equitable considerations referred to in theimmediately preceding paragraph. Notwithstanding the provisions of thisSection3.4,no Holder shall be required to contribute, in the aggregate, any amount inexcess of the amount by which the proceeds actually received by such Holder fromthe sale of the Registrable Securities subject to the Proceeding exceeds theamount of any damages that such Holder has otherwise been required to pay byreason of such untrue or alleged untrue statement or omission or allegedomission.
(c) Theindemnity and contribution agreements contained in this Section3.4are in addition to any liability that the Indemnifying Parties may have to theIndemnified Parties.
4. AdditionalAgreements of the Parties.
4.1. Transferof Registration Rights.The rights to cause the Company to register Registrable Securities pursuant toSection 2may be assigned (but only with all related obligations) by a Holder to atransferee or assignee of such securities that(i) is an Affiliate of the Holder, or (ii) aftersuch transfer or assignment, holds at least 25% of the Registrable Securitiesheld by the transferring Holder immediately prior to such transfer or assignment(subject to appropriate adjustment for stock splits, stock dividends,combinations and other recapitalizations), provided:(A) the Company is, within a reasonable time after such transfer orassignment, furnished with written notice of the name and address of suchtransferee or assignee and the securities with respect to which suchregistration rights are being transferred or assigned; (B) such transfereeor assignee agrees in writing to be bound by and subject to the terms andconditions of this Agreement, including without limitation the provisions ofSection 4.2below; and (C) such transfer or assignment shall be effective only ifimmediately following such transfer or assignment, other than to an Affiliate ofthe Holder, the further disposition of such securities by the transferee orassignee is restricted under the Securities Act.
4.2. “Lock-Up”Agreement.In connection with a Qualified Public Offering (whether such offering wasinitiated by the Company or the Initiating Holders), so long as TDCC holds 5% ofthe issued and outstanding capital stock of the Company (determined on a FullyDiluted Basis), TDCC will promptly, upon the request of the Company’sunderwriters, enter in to a lock-up agreement in form and substance reasonablysatisfactory to the Company or its underwriters and TDCC, providedthat each director, officer and 5% shareholder of the Company enters into alock-up agreement on the same terms. Such agreement shall be in writing in aform reasonably satisfactory to the underwriter and the Holders.
4.3. DiscontinuedDisposition.Each Holder agrees by its acquisition of such Registrable Securities that, uponreceipt of a notice from the Company of the occurrence of any event of the kinddescribed in Section2.4(c)(ii)through 2.4(c)(v),such Holder will forthwith immediately discontinue disposition of suchRegistrable Securities under a Registration Statement until such Holder’sreceipt of the copies of the supplemented Prospectus and/or amended RegistrationStatement or until it is advised in writing (the “Advice“)by the Company that the use of the applicable Prospectus may be resumed, and, ineither case, has received copies of any additional or supplemental filings thatare incorporated or deemed to be incorporated by reference in such Prospectus orRegistration Statement. The Company may provide appropriate stop orders toenforce the provisions of this Section4.3.
4.4. Terminationof Registration Rights.The rights set forth in Sections2.1,2.2,and 2.3shall terminate as to any Holder when the Registrable Securities held by suchHolder (together with any Affiliate of such Holder with whom such Holder mustaggregate its sales under SEC Rule 144) could be sold without restriction underSEC Rule 144(k) within a ninety (90) day period.
4.5. Limitationson Subsequent Registration Rights.From and after the date of this Agreement, the Company shall not, without theprior written consent of the holders of a majority of the shares of RegistrableSecurities, enter into any agreement with any holder or prospective holder ofany securities of the Company which would allow such holder or prospectiveholder (i) to include such securities in any registration of the Companyunless under the terms of such agreement, such holder or prospective holder mayinclude such securities in any such registration only to the extent that theinclusion of such securities will be paripassuwith all other securities included in such registration by way of a piggybackregistration right granted by the Company, including Registrable Securities ofTDCC, or (ii) to demand registration of any securities held by such holderor prospective holder on terms more favorable in the aggregate than the rightsgranted to TDCC pursuant to Section 2.1.
5.1. GoverningLaw. ThisAgreement shall be governed by and construed in accordance with the laws of theState of Delaware without regard to its principles of conflicts oflaws.
5.2. Counterparts. ThisAgreement may be executed in two (2) or more counterparts, each of which shallbe deemed an original, but all of which together shall constitute one and thesame instrument. This Agreement may also be executed and delivered by facsimilesignature and in two or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the sameinstrument.
5.3. Constructionof Certain Terms. Thetitles of the articles, sections, and subsections of this Agreement are forconvenience of reference only and are not to be considered in construing thisAgreement. Wherever the words “including,” “include” or “includes” are used inthis Agreement, they shall be deemed followed by the words “without limitation.”References to any gender shall be deemed to mean any gender. The parties heretohave participated jointly in the negotiation and drafting of this Agreement. Inthe event an ambiguity or question of intent or interpretation arises, thisAgreement shall be construed as if drafted jointly by the parties hereto, and nopresumption or burden of proof shall arise favoring or disfavoring any party byvirtue of the authorship of any provisions of this Agreement.
5.4. Notices. Allnotices and other communications given or made pursuant to this Agreement shallbe in writing and shall be deemed effectively given: (i) upon personal deliveryto the party to be notified; (ii) when sent by confirmed electronic mail orfacsimile if sent during normal business hours of the recipient, and if not soconfirmed, then on the next business day; (iii) five (5) days after having beensent by registered or certified mail, return receipt requested, postage prepaid;or (iv) one (1) day after deposit with a nationally recognized overnightcourier, specifying next day delivery, with written verification of receipt. Allcommunications shall be sent to the address or facsimile number set forth belowor to such other address or facsimile number as delivered by notice to the otherin accordance with this Section5.4:
Ifto the Company:
1Industrial Way West
Eatontown,New Jersey 07724
Witha copy to:
Dickstein,Shapiro, Morin & Oshinsky LLP
2101L Street, N.W.
TheDow Chemical Company
Attention:Business Counsel, Dow Ventures
Witha copy to:
King& Spalding LLP
1700Pennsylvania Avenue, N.W.
5.5. Amendmentsand Waivers. Neitherthis Agreement nor any term of this Agreement may be amended, terminated orwaived without the written consent of the Company and the holders of at least amajority of the then-outstanding Registrable Securities. Any amendment or waivereffected in accordance with this Section 5.5shall be binding upon TDCC and each transferee of the Registrable Securities,and the Company.
5.6. Severability. Theinvalidity of unenforceability of any provision hereof shall in no way affectthe validity or enforceability of any other provision.
5.7. Delaysor Omissions. Nodelay or omission to exercise any right, power or remedy accruing to any partyunder this Agreement, upon any breach or default of any other party under thisAgreement, shall impair any such right, power or remedy of such non-breaching ornon-defaulting party nor shall it be construed to be a waiver of any such breachor default, or an acquiescence therein, or of or in any similar breach ordefault thereafter occurring; nor shall any waiver of any single breach ordefault be deemed a waiver of any other breach or default theretofore orthereafter occurring. Any waiver, permit, consent or approval of any kind orcharacter on the part of any party of any breach or default under thisAgreement, or any waiver on the part of any party of any provisions orconditions of this Agreement, must be in writing and shall be effective only tothe extent specifically set forth in such writing. All remedies, either underthis Agreement or by law or otherwise afforded to any party, shall be cumulativeand not alternative.
5.8. EntireAgreement. ThisAgreement (including the Exhibits hereto) and the other Transaction Agreementsconstitute the full and entire understanding and agreement between the partieswith respect to the subject matter hereof, and any other written or oralagreement relating to the subject matter hereof existing between the parties areexpressly canceled.
5.9. DisputeResolution. Anyunresolved controversy or claim arising out of or relating to this Agreement,except as otherwise provided in this Agreement, shall be submitted toarbitration by one (1) arbitrator mutually agreed upon by the parties, and if noagreement can be reached within thirty (30) days after names of potentialarbitrators have been proposed by the American Arbitration Association (the“AAA”),then by one (1) arbitrator having reasonable experience in the type oftransactions provided for in this Agreement and who is chosen by the
AAA.The arbitration shall take place in the District of Columbia, in accordance withthe AAA rules then in effect, and judgment upon any award rendered in sucharbitration will be binding and may be entered in any court having jurisdictionthereof. There shall be limited discovery prior to the arbitration hearing asfollows: (i) exchange of witness lists and copies of documentary evidence anddocuments relating to or arising out of the issues to be arbitrated;(ii) depositions of all party witnesses; and (iii) such other depositionsas may be allowed by the arbitrators upon a showing of good cause. Depositionsshall be conducted in accordance with the Federal Rules of Civil Procedure, thearbitrator shall be required to provide in writing to the parties the basis forthe award or order of such arbitrator, and a court reporter shall record allhearings, with such record constituting the official transcript of suchproceedings. The arbitrator shall award reasonable attorney’s fees, costs, andnecessary disbursements in addition to any other relief to which the arbitratordetermines a party to be entitled. Each of the parties to this Agreementconsents to personal jurisdiction for any equitable action sought in the U.S.District Court for the District of Columbia or any court of the District ofColumbia having subject matter jurisdiction.
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INWITNESS WHEREOF, the parties have executed this Registration Rights Agreement asof the date first above written.
THEDOW CHEMICAL COMPANY: