REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and entered into
as of May 30, 2000, by and among FRISBY TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), and the investors listed on Schedule 1 hereto (the
"Investors").
RECITALS
A. The Company is party to a Purchase Agreement (the "Purchase Agreement"),
dated as of May 30, 2000, pursuant to which the Company has agreed to issue to
the Investors up to 800,000 units, each consisting of one share of common stock,
par value $0.001 per share (the "Common Stock") of the Company, and one warrant
granting the holder the right to purchase one share of Common Stock.
B. It is a condition to the Investors' obligation to purchase the Units
that the Company provide certain registration rights with respect to the
Registrable Securities (defined below).
C. The Company has agreed to provide certain registration rights with
respect to the Registrable Securities on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement, in addition to the terms
defined elsewhere herein, the following terms have the following meanings when
used herein with initial capital letters:
"Advice" has the meaning set forth in Section 6.
"Affiliate" has the meaning given to that term in Rule 405 under the
Securities Act.
"Common Stock" means the common stock, par value $0.001, of the Company.
"Company" has the meaning set forth in the preamble.
"indemnified party" has the meaning set forth in Section 8(c).
"indemnifying party" has the meaning set forth in Section 8(c).
"Losses" has the meaning set forth in Section 8(a).
"New York Court" has the meaning set forth in Section 11(j).
"Notice" has the meaning set forth in Section 3(c).
"Prospectus" means the prospectus included in any Registration Statement
(including without limitation a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to such
prospectus, including without limitation post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
"Registrable Securities" means (i) the shares of Common Stock purchased
under the Purchase Agreement and that are issued upon exercise of the Warrant,
(ii) the warrants issued under the Warrant Agreement, (iii) any other shares of
Common Stock that are owned by an Investor from time to time, whether acquired
prior to, on or after the date hereof, and (iv) any other securities issued in
respect of the shares of Common Stock referred to in clause (i) or (ii) upon any
stock split, stock dividend, recapitalization or other distribution with respect
to, conversion or exchange of or in replacement of such shares, until, in the
case of any such security, (x) it is effectively registered under the Securities
Act and disposed of in accordance with the Registration Statement covering it,
(y) it is saleable by the holder thereof pursuant to Rule 144(k) without any
volume limitation applicable thereto, or (z) it is distributed to the public
pursuant to Rule 144; provided, however, that any shares previously sold
pursuant to a registered public offering or pursuant to an exemption from the
registration requirements of the Securities Act under which the transferee does
not receive "restricted securities" shall cease to be Registrable Securities for
the Investors.
"Registration Expenses" has the meaning set forth in Section 7(a).
"Registration Statement" means any registration statement under the
Securities Act that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including without limitation the related
Prospectus, all amendments and supplements to such registration statement
(including post-effective amendments), all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" has the meaning set forth in Section 4(a).
"Unit" has the meaning set forth in the preamble.
"Warrant" means the right to acquire one share of Common Stock.
"Warrant Agreement" means the warrant agreement between the Company and the
Investors, dated the date hereof.
2. Holders of Registrable Securities. Whenever a number or percentage of
Registrable Securities is to be determined hereunder, each then-outstanding
share that is exercisable to purchase, convertible into or exchangeable for
shares of capital stock of the Company will be deemed to be equal to the number
of shares of Common Stock for which such share (or the security into which such
share is then convertible) is then so purchasable, convertible or exercisable.
3. Shelf Registration. (a) Upon written request from an Investor or
Investors holding at least 35% of the Registrable Securities then outstanding
and in no event later than 120 days after the date hereof, the Company will
register (a "Shelf Registration") all Registrable Securities held by such
Investor or Investors by filing a Registration Statement on Form S-3 (or any
equivalent successor form) with the SEC under and in accordance with the
provisions of the Securities Act. Upon receipt of such written request, the
Company shall, within five days thereof, give written notice of such request to
all Investors, and the Company shall include in the Shelf Registration all the
Registrable Securities which the Investors shall in writing request (within 20
days of receipt of the notice given by the Company pursuant to this Section
3(a)) to be included in such Shelf Registration. The Company will use its best
efforts to cause the Registration Statement on Form S-3 to be declared effective
by the SEC within 60 calendar days of the filing of such Registration Statement
with the SEC. The Company will keep the Registration Statement filed in respect
thereof effective until such time when all Registrable Securities covered by
such Registration Statement have been sold pursuant to such Registration
Statement.
(b) Postponement of Shelf Registration. The Company will be entitled to
postpone the filing period (or suspend the effectiveness) of any Shelf
Registration for a reasonable period of time, not in excess of 30 calendar days,
if the Board of Directors of the Company determines, in the good faith exercise
of its reasonable business judgment, that such registration and offering could
materially interfere with bona fide financing plans of the Company or would
require disclosure of information, the premature disclosure of which could
materially and adversely affect the Company or otherwise would not be in the
best interest of the Company. If the Company postpones the filing of a
Registration Statement, it will promptly notify the holders of Registrable
Securities in writing of the postponement, the reasons therefor and the proposed
length of the postponement and promptly notify such holders in writing when the
events or circumstances permitting such postponement have ended. The rights
provided hereunder may be exercised on only one occasion, notwithstanding any
other provision hereto.
4. Registration Procedures. In connection with the Company's registration
obligations pursuant to Section 3 hereof, the Company will effect such
registrations to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement on Form S-3 (or
any equivalent successor form) under the Securities Act available for the sale
of the Registrable Securities by the holders thereof in accordance with the
intended method or methods of distribution thereof, and cause each such
Registration Statement to become effective and remain effective as provided
herein; provided, however, that before filing a Registration Statement or
Prospectus or any amendments or supplements thereto (including documents that
would be incorporated or deemed to be incorporated therein by reference), the
Company will furnish to the holders of the Registrable Securities covered by
such Registration Statement and their counsel (the "Special Counsel") copies of
all such documents proposed to be filed, and will provide such holders and the
Special Counsel five days to review and comment on such documents. The Company
will not file any such Registration Statement or amendment thereto or any
Prospectus or any supplement thereto (including such documents which, upon
filing, would be incorporated or deemed to be incorporated by reference therein)
to which the holders of a majority of the Registrable Securities covered by such
Registration Statement and the Special Counsel, shall reasonably object on a
timely basis;
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 3; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or to such
Prospectus as so supplemented;
(c) Notify the selling holders of Registrable Securities and the Special
Counsel, promptly, and (if requested by any such person) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or any other federal or state governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iv) if at any time the representations and warranties of the
Company contained in any agreement contemplated by Section 4(m) hereof
(including any underwriting agreement) cease to be true and correct, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the occurrence of any event which makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in a
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, in the case of the
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (vii) of the Company's determination that a post-effective
amendment to a Registration Statement would be appropriate;
(d) Use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
moment;
(e) If requested by the holders of a majority of the Registrable Securities
being registered, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as such holders agree should be
included therein as may be required by applicable law and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company will not be required to take any actions
under this Section 4(e) that are not, in the opinion of counsel for the Company,
in compliance with applicable law;
(f) Furnish to each selling holder of Registrable Securities and the
Special Counsel without charge, at least one conformed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed
incorporated therein by reference and all exhibits, unless requested in writing
by such holder or counsel);
(g) Deliver to each selling holder of Registrable Securities and the
Special Counsel without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such persons may request; and the
Company hereby consents to the use of such Prospectus or each amendment or
supplement thereto by each of the selling holders of Registrable Securities and
the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto;
(h) Prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling holders of Registrable Securities in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions within the United
States as any seller or underwriter reasonably requests in writing; keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdiction of the Registrable Securities covered by the applicable
Registration Statement; provided, however that the Company will not be required
to (i) qualify generally to do business in any jurisdiction in which it is not
then so qualified or (ii) take any action that would subject it to general
service of process in any such jurisdiction in which it is not then so subject;
(i) Cooperate with the selling holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates will not bear any
restrictive legends;
(j) Cause the Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental agencies
or authorities within the United States except as may be required solely as a
consequence of the nature of such selling holder's business, in which case the
Company will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals as may be necessary to
enable the seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Securities;
(k) Upon the occurrence of any event contemplated by Section 4(c)(vi) or
4(c)(vii) hereof, prepare a supplement or post-effective amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the Investors of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(l) Use its best efforts to cause all Registrable Securities covered by
such Registration Statement to be listed on the NASDAQ Small Cap National Market
or any other securities exchange, if any, on which similar securities issued by
the Company are then listed;
(m) Enter into such agreements and take all such other actions in
connection therewith (including those requested by the holders of a majority of
the Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection, (i) make such
representations and warranties to the holders of such Registrable Securities, if
any, with respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by reference or
deemed incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the holders of a
majority of the Registrable Securities being sold) addressed to such selling
holders of Registrable Securities and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such holders and
underwriters, including without limitation the matters referred to in clause (i)
above; (iii) use its best efforts to obtain "comfort" letters and updates
thereof from the independent certified public accountants of the Company (and,
if necessary, any other certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data is, or is required to be, included in the
Registration Statement), addressed to each selling holder of Registrable
Securities, such letters to be in customary form and covering matters of the
type customarily covered in "comfort" letters in connection with underwritten
offerings; and (iv) deliver such documents and certificates as may be requested
by the holders of a majority of the Registrable Securities being sold and the
Special Counsel to evidence the continued validity of the representations and
warranties of the Company and its subsidiaries made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in the
underwriting agreement or similar agreement entered into by the Company. The
foregoing actions will be taken in connection with each closing under such
agreement as and to the extent required thereunder;
(n) Make available for inspection by a representative of the holders of
Registrable Securities being sold, and Special Counsel or any accountant
retained by such selling holders, all financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and
cause the officers, directors and employees of the Company and its subsidiaries
to supply all information reasonably requested by any such representative,
attorney or accountant in connection with such Registration Statement; provided,
however, that any records, information or documents that are designated by the
Company in writing as confidential at the time of delivery of such records,
information or documents will be kept confidential by such persons unless (i)
such records, information or documents are in the public domain or otherwise
publicly available, (ii) disclosure of such records, information or documents is
required by court or administrative order or is necessary to respond to inquires
of regulatory authorities, or (iii) disclosure of such records, information or
documents, in the opinion of counsel to such person, is otherwise required by
law (including without limitation pursuant to the requirements of the Securities
Act);
(o) Comply with all applicable rules and regulations of the SEC and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 calendar
days after the end of any 12-month period (or 90 calendar days after the end of
any 12-month period if such period is a fiscal year) commencing on the first day
of the first fiscal quarter of the Company, after the effective date of a
Registration Statement, which statements shall cover said 12-month period.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such Registrable Securities as the Company may,
from time to time, reasonably request in writing and the Company may exclude
from such registration the Registrable Securities of any seller who unreasonably
fails to furnish such information within five days after receiving such request.
Each holder of Registrable Securities will be deemed to have agreed by
virtue of its acquisition of such Registrable Securities that, upon receipt of
any notice from the Company of the occurrence of any event of the kind described
in Section 4(c)(ii), 4(c)(iii), 4(c)(v), 4(c)(vi) or 4(c)(vii) hereof, such
holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus until such holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
4(k) hereof, or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus. In the event the Company
shall give any such notice, the time period prescribed in Section 3(a) hereof
will be extended by the number of days during the time period from and including
the date of the giving of such notice to and including the date when each seller
of Registrable Securities covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 4(k) hereof or (y) the Advice.
5. Registration Expenses. (a) All Registration Expenses will be borne by
the Company whether or not any Registration Statement becomes effective.
"Registration Expenses" will mean all fees and expenses incident to the
performance of or compliance with this Agreement by the Company, including
without limitation (i) all registration and filing fees (including without
limitation fees and expenses (x) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (y) in compliance
with securities or "blue sky" laws (including without limitation fees and
disbursements of counsel for the underwriters or selling holders in connection
with "blue sky" qualifications of the Registrable Securities and determination
of the eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as the holders of a majority of the Registrable Securities
being sold may designate)), (ii) printing expenses (including printing of
prospectuses if requested by the holders of a majority of the Registrable
Securities included in any Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company
and the Special Counsel for the sellers of the Registrable Securities, (v) fees
and disbursements of all independent certified public accountants referred to in
Section 4(m)(iii) hereof (including the expenses of any special audit and
"comfort" letters required by or incident to such performance), (vi) fees and
expenses of any "qualified independent underwriter" or other independent
appraiser participating in an offering pursuant to Section 3 of Schedule E to
the By-laws of the National Association of Securities Dealers, Inc., (vii)
Securities Act liability insurance if the Company so desires such insurance, and
(viii) fees and expenses of all other persons retained by the Company, provided,
however, that Registration Expenses will not include fees and expenses of
counsel for the holders of Registrable Securities other than as provided herein,
all of which shall be borne by such holders. In addition, the Company will pay
its internal expenses (including without limitation all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange on which
similar securities issued by the Company are then listed and the fees and
expenses of any person, including special experts, retained by the Company.
6. Indemnification. (a) Indemnification by the Company. The Company will,
without limitation as to time, indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities registered
pursuant to this Agreement, the officers, directors and agents and employees of
each of them, each person who controls such holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of any such controlling person, from
and against all losses, claims, damages, liabilities, costs (including without
limitation the costs of investigation and reasonable attorneys' fees) and
expenses (collectively, "Losses"), as incurred, arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based solely upon information furnished in
writing to the Company by such holder expressly for use therein; provided,
however, that the Company will not be liable to any holder of Registrable
Securities to the extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if either (A) (i) such holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such holder of a Registrable Security to the person
asserting the claim from which such Losses arise and (ii) the Prospectus would
have completely corrected such untrue statement or alleged untrue statement or
such omission or alleged omission; or (B) such untrue statement or alleged
untrue statement or such omission or alleged omission is completely corrected in
an amendment or supplement to the Prospectus previously furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, and such holder thereafter fails to deliver such Prospectus as so
amended or supplemented prior to or concurrently with the sale of a Registrable
Security to the person asserting the claim from which such Losses arise.
The rights of any holder of Registrable Securities hereunder will not be
exclusive of the rights of any holder of Registrable Securities under any other
agreement or instrument of any holder of Registrable Securities to which the
Company is a party. Nothing in such other agreement or instrument will be
interpreted as limiting or otherwise adversely affecting a holder of Registrable
Securities hereunder and nothing in this Agreement will be interpreted as
limiting or otherwise adversely affecting the holder of Registrable Securities'
rights under any such other agreement or instrument, provided, however, that no
indemnified party will be entitled hereunder to recover more than its
indemnified Losses.
(b) Indemnification by Holders of Registrable Securities. In connection
with any Registration Statement in which a holder of Registrable Securities is
participating, such holder of Registrable Securities will severally indemnify,
to the fullest extent permitted by law, the Company, its directors and officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling persons, from and
against all Losses arising out of or based upon any untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
prospectus or arising out of or based upon any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is finally judicially determined to have been contained in any
information so furnished in writing by such holder to the Company expressly for
use in such Registration Statement or Prospectus and was relied upon by the
Company in the preparation of such Registration Statement, Prospectus or
preliminary prospectus. In no event will the liability of any selling holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds (net of payment of all expenses and underwriter's discounts and
commissions) received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any person shall become
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) will be paid to the indemnified party, as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). The
indemnifying party will not consent to entry of any judgment or enter into any
settlement or otherwise seek to terminate any action or proceeding in which any
indemnified party is or could be a party and as to which indemnification or
contribution could be sought by such indemnified party under this Section 6,
unless such judgment, settlement or other termination includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance satisfactory to the
indemnified party, from all liability in respect of such claim or litigation for
which such indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a) or 6(b) hereof in respect
of any Losses or is insufficient to hold such indemnified party harmless, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, will, jointly and severally, contribute to the amount paid or payable by
such indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party or indemnifying parties, on the one hand, and
such indemnified party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses will be deemed to include any legal or other fees or expenses
incurred by such party in connection with any action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 6(d), an indemnifying party that
is a selling holder of Registrable Securities will not be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities sold by such indemnifying party and distributed to the
public exceeds the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The provisions of this Section 6 will survive any termination of this
Agreement.
7. Rules 144 and 144A. The Company will file the reports required to be
filed by it under the Securities Act and the Exchange Act in a timely manner,
and will cooperate with any holder of Registrable Securities (including without
limitation by making such representations as any such holder may reasonably
request), all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitations of the exemptions provided by Rules 144 and 144A (including
without limitation the requirements of Rule 144A(d)(4)). Upon the request of any
holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such filing requirements.
8. Miscellaneous. (a) Additional Investors. Any "Additional Investor" as
defined in the Purchase Agreement shall become a party to this Agreement by
signing a counterpart joinder hereof and shall thereupon be an "Investor"
hereunder. The Company shall promptly deliver to each party an amended list of
Investors which includes any Additional Investors.
(b) Remedies. In the event of a breach by the Company of its obligations
under this Agreement, each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it will waive the
defense that a remedy at law would be adequate.
(c) No Inconsistent Agreements. The Company has not, as of the date hereof,
and will not, on or after the date hereof, enter into any agreement with respect
to its securities which is inconsistent with the rights granted to the holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.
(d) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of holders of a majority of
the then-outstanding Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of holders of Registrable Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of a majority of the Registrable
Securities being sold by such holders; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing and will be deemed given (i) when made, if
made by hand delivery, (ii) upon confirmation, if made by fax, or (iii) one
business day after being deposited with a reputable next-day courier, postage
prepaid, to the parties as follows:
(1) If to the Company:
Frisby Technologies, Inc.
3195 Centre Park Boulevard
Winston-Salem, North Carolina 27107
Attn: Stephen Villa
Facsimile No.: (336) 784-8682
and thereafter at such other address, notice of which is given to the
holders of Registrable Securities in accordance with the provisions of
this Section 8(e);
(2) If to the Investors or any other holder of Registrable
Securities, at their respective addresses set forth on the books and
records of the Company, or at such other address, notice of which is
given by such Investors to the Company in accordance with the
provisions of this Section 8(e).
(f) Owner of Registrable Securities. The Company will maintain, or will
cause its registrar and transfer agent to maintain, a stock book with respect to
the Common Stock, in which all transfers of Registrable Securities of which the
Company has received notice will be recorded. The Company may deem and treat the
person in whose name Registrable Securities are registered in the stock book of
the Company as the owner thereof for all purposes, including without limitation
the giving of notices under this Agreement.
(g) Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties. The
Company may not assign its rights or obligations hereunder without the prior
written consent of each holder of any Registrable Securities. No Stockholder may
assign its rights or obligations under this Agreement to any subsequent holder
of shares unless such holder has acquired at least 33% of the total outstanding
shares of Common Stock, whereupon such holder will be deemed to be a
"Stockholder" for all purposes under this Agreement. Notwithstanding the
foregoing, MUSI Investments S.A. ("MUSI") may assign its rights and obligations
under this Agreement to any Affiliate of MUSI. Notwithstanding the foregoing, no
transferee will have any of the rights granted under this Agreement (i) until
such transferee shall have acknowledged its rights and obligations hereunder by
a signed written statement of such transferee's acceptance of such rights and
obligations or (ii) if the transferor notifies the Company in writing on or
prior to such transfer that the transferee shall not have such rights. The
Company shall not, directly or indirectly, enter into any merger, consolidation
or reorganization in which the Company is not the surviving corporation unless
the proposed surviving corporation, prior to the merger, consolidation or
reorganization, agrees in writing to assume the obligations of the Company under
this Agreement, and for that purpose references herein to "Registrable
Securities" shall be deemed to be references to the securities to which holders
of Registrable Securities would be entitled to receive in exchange for
Registrable Securities in any such merger, consolidation or reorganization
unless such securities were registered under the Securities Act in connection
with the merger, consolidation or reorganization.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same instrument.
(i) Headings. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
(k) Jurisdiction; Consent to Service of Process. Each of the Investors and
the Company irrevocably submits to the non-exclusive jurisdiction of any court
located in the Borough of Manhattan or the United States Federal Court sitting
in the Southern District of New York over any suit, action or proceeding arising
out of or relating to this Agreement. Each of the Investors and the Company
consents to process being served in any such suit, action or proceeding by
serving a copy thereof upon the agent for service of process, provided that to
the extent lawful and possible, written notice of such service will also be
mailed to such Investors or the Company, as the case may be. Each of the
Investors and the Company agrees that such service will be deemed in every
respect effective service of process upon such Investors or the Company, as the
case may be, in any such suit, action or proceeding and will be taken and held
to be valid personal service upon such Stockholder or the Company, as the case
may be. Nothing in this subsection will affect or limit any right to serve
process in any manner permitted by law, to bring proceedings in the courts of
any jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction. Each of the Investors and the Company
waives any right it may have to assert the doctrine of forum non conveniens or
to object to venue to the extent any proceeding is brought in accordance with
this Section 8(k).
(l) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein will remain in full force and effect and will in
no way be affected, impaired or invalidated, and the parties hereto will use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(m) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
among the parties with respect to such registration rights.
[Remainder of page intentionally blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
FRISBY TECHNOLOGIES, INC.
By:/s/ Gregory S. Frisby
-------------------------
Name: Gregory S. Frisby
Title: Chairman and CEO
INVESTORS
MUSI INVESTMENTS S.A.
By:/s/ Luca Bassani Antivari
-------------------------
Name: Dott. Luca Bassani Antivari
Title: President
SCHOELLER TEXTIL AG
By:/s/ F. Albers
-------------------------
Name: F. Albers
Title:Chairman of the Board
By:/s/ H.J. Hubner
-------------------------
Name: H.J. Hubner
Title:Chief Executive Officer
/s/ Jean S. Moore
-------------------------
Jean S. Moore
ALLFIRST COMPANY CUSTODIAN
FOR HOGAN & HARTSON PARTNERS
RETIREMENT PLAN FOR THE BENEFIT
OF JEAN S. MOORE
By:/s/ Leslie S. Christensen
-------------------------
Name: Leslie S. Christensen
Title: Senior Vice President
[Signature Page to Registration Rights Agreement]
<PAGE>
Schedule 1
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Investors
---------
MUSI Investments S.A.
Jean S. Moore
Allfirst Company Custodian for Hogan & Hartson Partners Retirement
Plan for the Benefit of Jean S. Moore
Schoeller Textil AG
