Exhibit 10.4

 

Exhibit C

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 2, 2009
(the “Effective Date”), by and among Select Comfort Corporation, a Minnesota
corporation (the “Company”), and the undersigned buyer (each, a “Buyer” and,
collectively, the “Buyers”).

 

WHEREAS:

 

A.                                   In connection with the Securities Purchase
Agreement, by and among the parties hereto and dated as of October 2, 2009 (the
“Securities Purchase Agreement”), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue at the
Closing (as defined in the Securities Purchase Agreement) to the Buyers
(i) shares (the “Common Shares”) of the Company’s common stock, $0.01 par value
( “Common Stock”) and (ii) a warrant to purchase shares of Common Stock (such
warrant, together with any warrants or other securities issued in exchange or
substitution therefor or replacement thereof, and as any of the same may be
amended, restated or modified and in effect from time to time, being referred to
as the “Warrant”; and the shares of Common Stock issuable upon exercise of the
Warrant being referred to as the “Warrant Shares”); and

 

B.                                     Pursuant to the Securities Purchase
Agreement, the Company has agreed to provide to the Buyers certain registration
rights under the Securities Act of 1933, as amended, or any similar successor
statute, and the rules and regulations thereunder (collectively, the “1933
Act”), and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer, intending to be legally bound, agree as follows:

 

1.                                       DEFINITIONS.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

A.             “1934 ACT” MEANS, COLLECTIVELY, THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, OR ANY SIMILAR SUCCESSOR STATUTE, AND THE RULES AND
REGULATIONS THEREUNDER.

 

B.             “AVERAGE DAILY TRADING VOLUME” MEANS THE AVERAGE DAILY TRADING
VOLUME OF THE COMMON STOCK ON THE PRINCIPAL MARKET DURING THE PERIOD BEGINNING
AT 9:30 A.M. NEW YORK CITY TIME (OR SUCH OTHER TIME AS ITS PRINCIPAL MARKET
PUBLICLY ANNOUNCES IS THE OFFICIAL OPEN OF TRADING) AND ENDING AT 4:00 P.M. NEW
YORK CITY TIME (OR SUCH OTHER TIME AS ITS PRINCIPAL MARKET PUBLICLY ANNOUNCES IS
THE OFFICIAL CLOSE OF TRADING) AS REPORTED BY BLOOMBERG FINANCIAL MARKETS (OR
ANY SUCCESSOR THERETO) (“BLOOMBERG”) DURING THE TEN (10) TRADING DAYS ENDING ON
THE TRADING DAY IMMEDIATELY PRIOR TO THE DAY ON WHICH A SALE IS TO BE EFFECTED.

 

C.             “BLOCK TRADE” MEANS ANY SINGLE TRADE FOR AT LEAST 5,000 SHARES OF
COMMON STOCK ON THE COMPANY’S PRINCIPAL MARKET.

 

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D.             “BUSINESS DAY” MEANS ANY DAY OTHER THAN SATURDAY, SUNDAY OR ANY
OTHER DAY ON WHICH COMMERCIAL BANKS IN THE CITY OF NEW YORK ARE AUTHORIZED OR
REQUIRED BY LAW TO REMAIN CLOSED.

 

E.             “COMPANY SECURITIES” MEANS ANY SECURITY (AS DEFINED IN
SECTION 2(A)(1) OF THE 1933 ACT) ISSUED BY THE COMPANY AFTER THE EFFECTIVE DATE.

 

F.              “FINRA” MEANS THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.,
OR ANY SUCCESSOR THERETO.

 

G.             “INITIAL EFFECTIVENESS DEADLINE” MEANS THE EARLIER OF (I) THE
DATE THAT IS SEVENTY-FIVE (75) DAYS AFTER THE CLOSING DATE, AND (II) THE FIFTH
BUSINESS DAY AFTER THE COMPANY IS NOTIFIED BY THE SEC THAT THE REGISTRATION
STATEMENT WILL NOT BE REVIEWED OR IS NO LONGER SUBJECT TO FURTHER REVIEW AND
COMMENT (I.E., ALL OUTSTANDING COMMENTS THEREON HAVE BEEN RESOLVED TO THE
SATISFACTION OF THE SEC STAFF).

 

H.             “INITIAL FILING DEADLINE” MEANS THE LATER OF (I) OCTOBER 31,
2009, OR (II) THE FIFTH BUSINESS DAY AFTER THE CLOSING DATE.

 

I.              “FORM S-3” MEANS SUCH FORM OF REGISTRATION STATEMENT UNDER THE
1933 ACT AS IN EFFECT ON THE DATE HEREOF OR ANY SUCCESSOR FORM UNDER THE 1933
ACT SUBSEQUENTLY ADOPTED BY THE SEC WHICH PERMITS INCLUSION OR INCORPORATION OF
SUBSTANTIAL INFORMATION BY REFERENCE TO OTHER DOCUMENTS FILED BY THE COMPANY
WITH THE SEC AFTER THE EFFECTIVE DATE OF SUCH REGISTRATION STATEMENT.

 

J.              “INVESTOR” MEANS THE BUYER, ANY TRANSFEREE OR ASSIGNEE THEREOF
TO WHOM A BUYER ASSIGNS ITS RIGHTS UNDER THIS AGREEMENT AND WHO AGREES TO BECOME
BOUND BY THE PROVISIONS OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 9 AND ANY
TRANSFEREE OR ASSIGNEE THEREOF TO WHOM A TRANSFEREE OR ASSIGNEE ASSIGNS ITS
RIGHTS UNDER THIS AGREEMENT AND WHO AGREES TO BECOME BOUND BY THE PROVISIONS OF
THIS AGREEMENT IN ACCORDANCE WITH SECTION 9.

 

K.             “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A
PARTNERSHIP, A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED
ORGANIZATION AND A GOVERNMENTAL OR ANY DEPARTMENT OR AGENCY THEREOF, OR ANY
OTHER LEGAL ENTITY.

 

L.              “PRINCIPAL MARKET” MEANS, WITH RESPECT TO THE COMMON STOCK, THE
NASDAQ GLOBAL SELECT MARKET; PROVIDED, HOWEVER, THAT, IF AT ANY TIME AFTER THE
DATE OF THIS AGREEMENT THE PRINCIPAL NATIONAL STOCK EXCHANGE OR TRADING MARKET
FOR COMMON STOCK IS OTHER THAN THE NASDAQ GLOBAL SELECT MARKET, “PRINCIPAL
MARKET” SHALL AT SUCH TIME MEAN, WITH RESPECT  TO THE COMMON STOCK, SUCH OTHER
NATIONAL STOCK EXCHANGE OR TRADING MARKET; AND, WITH RESPECT TO ANY OTHER
SECURITY, “PRINCIPAL MARKET” MEANS THE PRINCIPAL NATIONAL SECURITIES EXCHANGE OR
TRADING MARKET FOR SUCH SECURITY.

 

M.            “QUALIFIED FINANCING TRANSACTION” MEANS ANY TRANSACTION:
(I) INVOLVING THE ISSUANCE OF 5% OR MORE OF ANY CLASS OF COMPANY SECURITIES, OR
(II) THE PRIMARY PURPOSE OF WHICH IS TO SATISFY, EXTINGUISH OR OTHERWISE
REFINANCE THE COMPANY’S OUTSTANDING INDEBTEDNESS UNDER THE AMENDED AND RESTATED
CREDIT AGREEMENT WITH THE COMPANY’S LENDERS.

 

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N.             “REGISTER,” “REGISTERED,” AND “REGISTRATION” REFER TO A
REGISTRATION EFFECTED BY PREPARING AND FILING ONE OR MORE REGISTRATION
STATEMENTS IN COMPLIANCE WITH THE 1933 ACT AND THE DECLARATION OR ORDERING OF
EFFECTIVENESS OF SUCH REGISTRATION STATEMENT(S) BY THE SEC.

 

O.             “REGISTRABLE SECURITIES” MEANS (I) THE COMMON SHARES, (II) THE
WARRANT SHARES ISSUED OR ISSUABLE UPON EXERCISE OF THE WARRANT AND (III) ANY
SHARES OF CAPITAL STOCK OF THE COMPANY ISSUED OR ISSUABLE WITH RESPECT TO THE
COMMON SHARES, THE WARRANT SHARES OR THE WARRANT AS A RESULT OF ANY STOCK SPLIT,
STOCK DIVIDEND, RECAPITALIZATION, EXCHANGE OR SIMILAR EVENT OR OTHERWISE;
PROVIDED, HOWEVER, THAT ANY SUCH REGISTRABLE SECURITIES SHALL CEASE TO BE
REGISTRABLE SECURITIES WHEN (A) A REGISTRATION STATEMENT WITH RESPECT TO THE
SALE OF SUCH SECURITIES BECOMES EFFECTIVE UNDER THE 1933 ACT AND SUCH SECURITIES
ARE DISPOSED OF IN ACCORDANCE WITH SUCH REGISTRATION STATEMENT, OR (B) SUCH
SECURITIES ARE SOLD IN ACCORDANCE WITH RULE 144 (AS DEFINED IN SECTION 8).

 

P.             “REGISTRATION STATEMENT” MEANS THE REGISTRATION STATEMENT OF THE
COMPANY FILED WITH THE SEC UNDER THE 1933 ACT PURSUANT TO SECTION 2(A) HEREOF
COVERING THE REGISTRABLE SECURITIES.

 

Q.             “RULE 415” MEANS RULE 415 UNDER THE 1933 ACT OR ANY SUCCESSOR
RULE PROVIDING FOR OFFERING SECURITIES ON A CONTINUOUS OR DELAYED BASIS.

 

R.              “SEC” MEANS THE U.S. SECURITIES AND EXCHANGE COMMISSION, OR ANY
SUCCESSOR THERETO.

 

S.             “TRADING DAY” MEANS ANY DAY ON WHICH THE COMMON STOCK IS TRADED
ON THE PRINCIPAL MARKET; PROVIDED THAT “TRADING DAY” SHALL NOT INCLUDE ANY DAY
ON WHICH THE COMMON STOCK IS SCHEDULED TO TRADE, OR ACTUALLY TRADES, ON THE
PRINCIPAL MARKET FOR LESS THAN 4.5 HOURS.

 

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

 

2.                                       MANDATORY REGISTRATION.

 

A.             MANDATORY REGISTRATION.  THE COMPANY SHALL PREPARE AND FILE WITH
THE SEC A REGISTRATION STATEMENT ON FORM S-3 (SUBJECT TO SECTION 2(C)), COVERING
THE RESALE OF ALL OF THE REGISTRABLE SECURITIES NO LATER THAN THE INITIAL FILING
DEADLINE.

 

B.             FORM OF REGISTRATION. IN THE EVENT THAT FORM S-3 IS NOT AVAILABLE
FOR THE REGISTRATION OF THE RESALE OF THE REGISTRABLE SECURITIES HEREUNDER, THE
COMPANY SHALL (I) REGISTER THE REGISTRABLE SECURITIES ON FORM S-1 OR ANOTHER
APPROPRIATE FORM REASONABLY ACCEPTABLE TO THE BUYER AND (II) UNDERTAKE TO
REGISTER SUCH REGISTRABLE SECURITIES ON FORM S-3 (BY POST-EFFECTIVE AMENDMENT TO
THE EXISTING REGISTRATION STATEMENT OR OTHERWISE) AS SOON AS SUCH FORM IS
AVAILABLE; PROVIDED THAT THE COMPANY SHALL MAINTAIN THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT THEN IN EFFECT UNTIL SUCH TIME AS A FORM S-3 COVERING THE
REGISTRABLE SECURITIES HAS BEEN DECLARED EFFECTIVE BY THE SEC.

 

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C.             EFFECTIVENESS DEADLINE.  THE COMPANY SHALL USE ALL COMMERCIALLY
REASONABLE EFFORTS TO HAVE THE REGISTRATION STATEMENT DECLARED EFFECTIVE BY THE
SEC AS SOON AS PRACTICABLE, BUT IN NO EVENT LATER THAN THE INITIAL EFFECTIVENESS
DEADLINE.  NOTWITHSTANDING THE FOREGOING, THE INITIAL EFFECTIVENESS DEADLINE
SHALL BE EXTENDED, WITHOUT LIABILITY, IN THE EVENT THAT THE COMPANY’S FAILURE TO
OBTAIN THE EFFECTIVENESS OF THE REGISTRATION STATEMENT ON A TIMELY BASIS RESULTS
FROM THE FAILURE OF A INVESTOR TO TIMELY PROVIDE THE COMPANY WITH INFORMATION
REQUESTED BY THE COMPANY AND NECESSARY TO COMPLETE THE REGISTRATION STATEMENT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT.  IN ADDITION, IN THE
EVENT THAT THE COMPANY’S FAILURE TO OBTAIN THE EFFECTIVENESS OF THE REGISTRATION
STATEMENT ON A TIMELY BASIS RESULTS FROM EVENTS OR CIRCUMSTANCES THAT ARE BEYOND
THE REASONABLE CONTROL OF THE COMPANY, THE INITIAL EFFECTIVENESS DEADLINE SHALL
BE AUTOMATICALLY EXTENDED TO THE EARLIER OF (I) THE DATE THAT IS NINETY (90)
DAYS AFTER THE CLOSING DATE, AND (II) THE TENTH BUSINESS DAY AFTER THE COMPANY
IS NOTIFIED BY THE SEC THAT THE REGISTRATION STATEMENT WILL NOT BE REVIEWED OR
IS NO LONGER SUBJECT TO FURTHER REVIEW AND COMMENT (I.E., ALL OUTSTANDING
COMMENTS THEREON HAVE BEEN RESOLVED TO THE SATISFACTION OF THE SEC STAFF).

 

D.             ALLOCATION OF REGISTRABLE SECURITIES IN THE INITIAL
REGISTRATION.  THE COMPANY WILL NOT INCLUDE IN THE REGISTRATION STATEMENT ANY
SECURITIES WHICH ARE NOT REGISTRABLE SECURITIES.  IN THE EVENT THAT AN INVESTOR
SELLS OR OTHERWISE TRANSFERS ANY OF SUCH INVESTOR’S REGISTRABLE SECURITIES, EACH
TRANSFEREE SHALL BE ALLOCATED A PRO RATA PORTION OF THE THEN REMAINING NUMBER OF
REGISTRABLE SECURITIES INCLUDED IN SUCH REGISTRATION STATEMENT FOR SUCH
TRANSFEROR.

 

3.                                       RELATED OBLIGATIONS.

 

Whenever the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2, the holders of Registrable Securities have requested that
any Registrable Securities be registered pursuant to this Agreement, or the
Company is otherwise obligated to file a Registration Statement pursuant to this
Agreement, the Company shall use all commercially reasonable efforts to effect
the registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:

 

A.             NO LATER THAN THE SECOND BUSINESS DAY AFTER THE REGISTRATION
STATEMENT BECOMES EFFECTIVE, THE COMPANY SHALL FILE WITH THE SEC THE FINAL
PROSPECTUS INCLUDED THEREIN PURSUANT TO RULE 424 (OR SUCCESSOR THERETO)
PROMULGATED UNDER THE 1933 ACT.  THE COMPANY SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO KEEP EACH REGISTRATION STATEMENT CONTINUOUSLY EFFECTIVE AT ALL TIMES
UNTIL THE EARLIER OF: (I) THE FIRST DATE AS OF WHICH THE INVESTOR MAY THEN SELL
ALL OF THE REGISTRABLE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT
PURSUANT TO RULE 144, AND (II) ONE HUNDRED AND EIGHTY (180) DAYS AFTER THE
CLOSING DATE (THE “REGISTRATION PERIOD”).  IF (I) THE COMPANY DESIRES TO
UNDERTAKE AND CONSUMMATE A RIGHTS OFFERING WITH RESPECT TO CERTAIN SHARES OF THE
COMMON STOCK (THE “RIGHTS OFFERING”), WHICH DETERMINATION SHALL BE IN THE SOLE
DISCRETION OF THE COMPANY’S BOARD OF DIRECTORS, (II) THE INVESTOR BENEFICIALLY
OWNS MORE THAN TEN (10%) OF THE COMPANY’S OUTSTANDING COMMON STOCK (AFTER GIVING
EFFECT TO THE RIGHTS OFFERING) AS A RESULT OF THE INVESTOR’S PARTICIPATION IN
THE RIGHTS OFFERING, AND (III) THE INVESTOR’S PARTICIPATION THAT RESULTED IN THE
INVESTOR ACQUIRING BENEFICIAL OWNERSHIP OF MORE THAN 10% OF THE COMPANY’S
OUTSTANDING COMMON STOCK WAS REQUIRED IN ORDER FOR THE COMPANY TO SATISFY THE
MINIMUM GROSS PROCEEDS CONDITION TO THE CLOSING OF THE RIGHTS OFFERING, THEN THE
COMPANY AGREES THAT THE REGISTRATION PERIOD WILL BE EXTENDED SUCH THAT THE
REGISTRATION PERIOD WILL

 

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CONTINUE UNTIL ONE HUNDRED AND EIGHTY (180) DAYS AFTER THE DATE ON WHICH
INVESTOR ACQUIRED THOSE SHARES THAT CAUSED THE INVESTOR TO BENEFICIALLY OWN MORE
THAN 10% OF THE COMMON STOCK (THE “EXTENDED REGISTRATION PERIOD”).  THE
REGISTRATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY
PROSPECTUSES (PRELIMINARY, FINAL, SUMMARY OR FREE WRITING) SHALL COMPLY AS TO
FORM AND CONTENT WITH THE APPLICABLE REQUIREMENTS OF THE 1933 ACT AND NOT
CONTAIN OR INCORPORATE BY REFERENCE ANY UNTRUE STATEMENT OF A MATERIAL FACT OR
OMIT TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN, OR NECESSARY TO
MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES IN WHICH THEY WERE
MADE, NOT MISLEADING.  THE REGISTRATION STATEMENT SHALL CONTAIN A “PLAN OF
DISTRIBUTION” APPROVED BY THE INVESTOR.  THE TERM “COMMERCIALLY REASONABLE
EFFORTS” SHALL MEAN, AMONG OTHER THINGS, THAT THE COMPANY SHALL RESPOND TO ANY
COMMENTS OF THE STAFF OF THE SEC WITH RESPECT TO A REGISTRATION STATEMENT AS
PROMPTLY AS REASONABLY PRACTICABLE AND SHALL SUBMIT TO THE SEC, AS PROMPTLY AS
REASONABLY PRACTICABLE AFTER THE COMPANY LEARNS THAT NO REVIEW OF A REGISTRATION
STATEMENT WILL BE MADE BY THE STAFF OF THE SEC OR THAT THE STAFF OF THE SEC HAS
NO FURTHER COMMENTS ON THE REGISTRATION STATEMENT, AS THE CASE MAY BE, A REQUEST
FOR ACCELERATION OF EFFECTIVENESS OF SUCH REGISTRATION STATEMENT TO A TIME AND
DATE NOT LATER THAN 48 HOURS AFTER THE SUBMISSION OF SUCH REQUEST.

 

B.             THE COMPANY SHALL PREPARE AND FILE WITH THE SEC SUCH AMENDMENTS
(INCLUDING POST-EFFECTIVE AMENDMENTS) AND SUPPLEMENTS TO A REGISTRATION
STATEMENT AND ANY PROSPECTUS USED IN CONNECTION WITH SUCH REGISTRATION STATEMENT
(WHICH PROSPECTUS SUPPLEMENTS SHALL BE FILED PURSUANT TO RULE 424 (OR SUCCESSOR
THERETO) PROMULGATED UNDER THE 1933 ACT) AS MAY BE NECESSARY TO KEEP SUCH
REGISTRATION STATEMENT EFFECTIVE AT ALL TIMES DURING THE REGISTRATION PERIOD,
AND, DURING SUCH PERIOD, COMPLY WITH THE PROVISIONS OF THE 1933 ACT WITH RESPECT
TO THE DISPOSITION OF ALL REGISTRABLE SECURITIES OF THE COMPANY COVERED BY SUCH
REGISTRATION STATEMENT UNTIL SUCH TIME AS ALL OF SUCH REGISTRABLE SECURITIES
SHALL HAVE BEEN DISPOSED OF IN ACCORDANCE WITH THE INTENDED METHODS OF
DISPOSITION BY THE SELLER OR SELLERS THEREOF AS SET FORTH IN SUCH REGISTRATION
STATEMENT.  IN THE CASE OF ANY AMENDMENT OR SUPPLEMENT TO A REGISTRATION
STATEMENT OR PROSPECTUS THAT IS REQUIRED TO BE FILED PURSUANT TO THIS AGREEMENT
(INCLUDING PURSUANT TO THIS SECTION 3(B)) BY REASON OF THE COMPANY FILING A
REPORT UNDER THE 1934 ACT, THE COMPANY SHALL HAVE INCORPORATED SUCH REPORT BY
REFERENCE INTO SUCH REGISTRATION STATEMENT, IF APPLICABLE AND PERMITTED BY LAW,
OR SHALL FILE SUCH AMENDMENTS OR SUPPLEMENTS WITH THE SEC ON THE SAME DAY.  THE
COMPANY SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO CAUSE ANY
POST-EFFECTIVE AMENDMENT TO A REGISTRATION STATEMENT TO BECOME EFFECTIVE AS SOON
AS PRACTICABLE AFTER SUCH FILING.  NO LATER THAN THE SECOND BUSINESS DAY AFTER A
POST-EFFECTIVE AMENDMENT TO A REGISTRATION STATEMENT BECOMES EFFECTIVE, THE
COMPANY SHALL FILE WITH THE SEC THE FINAL PROSPECTUS INCLUDED THEREIN PURSUANT
TO RULE 424 (OR SUCCESSOR THERETO) PROMULGATED UNDER THE 1933 ACT.

 

C.             THE INVESTOR SHALL HAVE THE RIGHT TO SELECT ONE LEGAL COUNSEL TO
REVIEW SUCH REGISTRATION STATEMENTS (“LEGAL COUNSEL”).  THE COMPANY SHALL
REASONABLY COOPERATE WITH LEGAL COUNSEL IN PERFORMING THE COMPANY’S OBLIGATIONS
UNDER THIS AGREEMENT.  WITHOUT LIMITING THE FOREGOING, THE COMPANY SHALL
(A) PERMIT LEGAL COUNSEL TO REVIEW AND COMMENT UPON ANY REGISTRATION STATEMENT
AND ANY AMENDMENT OR SUPPLEMENT TO ANY REGISTRATION STATEMENT (OR TO ANY
PROSPECTUS INCLUDED THEREIN) AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO ITS FILING
WITH THE SEC, AND (B) NOT FILE ANY REGISTRATION STATEMENT, AMENDMENT OR
SUPPLEMENT DESCRIBED IN THE FOREGOING CLAUSE (A) IN A FORM TO WHICH LEGAL
COUNSEL REASONABLY OBJECTS IN WRITING ON A TIMELY BASIS, UNLESS IN THE GOOD
FAITH OPINION OF THE COMPANY, AFTER CONSULTATION WITH ITS OUTSIDE COUNSEL, SUCH
FILING IS NECESSARY TO COMPLY WITH APPLICABLE LAW. THE COMPANY SHALL NOT SUBMIT
A

 

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REQUEST FOR ACCELERATION OF THE EFFECTIVENESS OF A REGISTRATION STATEMENT OR ANY
AMENDMENT OR SUPPLEMENT THERETO WITHOUT PROVIDING PRIOR NOTICE THEREOF TO LEGAL
COUNSEL AND THE INVESTOR.  THE COMPANY SHALL FURNISH (WHICH MAY BE BY E-MAIL) TO
LEGAL COUNSEL, WITHOUT CHARGE, (I) PROMPTLY AFTER THE SAME IS PREPARED AND FILED
WITH THE SEC, ONE COPY OF ANY REGISTRATION STATEMENT AND ANY
AMENDMENT(S) THERETO, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, ALL
DOCUMENTS INCORPORATED THEREIN BY REFERENCE AND ALL EXHIBITS THAT HAVE NOT BEEN
FILED VIA THE SEC’S EDGAR FILING SYSTEM (OR SUCCESSOR THERETO) AND (II) UPON THE
EFFECTIVENESS OF ANY REGISTRATION STATEMENT, ONE COPY OF THE PROSPECTUS INCLUDED
IN SUCH REGISTRATION STATEMENT AND ALL AMENDMENTS AND SUPPLEMENTS THERETO.  THE
COMPANY SHALL REASONABLY COOPERATE WITH LEGAL COUNSEL IN PERFORMING THE
COMPANY’S OBLIGATIONS PURSUANT TO THIS SECTION 3.

 

D.             THE COMPANY SHALL FURNISH TO THE INVESTOR WHOSE REGISTRABLE
SECURITIES ARE INCLUDED IN ANY REGISTRATION STATEMENT, WITHOUT CHARGE,
(I) PROMPTLY AFTER THE SAME IS PREPARED AND FILED WITH THE SEC, AT LEAST ONE
COPY OF SUCH REGISTRATION STATEMENT AND ANY AMENDMENT(S) THERETO, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES, ALL DOCUMENTS INCORPORATED THEREIN BY
REFERENCE THAT HAVE NOT BEEN FILED VIA THE SEC’S EDGAR FILING SYSTEM (OR
SUCCESSOR THERETO), ALL EXHIBITS AND EACH PRELIMINARY PROSPECTUS, (II) UPON THE
EFFECTIVENESS OF ANY REGISTRATION STATEMENT, AT LEAST ONE COPY OF THE PROSPECTUS
INCLUDED IN SUCH REGISTRATION STATEMENT AND ALL AMENDMENTS AND SUPPLEMENTS
THERETO (OR SUCH OTHER NUMBER OF COPIES AS SUCH INVESTOR MAY REASONABLY REQUEST)
AND (III) SUCH OTHER DOCUMENTS, INCLUDING COPIES OF ANY PROSPECTUS (PRELIMINARY,
FINAL, SUMMARY OR FREE WRITING), AS SUCH INVESTOR MAY REASONABLY REQUEST FROM
TIME TO TIME IN ORDER TO FACILITATE THE DISPOSITION OF THE REGISTRABLE
SECURITIES OWNED BY SUCH INVESTOR.

 

E.             THE COMPANY SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
(I) REGISTER AND QUALIFY, UNLESS AN EXEMPTION FROM REGISTRATION AND
QUALIFICATION APPLIES, THE RESALE BY THE INVESTOR OF THE REGISTRABLE SECURITIES
COVERED BY A REGISTRATION STATEMENT UNDER THE SECURITIES OR “BLUE SKY” LAWS OF
SUCH JURISDICTIONS WITHIN THE UNITED STATES REASONABLY REQUESTED BY ANY
INVESTOR, (II) PREPARE AND FILE IN THOSE JURISDICTIONS, SUCH AMENDMENTS
(INCLUDING POST-EFFECTIVE AMENDMENTS) AND SUPPLEMENTS TO SUCH REGISTRATIONS AND
QUALIFICATIONS AS MAY BE NECESSARY TO MAINTAIN THE EFFECTIVENESS THEREOF DURING
THE REGISTRATION PERIOD, (III) TAKE SUCH OTHER ACTIONS AS MAY BE NECESSARY TO
MAINTAIN SUCH REGISTRATIONS AND QUALIFICATIONS IN EFFECT AT ALL TIMES DURING THE
REGISTRATION PERIOD, AND (IV) TAKE ALL OTHER ACTIONS REASONABLY NECESSARY OR
ADVISABLE TO QUALIFY THE REGISTRABLE SECURITIES FOR SALE IN SUCH JURISDICTIONS;
PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE REQUIRED IN CONNECTION
THEREWITH OR AS A CONDITION THERETO TO (X) QUALIFY TO DO BUSINESS IN ANY
JURISDICTION WHERE IT WOULD NOT OTHERWISE BE REQUIRED TO QUALIFY BUT FOR THIS
SECTION 3(E) OR (Y) SUBJECT ITSELF TO GENERAL TAXATION IN ANY SUCH
JURISDICTION.  THE COMPANY SHALL PROMPTLY NOTIFY LEGAL COUNSEL AND THE INVESTOR
THAT HOLDS REGISTRABLE SECURITIES OF THE RECEIPT BY THE COMPANY OF ANY
NOTIFICATION WITH RESPECT TO THE SUSPENSION OF THE REGISTRATION OR QUALIFICATION
OF ANY OF THE REGISTRABLE SECURITIES FOR SALE UNDER THE SECURITIES OR “BLUE SKY”
LAWS OF ANY JURISDICTION OR ITS RECEIPT OF ACTUAL NOTICE OF THE INITIATION OR
THREATENING OF ANY PROCEEDING FOR SUCH PURPOSE.

 

F.              THE COMPANY SHALL NOTIFY LEGAL COUNSEL AND THE INVESTOR IN
WRITING OF THE HAPPENING OF ANY EVENT, AS PROMPTLY AS PRACTICABLE AFTER BECOMING
AWARE OF SUCH EVENT, AS A RESULT OF WHICH ANY PROSPECTUS INCLUDED IN, OR
RELATING TO, A REGISTRATION STATEMENT, AS THEN IN EFFECT, INCLUDES AN UNTRUE
STATEMENT OF A MATERIAL FACT OR OMISSION TO STATE A MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE
CIRCUMSTANCES

 

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UNDER WHICH THEY WERE MADE, NOT MISLEADING (PROVIDED THAT IN NO EVENT SHALL SUCH
NOTICE CONTAIN ANY MATERIAL, NONPUBLIC INFORMATION), AND PROMPTLY PREPARE AND
FILE WITH THE SEC A SUPPLEMENT OR AMENDMENT TO SUCH REGISTRATION STATEMENT TO
CORRECT SUCH UNTRUE STATEMENT OR OMISSION, AND DELIVER AT LEAST ONE COPY OF SUCH
SUPPLEMENT OR AMENDMENT TO LEGAL COUNSEL AND THE INVESTOR.  THE COMPANY SHALL
ALSO PROMPTLY NOTIFY LEGAL COUNSEL AND THE INVESTOR IN WRITING (I) WHEN A
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE AMENDMENT HAS BEEN
FILED, AND WHEN A REGISTRATION STATEMENT OR ANY POST-EFFECTIVE AMENDMENT HAS
BECOME EFFECTIVE (NOTIFICATION OF SUCH EFFECTIVENESS SHALL BE DELIVERED TO LEGAL
COUNSEL AND THE INVESTOR BY FACSIMILE ON THE SAME DAY OF SUCH EFFECTIVENESS),
(II) OF ANY REQUEST BY THE SEC FOR AMENDMENTS OR SUPPLEMENTS TO A REGISTRATION
STATEMENT OR RELATED PROSPECTUS OR RELATED INFORMATION, AND (III) OF THE
COMPANY’S REASONABLE DETERMINATION THAT A POST-EFFECTIVE AMENDMENT TO A
REGISTRATION STATEMENT WOULD BE APPROPRIATE.

 

G.             THE COMPANY SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
PREVENT THE ISSUANCE OF ANY STOP ORDER OR OTHER SUSPENSION OF EFFECTIVENESS OF A
REGISTRATION STATEMENT, OR THE SUSPENSION OF THE QUALIFICATION OF ANY OF THE
REGISTRABLE SECURITIES FOR SALE IN ANY JURISDICTION AND, IF SUCH AN ORDER OR
SUSPENSION IS ISSUED, TO OBTAIN THE WITHDRAWAL OF SUCH ORDER OR SUSPENSION AT
THE EARLIEST POSSIBLE MOMENT AND TO NOTIFY LEGAL COUNSEL AND THE INVESTOR WHO
HOLDS REGISTRABLE SECURITIES BEING SOLD OF THE ISSUANCE OF SUCH ORDER AND THE
RESOLUTION THEREOF OR ITS RECEIPT OF ACTUAL NOTICE OF THE INITIATION OR THREAT
OF ANY PROCEEDING FOR SUCH PURPOSE.

 

H.             AT THE REASONABLE REQUEST (IN THE CONTEXT OF THE SECURITIES LAWS)
OF ANY INVESTOR, OR IN THE CASE OF AN UNDERWRITTEN OFFERING UPON THE REQUEST OF
ANY UNDERWRITER, THE COMPANY SHALL FURNISH TO SUCH INVESTOR OR UNDERWRITER, AS
THE CASE MAY BE, ON THE DATE OF THE EFFECTIVENESS OF THE REGISTRATION STATEMENT
AND ON SUCH OTHER DATES AS SUCH INVESTOR OR UNDERWRITER MAY REASONABLY REQUEST
(I) A “COMFORT LETTER,” DATED SUCH DATE, FROM THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS, IN FORM AND SUBSTANCE AS IS CUSTOMARILY GIVEN BY
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS TO UNDERWRITERS IN AN UNDERWRITTEN
PUBLIC OFFERING, ADDRESSED TO THE INVESTOR AND ANY UNDERWRITERS (OR IF SUCH
ACCOUNTANTS ARE PROHIBITED BY GENERALLY ACCEPTED AUDITING STANDARDS FROM ISSUING
SUCH A “COMFORT LETTER” TO AN INVESTOR, THE COMPANY SHALL FURNISH TO SUCH
INVESTOR AN “AGREED UPON PROCEDURES” LETTER COVERING THE SAME MATTERS TO THE
GREATEST EXTENT POSSIBLE, AND OTHERWISE IN CUSTOMARY FORM AND SUBSTANCE), AND
(II) AN OPINION, DATED AS OF SUCH DATE, OF COUNSEL REPRESENTING THE COMPANY FOR
PURPOSES OF SUCH REGISTRATION STATEMENT, IN FORM, SCOPE AND SUBSTANCE AS IS
CUSTOMARILY GIVEN TO UNDERWRITERS IN AN UNDERWRITTEN PUBLIC OFFERING, ADDRESSED
TO SUCH INVESTOR OR UNDERWRITER, AS THE CASE MAY BE.  NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL INVESTOR BE PERMITTED TO
REQUEST THAT THE COMPANY, NOR SHALL THE COMPANY IN ANY WAY BE OBLIGATED TO,
ENTER INTO ANY WRITTEN AGREEMENT, ARRANGEMENT, OR UNDERSTANDING TO ENGAGE A
THIRD PARTY TO ACT AS AN UNDERWRITER.

 

I.              AT THE REASONABLE REQUEST (IN THE CONTEXT OF THE SECURITIES
LAWS) OF ANY INVESTOR OR, IN THE CASE OF AN UNDERWRITTEN OFFERING, UPON THE
REQUEST OF ANY UNDERWRITER, THE COMPANY SHALL MAKE AVAILABLE FOR INSPECTION
DURING REGULAR BUSINESS HOURS BY (I) ANY INVESTOR, (II) LEGAL COUNSEL AND
(III) ONE FIRM OF ACCOUNTANTS OR OTHER AGENTS RETAINED BY THE INVESTOR
(COLLECTIVELY, THE “INSPECTORS”), AND IN THE CASE OF AN UNDERWRITTEN OFFERING BY
ANY UNDERWRITER AND ITS LEGAL COUNSEL AND REPRESENTATIVES, ALL PERTINENT
FINANCIAL AND OTHER RECORDS, AND PERTINENT CORPORATE DOCUMENTS AND PROPERTIES OF
THE COMPANY (COLLECTIVELY, THE “RECORDS”), AS SHALL BE REASONABLY DEEMED
NECESSARY BY SUCH INSPECTOR OR UNDERWRITER, AS THE CASE MAY BE, AND CAUSE THE

 

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COMPANY’S OFFICERS, DIRECTORS OR EMPLOYEES, AS THE CASE MAY BE, TO SUPPLY SUCH
RELEVANT INFORMATION THAT ANY INSPECTOR OR UNDERWRITER MAY REASONABLY REQUEST;
PROVIDED, HOWEVER, THAT EACH INSPECTOR SHALL AGREE TO HOLD IN STRICT CONFIDENCE
AND SHALL NOT MAKE ANY DISCLOSURE (EXCEPT TO AN INVESTOR OR UNDERWRITER) OR USE
OF ANY RECORD OR OTHER INFORMATION THAT THE COMPANY DETERMINES IN GOOD FAITH TO
BE CONFIDENTIAL, AND OF WHICH DETERMINATION SUCH INSPECTORS IS SO NOTIFIED,
UNLESS (A) THE DISCLOSURE OF SUCH RECORDS IS NECESSARY TO AVOID OR CORRECT A
MISSTATEMENT OR OMISSION IN ANY REGISTRATION STATEMENT OR IS OTHERWISE REQUIRED
UNDER THE 1933 ACT, (B) THE RELEASE OF SUCH RECORDS IS ORDERED PURSUANT TO A
SUBPOENA OR OTHER ORDER FROM A COURT OR GOVERNMENT BODY OF COMPETENT
JURISDICTION, OR (C) THE INFORMATION IN SUCH RECORDS HAS BEEN MADE GENERALLY
AVAILABLE TO THE PUBLIC OTHER THAN BY DISCLOSURE IN VIOLATION OF THIS OR ANY
OTHER AGREEMENT OF WHICH SUCH INSPECTOR HAS KNOWLEDGE.  THE INVESTOR AGREES THAT
IT SHALL, UPON LEARNING THAT DISCLOSURE OF SUCH RECORDS IS SOUGHT IN OR BY A
COURT OR GOVERNMENTAL BODY OF COMPETENT JURISDICTION OR THROUGH OTHER MEANS,
GIVE PROMPT NOTICE TO THE COMPANY AND ALLOW THE COMPANY, AT ITS EXPENSE, TO
UNDERTAKE APPROPRIATE ACTION TO PREVENT DISCLOSURE OF, OR TO OBTAIN A PROTECTIVE
ORDER FOR, THE RECORDS DEEMED CONFIDENTIAL.  NOTHING HEREIN (OR ANY OTHER
CONFIDENTIALITY AGREEMENT BETWEEN THE COMPANY AND ANY INVESTOR) SHALL BE DEEMED
TO LIMIT ANY INVESTOR’S ABILITY TO SELL REGISTRABLE SECURITIES IN A MANNER THAT
IS OTHERWISE CONSISTENT WITH APPLICABLE LAWS AND REGULATIONS, PROVIDED THAT SUCH
INVESTOR RECEIVING INFORMATION PURSUANT TO THIS SECTION 3(I) COMPLIES WITH ITS
CONFIDENTIALITY OBLIGATIONS PURSUANT TO THIS SECTION 3(I).

 

J.              THE COMPANY SHALL HOLD IN CONFIDENCE AND NOT MAKE ANY DISCLOSURE
OF INFORMATION CONCERNING AN INVESTOR PROVIDED TO THE COMPANY UNLESS
(I) DISCLOSURE OF SUCH INFORMATION IS NECESSARY TO COMPLY WITH FEDERAL OR STATE
SECURITIES LAWS, (II) THE DISCLOSURE OF SUCH INFORMATION IS NECESSARY TO AVOID
OR CORRECT A MISSTATEMENT OR OMISSION IN ANY REGISTRATION STATEMENT, (III) THE
RELEASE OF SUCH INFORMATION IS ORDERED PURSUANT TO A SUBPOENA OR OTHER FINAL,
NON-APPEALABLE ORDER FROM A COURT OR GOVERNMENTAL BODY OF COMPETENT
JURISDICTION, OR (IV) SUCH INFORMATION HAS BEEN MADE GENERALLY AVAILABLE TO THE
PUBLIC OTHER THAN BY DISCLOSURE IN VIOLATION OF THIS AGREEMENT OR ANY OTHER
AGREEMENT.  THE COMPANY AGREES THAT IT SHALL, UPON LEARNING THAT DISCLOSURE OF
SUCH INFORMATION CONCERNING AN INVESTOR IS SOUGHT IN OR BY A COURT OR
GOVERNMENTAL BODY OF COMPETENT JURISDICTION OR THROUGH OTHER MEANS, GIVE PROMPT
WRITTEN NOTICE TO SUCH INVESTOR AND ALLOW SUCH INVESTOR, AT SUCH INVESTOR’S
EXPENSE, TO UNDERTAKE APPROPRIATE ACTION TO PREVENT DISCLOSURE OF, OR TO OBTAIN
A PROTECTIVE ORDER FOR, SUCH INFORMATION.

 

K.             THE COMPANY SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
CAUSE ALL THE REGISTRABLE SECURITIES COVERED BY A REGISTRATION STATEMENT TO BE
LISTED ON EACH SECURITIES EXCHANGE OR TRADING MARKET ON WHICH SECURITIES OF THE
SAME CLASS OR SERIES ISSUED BY THE COMPANY ARE LISTED.  THE COMPANY SHALL PAY
ALL FEES AND EXPENSES IN CONNECTION WITH SATISFYING ITS OBLIGATION UNDER THIS
SECTION 3(K).

 

L.              THE COMPANY SHALL COOPERATE WITH THE INVESTOR WHO HOLDS
REGISTRABLE SECURITIES BEING OFFERED AND THE UNDERWRITERS, IF ANY, AND, TO THE
EXTENT APPLICABLE, FACILITATE THE TIMELY PREPARATION AND DELIVERY OF
CERTIFICATES OR UNCERTIFICATED SHARES (NOT BEARING ANY RESTRICTIVE LEGEND)
REPRESENTING THE REGISTRABLE SECURITIES TO BE OFFERED PURSUANT TO A REGISTRATION
STATEMENT AND ENABLE SUCH CERTIFICATES OR UNCERTIFICATED SHARES TO BE IN SUCH
DENOMINATIONS OR AMOUNTS, AS THE CASE MAY BE, AS THE INVESTOR MAY REASONABLY
REQUEST AND REGISTERED IN SUCH NAMES AS THE INVESTOR MAY REQUEST.

 

M.            THE COMPANY SHALL PROVIDE A TRANSFER AGENT AND REGISTRAR OF ALL
SUCH REGISTRABLE SECURITIES NOT LATER THAN THE EFFECTIVE DATE OF THE APPLICABLE
REGISTRATION STATEMENT.

 

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N.             IF REQUESTED BY AN INVESTOR, THE COMPANY SHALL (I) AS SOON AS
REASONABLY PRACTICABLE INCORPORATE IN A PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE
AMENDMENT SUCH INFORMATION AS SUCH INVESTOR REQUESTS TO BE INCLUDED THEREIN
RELATING TO THE SALE AND DISTRIBUTION OF REGISTRABLE SECURITIES, INCLUDING
INFORMATION WITH RESPECT TO SUCH INVESTOR, THE NUMBER OF REGISTRABLE SECURITIES
BEING OFFERED OR SOLD, THE PURCHASE PRICE BEING PAID THEREFOR AND ANY OTHER
TERMS OF THE OFFERING OF THE REGISTRABLE SECURITIES TO BE SOLD IN SUCH OFFERING;
(II) AS SOON AS PRACTICABLE MAKE ALL REQUIRED FILINGS OF SUCH PROSPECTUS
SUPPLEMENT OR POST-EFFECTIVE AMENDMENT AFTER BEING NOTIFIED OF THE MATTERS TO BE
INCORPORATED IN SUCH PROSPECTUS SUPPLEMENT OR POST-EFFECTIVE AMENDMENT; AND
(III) AS SOON AS REASONABLY PRACTICABLE, SUPPLEMENT OR MAKE AMENDMENTS TO ANY
REGISTRATION STATEMENT OR PROSPECTUS IF REASONABLY REQUESTED BY AN INVESTOR.

 

O.             THE COMPANY SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO
CAUSE THE REGISTRABLE SECURITIES COVERED BY THE APPLICABLE REGISTRATION
STATEMENT TO BE REGISTERED WITH OR APPROVED BY SUCH OTHER GOVERNMENTAL AGENCIES
OR AUTHORITIES IN THE UNITED STATES AS MAY BE NECESSARY TO CONSUMMATE THE
DISPOSITION OF SUCH REGISTRABLE SECURITIES.

 

P.             THE COMPANY SHALL MAKE GENERALLY AVAILABLE TO ITS SECURITY
HOLDERS AS SOON AS PRACTICAL, BUT NOT LATER THAN NINETY (90) DAYS AFTER THE
CLOSE OF THE PERIOD COVERED THEREBY, AN EARNINGS STATEMENT (IN FORM COMPLYING
WITH THE PROVISIONS OF RULE 158 UNDER THE 1933 ACT) COVERING A 12-MONTH PERIOD
BEGINNING NOT LATER THAN THE FIRST DAY OF THE COMPANY’S FISCAL QUARTER NEXT
FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT.

 

Q.             THE COMPANY SHALL OTHERWISE USE ALL COMMERCIALLY REASONABLE
EFFORTS TO COMPLY WITH ALL APPLICABLE RULES AND REGULATIONS OF THE SEC IN
CONNECTION WITH ANY REGISTRATION HEREUNDER.

 

R.              WITHIN TWO (2) BUSINESS DAYS AFTER A REGISTRATION STATEMENT THAT
COVERS APPLICABLE REGISTRABLE SECURITIES IS ORDERED EFFECTIVE BY THE SEC, THE
COMPANY SHALL DELIVER, AND SHALL CAUSE LEGAL COUNSEL FOR THE COMPANY TO DELIVER,
TO THE TRANSFER AGENT FOR SUCH REGISTRABLE SECURITIES (WITH COPIES TO THE
INVESTOR WHOSE REGISTRABLE SECURITIES ARE INCLUDED IN SUCH REGISTRATION
STATEMENT) CONFIRMATION THAT SUCH REGISTRATION STATEMENT HAS BEEN DECLARED
EFFECTIVE BY THE SEC IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT A,
PROVIDED THAT IF THE COMPANY CHANGES ITS TRANSFER AGENT, IT SHALL IMMEDIATELY
DELIVER ANY PREVIOUSLY DELIVERED NOTICES UNDER THIS SECTION 3(R) AND ANY
SUBSEQUENT NOTICES TO SUCH NEW TRANSFER AGENT.

 

S.             TO THE EXTENT NOT MADE BY THE UNDERWRITERS IN THE CASE OF AN
UNDERWRITTEN OFFERING, THE COMPANY SHALL MAKE SUCH FILINGS WITH FINRA, PURSUANT
TO NASD RULE 2710 OR OTHERWISE (INCLUDING PROVIDING ALL REQUIRED INFORMATION AND
PAYING REQUIRED FEES THERETO), AS AND WHEN REQUESTED BY ANY INVESTOR, OR IN THE
CASE OF AN UNDERWRITTEN OFFERING, BY ANY UNDERWRITER, AND MAKE ALL OTHER FILINGS
AND TAKE ALL OTHER ACTIONS REASONABLY NECESSARY TO EXPEDITE AND FACILITATE THE
DISPOSITION BY THE INVESTOR OF REGISTRABLE SECURITIES PURSUANT TO A REGISTRATION
STATEMENT, INCLUDING REASONABLY COOPERATING WITH ANY BROKER-DEALER THROUGH WHICH
ANY INVESTOR PROPOSES TO RESELL REGISTRABLE SECURITIES AND PROMPTLY RESPONDING
TO ANY COMMENTS RECEIVED FROM FINRA.

 

T.              THE COMPANY SHALL ENTER INTO SUCH CUSTOMARY AGREEMENTS
(INCLUDING, IN THE CASE OF UNDERWRITTEN OFFERING, AN UNDERWRITING AGREEMENT) AND
TAKE SUCH OTHER ACTIONS AS THE ANY OF THE INVESTOR OR UNDERWRITERS, IF ANY, MAY
REASONABLY REQUEST IN ORDER TO EXPEDITE AND FACILITATE THE DISPOSITION OF THE
REGISTRABLE SECURITIES AND ANY OTHER SECURITIES COVERED BY A

 

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REGISTRATION STATEMENT.  WITHOUT LIMITING THE FOREGOING, IN CONNECTION WITH ANY
UNDERWRITTEN OFFERING AND TAKING INTO ACCOUNT THE COMPANY’S BUSINESS NEEDS, THE
COMPANY SHALL MAKE APPROPRIATE OFFICERS OF THE COMPANY AVAILABLE FOR MEETINGS
WITH PROSPECTIVE PURCHASERS OF THE REGISTRABLE SECURITIES AND PREPARE AND
PRESENT TO POTENTIAL INVESTORS CUSTOMARY “ROAD SHOW” MATERIALS, IN EACH CASE IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE UNDERWRITERS AND IN ALL RESPECTS IN A
MANNER CONSISTENT WITH OTHER ISSUANCES OF SECURITIES IN AN OFFERING OF A SIMILAR
SIZE TO SUCH OFFERING OF THE REGISTRABLE SECURITIES.

 

U.             THE COMPANY SHALL NOTIFY THE INVESTOR AND THE MANAGING
UNDERWRITERS, IF ANY, AS PROMPTLY AS REASONABLY PRACTICABLE, AND (IF REQUESTED
BY ANY SUCH PERSON) CONFIRM SUCH NOTICE (WHICH NOTICE SHALL, PURSUANT TO CLAUSES
(II), (III), (V) AND (VI) HEREOF, BE ACCOMPANIED BY AN INSTRUCTION TO SUSPEND
USE OF THE PROSPECTUS UNTIL THE REQUISITE CHANGES HAVE BEEN MADE) 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(T) (INCLUDING ANY
UNDERWRITING AGREEMENT) CEASE TO BE TRUE AND CORRECT IN ANY MATERIAL RESPECT, IF
AND ONLY TO THE EXTENT THAT SUCH REPRESENTATIONS AND WARRANTIES ARE CONTINUING
UNDER SUCH AGREEMENT OR IF THERE IS A CONTINUING PROSPECTUS DELIVERY
REQUIREMENT, (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, AND (VI) OF THE OCCURRENCE OF
ANY EVENT THAT 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 THAT REQUIRES THE MAKING
OF ANY CHANGES IN A REGISTRATION STATEMENT, PROSPECTUS OR ANY SUCH DOCUMENT 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
NECESSARY TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER
WHICH THEY WERE MADE, NOT MISLEADING.

 

4.             OBLIGATIONS OF THE INVESTOR.

 

A.             AT LEAST SEVEN (7) BUSINESS DAYS PRIOR TO THE FIRST ANTICIPATED
FILING DATE OF A REGISTRATION STATEMENT AND AT LEASE FIVE (5) BUSINESS DAYS
PRIOR TO THE FILING OF ANY AMENDMENT OR SUPPLEMENT TO A REGISTRATION STATEMENT
OR PROSPECTUS, THE COMPANY SHALL NOTIFY THE INVESTOR IN WRITING OF THE
INFORMATION, IF ANY, THE COMPANY REQUIRES FROM EACH SUCH INVESTOR IF SUCH
INVESTOR ELECTS TO HAVE ANY OF SUCH INVESTOR’S REGISTRABLE SECURITIES INCLUDED
IN SUCH REGISTRATION STATEMENT OR, WITH RESPECT TO AN AMENDMENT OR A SUPPLEMENT,
IF SUCH INVESTOR’S REGISTRABLE SECURITIES ARE INCLUDED IN SUCH REGISTRATION
STATEMENT (EACH AN “INFORMATION REQUEST”). PROVIDED THAT THE COMPANY SHALL HAVE
COMPLIED WITH ITS OBLIGATIONS SET FORTH IN THE PRECEDING SENTENCE, IT SHALL BE A
CONDITION PRECEDENT TO THE OBLIGATIONS OF THE COMPANY TO COMPLETE THE
REGISTRATION PURSUANT TO THIS AGREEMENT WITH RESPECT TO THE REGISTRABLE
SECURITIES OF

 

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A PARTICULAR INVESTOR THAT SUCH INVESTOR SHALL FURNISH TO THE COMPANY, IN
RESPONSE TO AN INFORMATION REQUEST, SUCH INFORMATION REGARDING ITSELF, THE
REGISTRABLE SECURITIES HELD BY IT AND THE INTENDED METHOD OF DISPOSITION OF THE
REGISTRABLE SECURITIES HELD BY IT AS SHALL BE REASONABLY REQUIRED TO EFFECT THE
REGISTRATION OF SUCH REGISTRABLE SECURITIES AND SHALL EXECUTE SUCH DOCUMENTS IN
CONNECTION WITH SUCH REGISTRATION AS THE COMPANY MAY REASONABLY REQUEST.

 

B.             THE INVESTOR AGREES TO COOPERATE WITH THE COMPANY AS REASONABLY
REQUESTED BY THE COMPANY IN CONNECTION WITH THE PREPARATION AND FILING OF ANY
REGISTRATION STATEMENT IN WHICH ANY REGISTRABLE SECURITIES HELD BY SUCH INVESTOR
ARE BEING INCLUDED.  NO INVESTOR SHALL HAVE ANY RIGHT TO OBTAIN OR SEEK AN
INJUNCTION RESTRAINING OR OTHERWISE DELAYING ANY SUCH REGISTRATION AS THE RESULT
OF ANY CONTROVERSY THAT MIGHT ARISE WITH RESPECT TO THE INTERPRETATION OR
IMPLEMENTATION OF SECTIONS 2, 3 OR 10.

 

C.             THE INVESTOR AGREES THAT, UPON RECEIPT OF ANY NOTICE FROM THE
COMPANY OF THE HAPPENING OF ANY EVENT OF THE KIND DESCRIBED IN SECTION 3(G) OR
THE FIRST SENTENCE OF SECTION 3(F) OR, IN THE CASE OF AN OFFERING PURSUANT TO
RULE 415, RECEIPT OF A SUSPENSION NOTICE, SUCH INVESTOR WILL PROMPTLY
DISCONTINUE DISPOSITION OF REGISTRABLE SECURITIES PURSUANT TO ANY REGISTRATION
STATEMENT(S) COVERING SUCH REGISTRABLE SECURITIES UNTIL SUCH INVESTOR’S RECEIPT
OF THE COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS CONTEMPLATED BY
SECTION 3(D) OR THE FIRST SENTENCE OF SECTION 3(F) OR RECEIPT OF NOTICE THAT NO
SUPPLEMENT OR AMENDMENT IS REQUIRED OR THAT THE BLACK OUT HAS ENDED. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE COMPANY SHALL CAUSE ITS TRANSFER
AGENT TO DELIVER UNLEGENDED SHARES OF COMMON STOCK TO A TRANSFEREE OF AN
INVESTOR IN ACCORDANCE WITH THE TERMS OF THE SECURITIES PURCHASE AGREEMENT IN
CONNECTION WITH ANY SALE OF REGISTRABLE SECURITIES WITH RESPECT TO WHICH AN
INVESTOR PROVIDES REASONABLE EVIDENCE THAT SUCH INVESTOR HAS ENTERED INTO A
CONTRACT FOR SALE PRIOR TO THE INVESTOR’S RECEIPT OF A NOTICE FROM THE COMPANY
OF THE HAPPENING OF ANY EVENT OF THE KIND DESCRIBED IN SECTION 3(U).

 

D.             THE INVESTOR AGREES, IN CONNECTION WITH ANY UNDERWRITTEN OFFERING
MADE PURSUANT TO A REGISTRATION STATEMENT FILED PURSUANT TO THIS AGREEMENT IN
WHICH SUCH INVESTOR HAS ELECTED TO INCLUDE REGISTRABLE SECURITIES, IF REQUESTED
(PURSUANT TO A WRITTEN NOTICE) BY THE MANAGING UNDERWRITER(S) NOT TO EFFECT ANY
PUBLIC SALE OR DISTRIBUTION OF ANY COMMON EQUITY SECURITIES OF THE COMPANY (OR
SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE OR EXERCISABLE FOR SUCH COMMON
EQUITY SECURITIES) (EXCEPT AS PART OF SUCH UNDERWRITTEN OFFERING) DURING THE
PERIOD COMMENCING NOT EARLIER THAN 7 DAYS PRIOR TO AND CONTINUING FOR NOT MORE
THAN 90 DAYS (OR SUCH SHORTER PERIOD AS THE MANAGING UNDERWRITER(S) MAY PERMIT)
AFTER THE EFFECTIVE DATE OF THE RELATED REGISTRATION STATEMENT (OR DATE OF THE
PROSPECTUS SUPPLEMENT IF THE OFFERING IS MADE PURSUANT TO A “SHELF”
REGISTRATION) PURSUANT TO WHICH SUCH UNDERWRITTEN OFFERING SHALL BE MADE;
PROVIDED, THAT SUCH INVESTOR SHALL ONLY BE SO BOUND SO LONG AS AND TO THE EXTENT
THAT EACH EXECUTIVE OFFICER AND DIRECTOR OF THE COMPANY AND OTHER SHAREHOLDER
HAVING REGISTRATION RIGHTS WITH RESPECT TO THE SECURITIES OF THE COMPANY IS
SIMILARLY BOUND.

 

5.             EXPENSES OF REGISTRATION.

 

All expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings and qualifications pursuant to, or
otherwise in connection with the Company’s compliance with its obligations
under, Sections 2 and 3, including all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company, shall be paid by the Company.  The Company shall also reimburse the
Investor for the reasonable fees and disbursements of Legal Counsel in

 

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connection with registrations, filings and qualifications pursuant to Sections 2
and 3 of this Agreement in an amount not to exceed $50,000 per Registration
Statement.  In no event, however, will the Company be responsible for any
underwriting discount or selling commission with respect to any sale of
Registrable Securities pursuant to this Agreement, and Investor shall be
responsible for any taxes of any kind (including, without limitation, transfer
taxes) with respect to any disposition, sale or transfer of Registrable
Securities and for any legal, accounting and other expenses incurred by it,
except as provided in the preceding sentence with respect to Legal Counsel, in
connection with any Registration Statement.

 

6.             INDEMNIFICATION.

 

In the event any Registrable Securities are included in a Registration Statement
under this Agreement:

 

A.             TO THE FULLEST EXTENT PERMITTED BY LAW, THE COMPANY WILL, AND
HEREBY DOES, INDEMNIFY, HOLD HARMLESS AND DEFEND THE INVESTOR AND ANY
UNDERWRITER, AND THE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, MANAGERS,
EMPLOYEES, AGENTS, REPRESENTATIVES OF, AND EACH PERSON, IF ANY, WHO CONTROLS ANY
INVESTOR OR UNDERWRITER WITHIN THE MEANING OF THE 1933 ACT OR THE 1934 ACT
(EACH, AN “INDEMNIFIED PERSON”), AGAINST ANY LOSSES, CLAIMS, DAMAGES,
LIABILITIES, JUDGMENTS, FINES, PENALTIES, CHARGES, COSTS, REASONABLE ATTORNEYS’
FEES, AMOUNTS PAID IN SETTLEMENT OR EXPENSES, JOINT OR SEVERAL, (COLLECTIVELY,
“CLAIMS”) INCURRED IN INVESTIGATING, PREPARING OR DEFENDING ANY ACTION, CLAIM,
SUIT, INQUIRY, PROCEEDING, INVESTIGATION OR APPEAL TAKEN FROM THE FOREGOING BY
OR BEFORE ANY COURT OR GOVERNMENTAL, ADMINISTRATIVE OR OTHER REGULATORY AGENCY
AUTHORITY, OR BODY (INCLUDING THE SEC OR ANY STATE SECURITIES COMMISSION,
AUTHORITY OR SELF-REGULATORY ORGANIZATION, IN THE UNITED STATES OR ANYWHERE ELSE
IN THE WORLD), WHETHER PENDING OR THREATENED, WHETHER OR NOT AN INDEMNIFIED
PARTY IS OR MAY BE A PARTY THERETO (“INDEMNIFIED DAMAGES”), TO WHICH ANY OF THEM
MAY BECOME SUBJECT INSOFAR AS SUCH CLAIMS (OR ACTIONS OR PROCEEDINGS, WHETHER
COMMENCED OR THREATENED, IN RESPECT THEREOF) ARISE OUT OF OR ARE BASED UPON:
(I) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT IN
(INCLUDING BY WAY OF INCORPORATION BE REFERENCE) A REGISTRATION STATEMENT OR ANY
POST-EFFECTIVE AMENDMENT THERETO OR IN ANY FILING MADE IN CONNECTION WITH THE
QUALIFICATION OF THE OFFERING UNDER THE SECURITIES OR OTHER “BLUE SKY” LAWS OF
ANY JURISDICTION IN WHICH REGISTRABLE SECURITIES ARE OFFERED (“BLUE SKY
FILINGS”), OR THE OMISSION OR ALLEGED OMISSION TO STATE A MATERIAL FACT REQUIRED
TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING,
(II) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT
CONTAINED (INCLUDING BY WAY OF INCORPORATION BY REFERENCE) IN ANY PRELIMINARY,
FINAL, SUMMARY OR FREE WRITING PROSPECTUS (AS AMENDED OR SUPPLEMENTED, IF THE
COMPANY FILES ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO WITH THE SEC) OR THE
OMISSION OR ALLEGED OMISSION TO STATE THEREIN (INCLUDING BY WAY OF INCORPORATION
BE REFERENCE) ANY MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE THEREIN,
IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THE STATEMENTS THEREIN (INCLUDING BY
WAY OF INCORPORATION BE REFERENCE) WERE MADE, NOT MISLEADING, OR (III) ANY
VIOLATION OR ALLEGED VIOLATION BY THE COMPANY OF THE 1933 ACT, THE 1934 ACT, ANY
OTHER LAW, INCLUDING ANY STATE SECURITIES LAW, OR ANY RULE OR REGULATION
THEREUNDER RELATING TO THE OFFER OR SALE OF THE REGISTRABLE SECURITIES PURSUANT
TO A REGISTRATION STATEMENT (THE MATTERS IN THE FOREGOING CLAUSES (I) THROUGH
(III) BEING, COLLECTIVELY, “VIOLATIONS”).  SUBJECT TO SECTION 6(C), THE COMPANY
SHALL REIMBURSE THE INDEMNIFIED PERSONS, PROMPTLY AS SUCH EXPENSES ARE INCURRED
AND ARE DUE AND PAYABLE, FOR ANY LEGAL FEES OR OTHER REASONABLE EXPENSES
INCURRED BY THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY SUCH CLAIM. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE INDEMNIFICATION
AGREEMENT CONTAINED IN THIS SECTION 6(A): (I) SHALL

 

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NOT APPLY TO A CLAIM BY AN INDEMNIFIED PERSON ARISING OUT OF OR BASED UPON A
VIOLATION WHICH OCCURS IN RELIANCE UPON AND IN CONFORMITY WITH INFORMATION
FURNISHED IN WRITING TO THE COMPANY BY SUCH INDEMNIFIED PERSON FOR SUCH
INDEMNIFIED PERSON EXPRESSLY FOR USE IN CONNECTION WITH THE PREPARATION OF THE
REGISTRATION STATEMENT OR ANY SUCH AMENDMENT THEREOF OR SUPPLEMENT THERETO IF
SUCH PROSPECTUS (OR AMENDMENT OR SUPPLEMENT THERETO) WAS TIMELY FILED WITH THE
SEC AND FURNISHED BY THE COMPANY TO SUCH INVESTOR PURSUANT TO SECTION 3(D),
(II) SHALL NOT APPLY TO A CLAIM BY AN INDEMNIFIED PERSON ARISING OUT OF OR BASED
UPON SALES OF REGISTRABLE SECURITIES BY SUCH INDEMNIFIED PERSON PURSUANT TO A
REGISTRATION STATEMENT IN VIOLATION OF SECTION 4(C), AND (III) SHALL NOT APPLY
TO AMOUNTS PAID IN SETTLEMENT OF ANY CLAIM IF SUCH SETTLEMENT IS EFFECTED
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD, CONDITIONED OR DELAYED.  SUCH INDEMNITY SHALL REMAIN IN
FULL FORCE AND EFFECT REGARDLESS OF ANY INVESTIGATION MADE BY OR ON BEHALF OF
THE INDEMNIFIED PERSON AND SHALL SURVIVE THE TRANSFER OF THE REGISTRABLE
SECURITIES BY THE INVESTOR PURSUANT TO SECTION 9.

 

B.             IN CONNECTION WITH ANY REGISTRATION STATEMENT IN WHICH AN
INVESTOR IS PARTICIPATING, EACH SUCH INVESTOR AGREES TO SEVERALLY AND NOT
JOINTLY INDEMNIFY, HOLD HARMLESS AND DEFEND, TO THE SAME EXTENT AND IN THE SAME
MANNER AS IS SET FORTH IN SECTION 6(A), THE COMPANY, EACH OF ITS DIRECTORS, EACH
OF ITS OFFICERS WHO SIGNS THE REGISTRATION STATEMENT, AND EACH PERSON, IF ANY,
WHO CONTROLS THE COMPANY WITHIN THE MEANING OF THE 1933 ACT OR THE 1934 ACT
(EACH AN “INDEMNIFIED PARTY”), AGAINST ANY CLAIM OR INDEMNIFIED DAMAGES TO WHICH
ANY OF THEM MAY BECOME SUBJECT, UNDER THE 1933 ACT, THE 1934 ACT OR OTHERWISE,
INSOFAR AS SUCH CLAIM OR INDEMNIFIED DAMAGES ARISE OUT OF OR ARE BASED UPON
(I) ANY VIOLATION, IN EACH CASE TO THE EXTENT, AND ONLY TO THE EXTENT, THAT SUCH
VIOLATION OCCURS IN RELIANCE UPON AND IN CONFORMITY WITH WRITTEN INFORMATION
FURNISHED TO THE COMPANY BY SUCH INVESTOR EXPRESSLY FOR USE IN CONNECTION WITH
SUCH REGISTRATION STATEMENT OR (II) SALES OF REGISTRABLE SECURITIES BY SUCH
INDEMNIFIED PERSON PURSUANT TO A REGISTRATION STATEMENT IN VIOLATION OF
SECTION 4(C) AND, SUBJECT TO SECTION 6(C), SUCH INVESTOR WILL REIMBURSE ANY
LEGAL OR OTHER EXPENSES REASONABLY INCURRED BY AN INDEMNIFIED PARTY IN
CONNECTION WITH INVESTIGATING OR DEFENDING ANY SUCH CLAIM; PROVIDED, HOWEVER,
THAT THE INDEMNITY AGREEMENT CONTAINED IN THIS SECTION 6(B) AND THE AGREEMENT
WITH RESPECT TO CONTRIBUTION CONTAINED IN SECTION 7 SHALL NOT APPLY TO AMOUNTS
PAID IN SETTLEMENT OF ANY CLAIM IF SUCH SETTLEMENT IS EFFECTED WITHOUT THE PRIOR
WRITTEN CONSENT OF SUCH INVESTOR, WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD, CONDITIONED OR DELAYED; PROVIDED, FURTHER, HOWEVER, THAT THE AGGREGATE
LIABILITY OF THE INVESTOR IN CONNECTION WITH ANY VIOLATION SHALL NOT EXCEED THE
NET PROCEEDS TO SUCH INVESTOR AS A RESULT OF THE SALE OF REGISTRABLE SECURITIES
PURSUANT TO THE REGISTRATION STATEMENT GIVING RISE TO SUCH CLAIM.  SUCH
INDEMNITY SHALL REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF ANY INVESTIGATION
MADE BY OR ON BEHALF OF SUCH INDEMNIFIED PARTY AND SHALL SURVIVE ANY TRANSFER OF
THE REGISTRABLE SECURITIES BY AN INVESTOR PURSUANT TO SECTION 9.

 

C.             PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PERSON OR INDEMNIFIED
PARTY UNDER THIS SECTION 6 OF NOTICE OF THE COMMENCEMENT OF ANY ACTION OR
PROCEEDING (INCLUDING ANY GOVERNMENTAL ACTION OR PROCEEDING) INVOLVING A CLAIM,
SUCH INDEMNIFIED PERSON OR INDEMNIFIED PARTY SHALL, IF A CLAIM IN RESPECT
THEREOF IS TO BE MADE AGAINST ANY INDEMNIFYING PARTY UNDER THIS SECTION 6,
DELIVER TO THE INDEMNIFYING PARTY A WRITTEN NOTICE OF THE COMMENCEMENT THEREOF,
AND THE INDEMNIFYING PARTY SHALL HAVE THE RIGHT TO PARTICIPATE IN, AND, TO THE
EXTENT THE INDEMNIFYING PARTY SO DESIRES, JOINTLY WITH ANY OTHER INDEMNIFYING
PARTY SIMILARLY NOTICED, TO ASSUME CONTROL OF THE DEFENSE THEREOF WITH COUNSEL
MUTUALLY SATISFACTORY TO THE INDEMNIFYING PARTY AND THE INDEMNIFIED PERSON OR
THE INDEMNIFIED PARTY, AS THE CASE MAY BE. IN ANY SUCH PROCEEDING, ANY
INDEMNIFIED PERSON OR INDEMNIFIED PARTY MAY RETAIN ITS OWN COUNSEL, BUT, EXCEPT
AS PROVIDED IN

 

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THE FOLLOWING SENTENCE, THE FEES AND EXPENSES OF THAT COUNSEL WILL BE AT THE
EXPENSE OF THAT INDEMNIFIED PERSON OR INDEMNIFIED PARTY, AS THE CASE MAY BE,
UNLESS (I) THE INDEMNIFYING PARTY AND THE INDEMNIFIED PERSON OR INDEMNIFIED
PARTY, AS APPLICABLE, SHALL HAVE MUTUALLY AGREED TO THE RETENTION OF THAT
COUNSEL, (II) THE INDEMNIFYING PARTY DOES NOT ASSUME THE DEFENSE OF SUCH
PROCEEDING IN A TIMELY MANNER OR (III) IN THE REASONABLE OPINION OF COUNSEL
RETAINED BY THE INDEMNIFIED PERSON OR INDEMNIFIED PARTY, THE REPRESENTATION BY
SUCH COUNSEL FOR THE INDEMNIFIED PERSON OR INDEMNIFIED PARTY AND THE
INDEMNIFYING PARTY WOULD BE INAPPROPRIATE DUE TO ACTUAL OR POTENTIAL DIFFERING
INTERESTS BETWEEN SUCH INDEMNIFIED PERSON OR INDEMNIFIED PARTY AND ANY OTHER
PARTY REPRESENTED BY SUCH COUNSEL IN SUCH PROCEEDING.  THE COMPANY SHALL PAY
REASONABLE FEES FOR UP TO ONE SEPARATE LEGAL COUNSEL (PLUS LOCAL COUNSEL) FOR
THE INVESTOR, AND SUCH LEGAL COUNSEL SHALL BE SELECTED BY THE INVESTOR HOLDING
AT LEAST TWO-THIRDS (2/3) IN INTEREST OF THE REGISTRABLE SECURITIES INCLUDED IN
THE REGISTRATION STATEMENT TO WHICH THE CLAIM RELATES.  THE INDEMNIFYING PARTY
SHALL KEEP THE INDEMNIFIED PERSON OR INDEMNIFIED PARTY FULLY APPRISED AT ALL
TIMES AS TO THE STATUS OF THE DEFENSE OR ANY SETTLEMENT NEGOTIATIONS WITH
RESPECT THERETO.  NO INDEMNIFYING PARTY SHALL BE LIABLE FOR ANY SETTLEMENT OF
ANY ACTION, CLAIM OR PROCEEDING EFFECTED WITHOUT ITS PRIOR WRITTEN CONSENT,
PROVIDED, HOWEVER, THAT THE INDEMNIFYING PARTY SHALL NOT UNREASONABLY WITHHOLD,
DELAY OR CONDITION ITS CONSENT.  NO INDEMNIFYING PARTY SHALL, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE INDEMNIFIED PERSON OR INDEMNIFIED PARTY, CONSENT TO ENTRY
OF ANY JUDGMENT OR ENTER INTO ANY SETTLEMENT OR OTHER COMPROMISE WITH RESPECT TO
ANY PENDING OR THREATENED ACTION OR CLAIM IN RESPECT OF WHICH INDEMNIFICATION OR
CONTRIBUTION MAY BE OR HAS BEEN SOUGHT HEREUNDER (WHETHER OR NOT THE INDEMNIFIED
PERSON OR INDEMNIFIED PARTY IS AN ACTUAL OR POTENTIAL PARTY TO SUCH ACTION OR
CLAIM) WHICH DOES NOT INCLUDE AS AN UNCONDITIONAL TERM THEREOF THE GIVING BY THE
CLAIMANT OR PLAINTIFF TO SUCH INDEMNIFIED PERSON OR INDEMNIFIED PARTY OF A
RELEASE FROM ALL LIABILITY IN RESPECT TO SUCH CLAIM OR LITIGATION, AND SUCH
SETTLEMENT SHALL NOT INCLUDE ANY ADMISSION AS TO FAULT ON THE PART OF THE
INDEMNIFIED PERSON OR INDEMNIFIED PARTY.  FOLLOWING INDEMNIFICATION AS PROVIDED
FOR HEREUNDER, THE INDEMNIFYING PARTY SHALL BE SUBROGATED TO ALL RIGHTS OF THE
INDEMNIFIED PERSON OR INDEMNIFIED PARTY WITH RESPECT TO ALL THIRD PARTIES, FIRMS
OR CORPORATIONS RELATING TO THE MATTER FOR WHICH INDEMNIFICATION HAS BEEN MADE. 
THE FAILURE TO DELIVER WRITTEN NOTICE TO THE INDEMNIFYING PARTY WITHIN A
REASONABLE TIME OF THE COMMENCEMENT OF ANY SUCH ACTION SHALL NOT RELIEVE SUCH
INDEMNIFYING PARTY OF ANY LIABILITY TO THE INDEMNIFIED PERSON OR INDEMNIFIED
PARTY UNDER THIS SECTION 6, EXCEPT TO THE EXTENT THAT THE INDEMNIFYING PARTY IS
PREJUDICED IN ITS ABILITY TO DEFEND SUCH ACTION.

 

D.             THE INDEMNIFICATION REQUIRED BY THIS SECTION 6 SHALL BE MADE BY
PERIODIC PAYMENTS OF THE AMOUNT THEREOF DURING THE COURSE OF THE INVESTIGATION
OR DEFENSE, AS AND WHEN BILLS ARE RECEIVED OR INDEMNIFIED DAMAGES ARE INCURRED.

 

E.             THE INDEMNITY AGREEMENTS CONTAINED HEREIN SHALL BE IN ADDITION TO
(I) ANY CAUSE OF ACTION OR SIMILAR RIGHT OF THE INDEMNIFIED PERSON OR
INDEMNIFIED PARTY AGAINST THE INDEMNIFYING PARTY OR OTHERS, AND (II) ANY
LIABILITIES THE INDEMNIFYING PARTY MAY BE SUBJECT TO PURSUANT TO THE LAW.

 

7.             CONTRIBUTION.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however, that: 
(i) no Person involved in the sale of Registrable Securities who is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of

 

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the 1933 Act) in connection with such sale, shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any Investor
shall be limited to an amount equal to the net amount of proceeds received by
such Investor from the sale of such Registrable Securities pursuant to the
Registration Statement giving rise to such action or claim for indemnification,
less the amount of any damages that such Investor has otherwise been required to
pay in connection with such sale.

 

8.             REPORTS UNDER THE 1934 ACT.

 

With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration (“Rule 144”), the Company agrees to:

 

A.             MAKE AND KEEP PUBLIC INFORMATION AVAILABLE, AS THOSE TERMS ARE
UNDERSTOOD AND DEFINED IN RULE 144;

 

B.             MAINTAIN, AND NOT TERMINATE, ITS STATUS AS AN ISSUER REQUIRED TO
FILE REPORTS UNDER THE 1934 ACT;

 

C.             FILE WITH THE SEC IN A TIMELY MANNER ALL REPORTS AND OTHER
DOCUMENTS REQUIRED OF THE COMPANY UNDER THE 1934 ACT SO LONG AS THE COMPANY
REMAINS SUBJECT TO SUCH REQUIREMENTS AND THE FILING OF SUCH REPORTS AND OTHER
DOCUMENTS IS REQUIRED FOR THE APPLICABLE PROVISIONS OF RULE 144; AND

 

D.             FURNISH TO THE INVESTOR SO LONG AS SUCH INVESTOR OWNS REGISTRABLE
SECURITIES, PROMPTLY UPON REQUEST, (I) A WRITTEN STATEMENT BY THE COMPANY THAT
IT HAS COMPLIED WITH THE REPORTING REQUIREMENTS OF RULE 144 AND THE 1934 ACT,
(II) A COPY OF THE MOST RECENT ANNUAL OR QUARTERLY REPORT OF THE COMPANY AND
SUCH OTHER REPORTS AND DOCUMENTS SO FILED BY THE COMPANY (OR INFORMATION
REGARDING THE LOCATIONS THEREOF ON THE SEC’S EDGAR FILING SYSTEM OR SUCCESSOR
THERETO), AND (III) SUCH OTHER INFORMATION AS MAY BE REASONABLY REQUESTED TO
PERMIT THE INVESTOR TO SELL SUCH SECURITIES PURSUANT TO RULE 144 WITHOUT
REGISTRATION.

 

THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 8 SHALL CONTINUE FOR A PERIOD
OF TWELVE (12) MONTHS FOLLOWING THE CLOSING DATE; PROVIDED THAT IF, AS OF THE
CLOSING DATE, SUCH INVESTOR IS, OR PURSUANT TO THE RIGHTS OFFERING BECOMES, AN
AFFILIATE (AS DEFINED IN RULE 144) OF THE COMPANY, THEN SUCH PERIOD SHALL BE
EXTENDED TO TWENTY-FOUR (24) MONTHS.  IN NO EVENT SHALL THE COMPANY BE REQUIRED
TO COMPLY WITH THIS SECTION 8 IF IT CEASES TO MAINTAIN THE REGISTRATION OF ITS
COMMON STOCK UNDER THE 1933 ACT AS A RESULT OF A “GOING PRIVATE” TRANSACTION
APPROVED BY THE COMPANY’S SHAREHOLDERS.

 

9.             ASSIGNMENT OF REGISTRATION RIGHTS.

 

The rights and obligations under this Agreement shall not be assignable directly
or indirectly whether by operation of law, merger or sale of substantially all
the assets or stock of the Company or Investor.

 

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10.           LIMITATIONS ON REGISTRATION RIGHTS.

 

A.             SUSPENSION OF TRADING.  AT ANY TIME AFTER THE REGISTRABLE
SECURITIES ARE COVERED BY AN EFFECTIVE REGISTRATION STATEMENT, THE COMPANY MAY
DELIVER TO THE HOLDERS OF SUCH REGISTRABLE SECURITIES A CERTIFICATE (THE
“SUSPENSION CERTIFICATE”) APPROVED BY THE CHIEF EXECUTIVE OFFICER OR CHIEF
FINANCIAL OFFICER OF THE COMPANY AND SIGNED BY AN OFFICER OF THE COMPANY STATING
THAT THE BOARD OF DIRECTORS OF THE COMPANY IN GOOD FAITH REASONABLY BELIEVES
THAT THE EFFECTIVENESS OF AND SALES OF REGISTRABLE SECURITIES UNDER THE
REGISTRATION STATEMENT WOULD: (I) MATERIALLY INTERFERE WITH ANY TRANSACTION THAT
WOULD REQUIRE THE COMPANY TO PREPARE FINANCIAL STATEMENTS UNDER THE SECURITIES
ACT THAT THE COMPANY WOULD OTHERWISE NOT BE REQUIRED TO PREPARE IN ORDER TO
COMPLY WITH ITS OBLIGATIONS UNDER THE EXCHANGE ACT, OR (II) REQUIRE PUBLIC
DISCLOSURE OF A MATERIAL TRANSACTION OR EVENT PRIOR TO THE TIME SUCH DISCLOSURE
MIGHT OTHERWISE BE REQUIRED.  UPON RECEIPT OF A SUSPENSION CERTIFICATE BY THE
INVESTOR, IT SHALL REFRAIN FROM SELLING OR OTHERWISE TRANSFERRING OR DISPOSING
OF ANY REGISTRABLE SECURITIES THEN HELD FOR A SPECIFIED PERIOD OF TIME (A
“SUSPENSION PERIOD”) NOT TO EXCEED TWENTY (20) CALENDAR DAYS.  THE REGISTRATION
PERIOD OR EXTENDED REGISTRATION PERIOD SHALL BE AUTOMATICALLY EXTENDED BY THE
NUMBER OF DAYS THAT ELAPSE DURING ANY SUSPENSION PERIOD.

 

B.             DISCONTINUED DISPOSITION.  BY ITS ACQUISITION OF REGISTRABLE
SECURITIES, THE INVESTOR AGREES THAT, UPON RECEIPT OF A NOTICE FROM THE COMPANY
OF THE OCCURRENCE OF ANY EVENT OF THE KIND DESCRIBED IN SECTION 3(U)(II)-(VI),
THE INVESTOR WILL FORTHWITH DISCONTINUE DISPOSITION OF SUCH REGISTRABLE
SECURITIES UNDER THE REGISTRATION STATEMENT UNTIL IT IS ADVISED IN WRITING BY
THE COMPANY, BUT IN NO EVENT MORE THAN TWENTY (20) CALENDAR DAYS, THAT THE USE
OF THE APPLICABLE PROSPECTUS (AS IT MAY HAVE BEEN SUPPLEMENTED OR AMENDED) MAY
BE RESUMED (A “BLACK-OUT” AND TOGETHER WITH ANY SUSPENSION PERIOD, THE “COVERED
PERIODS”). THE COMPANY SHALL BE PERMITTED TO CAUSE THE INVESTOR TO REFRAIN FROM
SELLING OR OTHERWISE TRANSFERRING OR DISPOSING OF ANY REGISTRABLE SECURITIES FOR
UP TO THREE (3) COVERED PERIODS DURING THE REGISTRATION PERIOD.  IF THE EXTENDED
REGISTRATION PERIOD IS TRIGGERED, THEN THE COMPANY SHALL BE PERMITTED TO CAUSE
THE INVESTOR TO REFRAIN FROM SELLING OR OTHERWISE TRANSFERRING OR DISPOSING OF
ANY REGISTRABLE SECURITIES FOR ONE (1) ADDITIONAL COVERED PERIOD DURING THE
EXTENDED REGISTRATION PERIOD.  THE REGISTRATION PERIOD OR EXTENDED REGISTRATION
PERIOD SHALL BE AUTOMATICALLY EXTENDED BY THE NUMBER OF DAYS THAT ELAPSE DURING
ANY BLACK-OUT.

 

C.             QUALIFIED FINANCING DISPOSITION RESTRICTION.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY, UNTIL THE EARLIER TO OCCUR OF: (I) SIX MONTHS AFTER
THE CLOSING DATE, OR (II) THE DATE THE COMPANY CLOSES ON A QUALIFIED FINANCING
TRANSACTION, THE INVESTOR WILL BE DEEMED TO HAVE AGREED, BY VIRTUE OF ITS
ACQUISITION OF REGISTRABLE SECURITIES, TO THE COMPANY’S RIGHT TO CAUSE THE
INVESTOR TO REFRAIN FROM SELLING OR OTHERWISE TRANSFERRING OR DISPOSING OF ANY
REGISTRABLE SECURITIES, AT ANY TIME FOR UP TO THIRTY (30) DAYS, UPON RECEIPT OF
A NOTICE FROM THE COMPANY THAT IT IS PLANNING TO ENTER INTO A DEFINITIVE
AGREEMENT IN CONNECTION WITH A QUALIFIED FINANCING TRANSACTION (“FINANCING
BLACK-OUT”).  THE FINANCING BLACK-OUT MAY ONLY BE EXERCISED BY THE COMPANY ON
ONE OCCASION.  THE REGISTRATION PERIOD OR EXTENDED REGISTRATION PERIOD SHALL BE
AUTOMATICALLY EXTENDED BY THE NUMBER OF DAYS THAT ELAPSE DURING ANY FINANCING
BLACK-OUT.

 

D.             TRADING VOLUME LIMITATIONS.  THE INVESTOR COVENANTS AND AGREES
THAT UNTIL THE EARLIER TO OCCUR OF: (I) SIX MONTHS AFTER THE CLOSING DATE, OR
(II) THE DATE THE COMPANY CLOSES ON A QUALIFIED FINANCING TRANSACTION, IT SHALL
BE PROHIBITED, ON ANY TRADING DAY, FROM SELLING (INCLUDING SHORT SALES) OR
OTHERWISE DISPOSING OF, WHETHER PURSUANT TO A REGISTRATION STATEMENT OR
OTHERWISE, REGISTRABLE SECURITIES HELD BY SUCH INVESTOR THAT WOULD REPRESENT
GREATER THAN TEN

 

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PERCENT (10%) OF THE AVERAGE DAILY TRADING VOLUME.  THE INVESTOR ALSO MAY SUBMIT
A REQUEST TO THE COMPANY THAT IT BE PERMITTED TO EXECUTE A BLOCK TRADE NOT
OTHERWISE PERMITTED UNDER THIS SECTION 10(D), WHICH REQUEST SHALL BE SUBJECT TO
THE PRIOR APPROVAL OF THE COMPANY, WHICH APPROVAL SHALL NOT BE UNREASONABLY
WITHHELD, CONDITIONED OR DELAYED.

 

E.             STOP ORDERS.  THE COMPANY MAY IMPOSE STOP TRANSFER INSTRUCTIONS
TO ENFORCE THE PROVISIONS OF THIS SECTION 10.

 

11.           AMENDMENT OF REGISTRATION RIGHTS.

 

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investor.  Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon the Investor and the Company.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities.  No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

 

12.           TERMINATION.

 

A.             THIS AGREEMENT SHALL TERMINATE AND BE OF NO FURTHER FORCE AND
EFFECT UPON THE EARLIER TO OCCUR OF: (I) THE DATE ON WHICH THE COMPANY
TERMINATES THE REGISTRATION OF ITS COMMON STOCK UNDER SECTION 12 OF THE 1933
ACT, OR (II) THE DATE ON WHICH THE REGISTRATION PERIOD ENDS.  NOTWITHSTANDING
THE FOREGOING, THE TERMS AND CONDITIONS OF SECTIONS 5, 6, 7, 10, 11, 12 AND 13
SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT UNTIL THE THIRTIETH (30TH) DAY
FOLLOWING THE EXPIRATION OF THE STATUTE OF LIMITATIONS APPLICABLE TO THE
VIOLATIONS IN QUESTION.

 

B.             IF AT ANY TIME THE SECURITIES PURCHASE AGREEMENT IS TERMINATED
WITHOUT A CLOSING (AS DEFINED IN THE SECURITIES PURCHASE AGREEMENT) HAVING
OCCURRED, THIS AGREEMENT WILL AUTOMATICALLY TERMINATE CONCURRENT WITH THE
TERMINATION OF THE SECURITIES PURCHASE AGREEMENT.  FOR THE AVOIDANCE OF DOUBT,
IN THE EVENT OF A TERMINATION PURSUANT TO THIS SECTION 12(B), NONE OF THE RIGHTS
OR OBLIGATIONS OF THE COMPANY OR INVESTOR WILL SURVIVE SUCH TERMINATION.

 

13.           MISCELLANEOUS.

 

A.             A PERSON IS DEEMED TO BE A HOLDER OF REGISTRABLE SECURITIES
WHENEVER SUCH PERSON OWNS OR IS DEEMED TO OWN OF RECORD SUCH REGISTRABLE
SECURITIES.  IF THE COMPANY RECEIVES CONFLICTING INSTRUCTIONS, NOTICES OR
ELECTIONS FROM TWO OR MORE PERSONS WITH RESPECT TO THE SAME REGISTRABLE
SECURITIES, THE COMPANY SHALL ACT UPON THE BASIS OF INSTRUCTIONS, NOTICE OR
ELECTION RECEIVED FROM THE REGISTERED OWNER OF SUCH REGISTRABLE SECURITIES.

 

B.             FOR ANY INVESTOR THAT IS A PARTNERSHIP, LIMITED LIABILITY COMPANY
OR CORPORATION, THE PARTNERS, MEMBERS, STOCKHOLDERS, SUBSIDIARIES, PARENTS AND
AFFILIATES OF SUCH INVESTOR, OR THE ESTATES AND FAMILY MEMBERS OF ANY SUCH
PARTNERS AND RETIRED PARTNERS AND ANY TRUSTS FOR THE BENEFIT OF ANY OF THE
FOREGOING PERSONS SHALL BE DEEMED TO BE A SINGLE “INVESTOR”, AND ANY PRO RATA
REDUCTION UNDER THIS AGREEMENT WITH RESPECT TO SUCH “INVESTOR” SHALL BE BASED
UPON THE AGGREGATE AMOUNT OF SHARES CARRYING REGISTRATION RIGHTS OWNED BY ALL
ENTITIES AND INDIVIDUALS INCLUDED IN SUCH “INVESTOR,” AS DEFINED IN THIS
SENTENCE.

 

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C.             ANY NOTICE, CONSENT, WAIVER, REQUEST, INSTRUCTION OR OTHER
COMMUNICATION REQUIRED OR PERMITTED TO BE GIVEN UNDER THE TERMS OF THIS
AGREEMENT SHALL BE IN WRITING AND WILL BE DEEMED TO HAVE BEEN DULY GIVEN: 
(I) UPON RECEIPT, WHEN DELIVERED PERSONALLY; (II) UPON RECEIPT, WHEN SENT BY
FACSIMILE (PROVIDED CONFIRMATION OF TRANSMISSION IS MECHANICALLY OR
ELECTRONICALLY GENERATED AND KEPT ON FILE BY THE SENDING PARTY); OR (III) ONE
(1) BUSINESS DAY AFTER DEPOSIT WITH A NATIONALLY RECOGNIZED OVERNIGHT DELIVERY
SERVICE, IN EACH CASE PROPERLY ADDRESSED TO THE PARTY TO RECEIVE THE SAME.  THE
ADDRESSES AND FACSIMILE NUMBERS FOR SUCH COMMUNICATIONS SHALL BE:

 

If to the Company:

 

Select Comfort Corporation
9800 59th Avenue North
Minneapolis, Minnesota 55442
Attention: Mark Kimball
Facsimile: (763) 551-6888

 

With a copy to:

 

Oppenheimer Wolff Donnelly LLP

Plaza VII, Suite 3300

45 South Seventh Street

Minneapolis, MN 55402-1609

Attention: Thomas R. Marek

Facsimile: (612) 607-7100

 

If to Legal Counsel, to its address and facsimile number provided by the holders
of Registrable Securities designating such Legal Counsel pursuant to
Section 3(c).

 

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached to the Securities Purchase Agreement, with copies to such
Buyer’s representatives as set forth on such Schedule of Buyers, or, in the case
of a Buyer or other party named above, to such other address and/or facsimile
number and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party at least 5 days prior to
the effectiveness of such change.

 

If to an Investor (other than the Buyer), to such Investor at the address and/or
facsimile number reflected in the records or the Company.

 

Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or
(C) provided by a courier or overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or deposit with a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.  Notwithstanding the foregoing, the Company or its
counsel may transmit versions of any Registration Statement (or any amendments
or supplements thereto) to Legal Counsel in satisfaction of its obligations
under Section 3(c) to permit Legal Counsel to review such Registration Statement
prior to filing (and solely for such purpose) by email to such e-mail

 

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address as has been provided for such purpose by Legal Counsel, provided that
delivery and receipt of such transmission shall be confirmed by electronic,
telephonic or other means.

 

D.             FAILURE OF ANY PARTY TO EXERCISE ANY RIGHT OR REMEDY UNDER THIS
AGREEMENT OR OTHERWISE, OR DELAY BY A PARTY IN EXERCISING SUCH RIGHT OR REMEDY,
SHALL NOT OPERATE AS A WAIVER THEREOF.

 

E.             ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTIONS)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE
STATE OF DELAWARE. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING THE STATE OF DELAWARE, FOR
THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE
VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY DEPOSIT WITH A
NATIONALLY RECOGNIZED OVERNIGHT DELIVERY SERVICE, TO SUCH PARTY AT THE ADDRESS
FOR SUCH NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW.  IF ANY PROVISION OF THIS AGREEMENT SHALL BE
INVALID OR UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR
UNENFORCEABILITY SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF THE
REMAINDER OF THIS AGREEMENT IN THAT JURISDICTION OR THE VALIDITY OR
ENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT IN ANY OTHER JURISDICTION. 
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

F.              THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS CONSTITUTE
THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND THEREOF.  THERE ARE NO RESTRICTIONS, PROMISES, WARRANTIES OR
UNDERTAKINGS, OTHER THAN THOSE SET FORTH OR REFERRED TO HEREIN AND THEREIN. 
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS AMONG THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF.

 

G.             SUBJECT TO THE REQUIREMENTS OF SECTION 9, THIS AGREEMENT SHALL
INURE TO THE BENEFIT OF AND BE BINDING UPON THE PERMITTED SUCCESSORS AND ASSIGNS
OF EACH OF THE PARTIES HERETO.

 

H.             THE HEADINGS IN THIS AGREEMENT ARE FOR CONVENIENCE OF REFERENCE
ONLY AND SHALL NOT FORM PART OF, OR AFFECT THE MEANING OR INTERPRETATION OF,
THIS AGREEMENT.

 

I.              THIS AGREEMENT AND ANY AMENDMENTS HERETO MAY BE EXECUTED AND
DELIVERED IN TWO OR MORE IDENTICAL COUNTERPARTS, AND BY THE DIFFERENT PARTIES
HERETO IN SEPARATE COUNTERPARTS, EACH OF WHICH WHEN EXECUTED SHALL BE DEEMED TO
BE AN ORIGINAL, BUT ALL OF WHICH

 

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TAKEN TOGETHER SHALL CONSTITUTE ONE AND THE SAME AGREEMENT. THIS AGREEMENT SHALL
BECOME EFFECTIVE AND BINDING UPON EACH PARTY HERETO WHEN COUNTERPARTS HAVE BEEN
SIGNED BY EACH PARTY HERETO AND DELIVERED TO THE OTHER PARTIES HERETO, IT BEING
UNDERSTOOD THAT ALL PARTIES NEED NOT SIGN THE SAME COUNTERPART.  IN THE EVENT
THAT ANY SIGNATURE TO THIS AGREEMENT OR ANY AMENDMENT HERETO IS DELIVERED BY
FACSIMILE TRANSMISSION OR BY E-MAIL DELIVERY OF A “.PDF” FORMAT DATA FILE, SUCH
SIGNATURE SHALL CREATE A VALID AND BINDING OBLIGATION OF THE PARTY EXECUTING (OR
ON WHOSE BEHALF SUCH SIGNATURE IS EXECUTED) WITH THE SAME FORCE AND EFFECT AS IF
SUCH FACSIMILE OR “.PDF” SIGNATURE PAGE WERE AN ORIGINAL THEREOF.  NO PARTY
HERETO SHALL RAISE THE USE OF A FACSIMILE MACHINE OR E-MAIL DELIVERY OF A “.PDF”
FORMAT DATA FILE TO DELIVER A SIGNATURE TO THIS AGREEMENT OR ANY AMENDMENT
HERETO OR THE FACT THAT SUCH SIGNATURE WAS TRANSMITTED OR COMMUNICATED THROUGH
THE USE OF A FACSIMILE MACHINE OR E-MAIL DELIVERY OF A “.PDF” FORMAT DATA FILE
AS A DEFENSE TO THE FORMATION OR ENFORCEABILITY OF A CONTRACT AND EACH PARTY
HERETO FOREVER WAIVES ANY SUCH DEFENSE.

 

J.              EACH PARTY SHALL DO AND PERFORM, OR CAUSE TO BE DONE AND
PERFORMED, ALL SUCH FURTHER ACTS AND THINGS, AND SHALL EXECUTE AND DELIVER ALL
SUCH OTHER AGREEMENTS, CERTIFICATES, INSTRUMENTS AND DOCUMENTS, AS THE OTHER
PARTY MAY REASONABLY REQUEST IN ORDER TO CARRY OUT THE INTENT AND ACCOMPLISH THE
PURPOSES OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

K.             ALL CONSENTS AND OTHER DETERMINATIONS TO BE MADE BY THE INVESTOR
PURSUANT TO THIS AGREEMENT SHALL BE MADE ONLY BY THE INVESTOR.

 

L.              THE LANGUAGE USED IN THIS AGREEMENT WILL BE DEEMED TO BE THE
LANGUAGE CHOSEN BY THE PARTIES TO EXPRESS THEIR MUTUAL INTENT AND NO RULES OF
STRICT CONSTRUCTION WILL BE APPLIED AGAINST ANY PARTY.

 

M.            EACH BUYER AND EACH HOLDER OF THE REGISTRABLE SECURITIES SHALL
HAVE ALL RIGHTS AND REMEDIES SET FORTH IN THE TRANSACTION DOCUMENTS AND ALL
RIGHTS AND REMEDIES THAT SUCH BUYERS AND HOLDERS HAVE BEEN GRANTED AT ANY TIME
UNDER ANY OTHER AGREEMENT OR CONTRACT AND ALL OF THE RIGHTS THAT SUCH BUYERS AND
HOLDERS HAVE UNDER ANY LAW.  ANY PERSON HAVING ANY RIGHTS UNDER ANY PROVISION OF
THIS AGREEMENT SHALL BE ENTITLED TO ENFORCE SUCH RIGHTS SPECIFICALLY (WITHOUT
POSTING A BOND OR OTHER SECURITY OR PROVING ACTUAL DAMAGES), TO RECOVER DAMAGES
BY REASON OF ANY BREACH OF ANY PROVISION OF THIS AGREEMENT AND TO EXERCISE ALL
OTHER RIGHTS GRANTED BY LAW OR IN EQUITY.

 

N.             THIS AGREEMENT IS INTENDED FOR THE BENEFIT OF THE PARTIES HERETO
AND THEIR RESPECTIVE PERMITTED SUCCESSORS AND ASSIGNS AND, TO THE EXTENT
PROVIDED IN SECTIONS 6(A) AND 6(B) HEREOF, THE INVESTOR, ANY UNDERWRITER, AND
THE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, MANAGERS, EMPLOYEES, AGENTS,
REPRESENTATIVES OF, AND EACH PERSON, IF ANY, WHO CONTROLS ANY INVESTOR OR
UNDERWRITER WITHIN THE MEANING OF THE 1933 ACT OR THE 1934 ACT AND EACH OF THE
COMPANY’S DIRECTORS, EACH OF THE COMPANY’S OFFICERS WHO SIGNS THE REGISTRATION
STATEMENT, AND EACH PERSON, IF ANY, WHO CONTROLS THE COMPANY WITHIN THE MEANING
OF THE 1933 ACT OR THE 1934 ACT, AND IS NOT FOR THE BENEFIT OF, NOR MAY ANY
PROVISION HEREOF BE ENFORCED BY, ANY OTHER PERSON.

 

O.             UNLESS THE CONTEXT OTHERWISE REQUIRES, (I) ALL REFERENCES TO
SECTIONS, SCHEDULES OR EXHIBITS ARE TO SECTIONS, SCHEDULES OR EXHIBITS CONTAINED
IN OR ATTACHED TO THIS AGREEMENT, (II) WORDS IN THE SINGULAR OR PLURAL INCLUDE
THE SINGULAR AND PLURAL AND PRONOUNS STATED IN EITHER THE MASCULINE, THE
FEMININE OR NEUTER GENDER SHALL INCLUDE THE MASCULINE,

 

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FEMININE AND NEUTER AND (III) THE USE OF THE WORD “INCLUDING” IN THIS AGREEMENT
SHALL BE BY WAY OF EXAMPLE RATHER THAN LIMITATION.

 

*   *   *   *   *

 

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IN WITNESS WHEREOF, each party hereto has caused this Registration Rights
Agreement to be duly executed as of the date first written above.

 

 

 

COMPANY:

 

 

 

Select Comfort Corporation

 

 

 

 

 

By:

/s/ James Raabe

 

Name:

James Raabe

 

Title:

Chief Financial Officer

 

 

 

 

 

BUYERS:

 

 

 

Sterling SC Investor, LLC

 

By:  Sterling Capital Partners III, L.P.

 

Its:  Sole Member

 

 

 

By: SC Partners III, L.P.

 

Its:  General Partner

 

 

 

By:  Sterling Capital Partners III, LLC

 

Its:   General Partner

 

 

 

By:

/s/ R. Christopher Hoehn-Saric

 

Name:

R. Christopher Hoehn-Saric

 

Title:

Senior Managing Director

 

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EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

[TRANSFER AGENT]

Attn:

 

Re:          Select Comfort Corporation

 

Ladies and Gentlemen:

 

We are counsel to Select Comfort Corporation, a Minnesota corporation (the
“Company”), and have represented the Company in connection with that certain
Securities Purchase Agreement (the “Purchase Agreement”) entered into by and
among the Company and the buyers named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders shares of Common Stock of
the Company.  Pursuant to the Purchase Agreement, the Company also has entered
into a Registration Rights Agreement with the Holders (the “Registration Rights
Agreement”), pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), under the Securities Act of 1933, as amended (the “1933 Act”).  In
connection with the Company’s obligations under the Registration Rights
Agreement, on                                , 200 , the Company filed a
Registration Statement on Form [S-    ] (File
No. 333-                          ) (the “Registration Statement”) with the
Securities and Exchange Commission (the “SEC”) relating to the Registrable
Securities, which names each of the Holders as a selling stockholder thereunder.

 

In connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC, and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

 

 

Very truly yours,

 

 

 

[ISSUER’S COUNSEL]

 

 

 

By:

 

cc:           [LIST NAMES OF HOLDERS]

 

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