EXHIBIT 10.4

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of October 20, 2010, between Comstock Mining Inc., a Nevada corporation (the
“Company”), and each of the Persons who are signatories hereto (each such
purchaser, a “Purchaser” and, collectively, the “Purchasers”).

This Agreement is made pursuant to the Purchase Agreement (as defined herein).

The Company and each Purchaser hereby agrees as follows:

1.           Definitions.  Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement.  As used in this Agreement, the following
terms shall have the following meanings:
 
“Advice” shall have the meaning set forth in Section 6(c).

“Additional Dividends” shall have the meaning set forth in Section 6(a).

“Commission” means the U.S. Securities and Exchange Commission.

“Effectiveness Period” shall have the meaning set forth in Section 2(b).

“FINRA” means the Financial Industry Regulatory Authority.

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

“Indemnified Party” shall have the meaning set forth in Section 5(c).

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Losses” shall have the meaning set forth in Section 5(a).

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated by the Commission pursuant to
the Securities Act), as amended or supplemented, with respect to the terms of
the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

“Purchase Agreement” means the Securities Purchase Agreement, dated as of the
date hereof, among the Company and the initial Holders party hereto, as amended,
modified or supplemented from time to time in accordance with its terms.

“Registration Default” shall have the meaning set forth in Section 6(a).

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4

“Registrable Securities” means, as of any date of determination, (a) the
Underlying Shares with respect to the Preferred Stock; (b) any securities issued
or then issuable upon any stock split, dividend or other
distribution,  recapitalization or similar event with respect to the foregoing;
provided, however, that any such Registrable Securities shall cease to be
Registrable Securities (and the Company shall not be required to maintain the
effectiveness of any, or file another, Registration Statement hereunder with
respect thereto) for so long as (i) a Registration Statement with respect to the
sale of such Registrable Securities is declared effective by the Commission
under the Securities Act and such Registrable Securities have been disposed of
by the Holder in accordance with such effective Registration Statement, (ii)
such Registrable Securities have been previously sold in accordance with Rule
144, or (iii) such securities become eligible for resale without volume or
manner-of-sale restrictions (provided the Company is current with the public
information requirements as determined by the counsel to the Company as set
forth in a written opinion letter to such effect, addressed, delivered and
acceptable to the Transfer Agent and the affected Holders (assuming that such
securities and any securities issuable upon exercise, conversion or exchange of
which, or as a dividend upon which, such securities were issued or are issuable,
were at no time held by any Affiliate of the Company), as reasonably determined
by the Company, upon the advice of counsel to the Company.

“Registration Statement” means any registration statement required to be filed
hereunder pursuant to Section 2 (Registration) or Section 6(d) (Piggyback
Registrations), including (in each case) the Prospectus, amendments and
supplements to any such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in any such registration
statement.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section
3(a).

“Significant Holder” shall have the meaning set forth in Section 3(a).

“10-K Filing Date” shall have the meaning set forth in Section 2(a).

2.           Registration.
 
(a)           The Company shall, at its own cost, prepare and, not later than 45
days after (or if the 45th day is not a business day, the first business day
thereafter) the date upon which the Company’s annual report on Form 10-K for the
fiscal year ending December 31, 2010 is filed with the Commission (the “10-K
Filing Date”), file with the Commission a Registration Statement covering the
resale of the Registrable Securities by each Holder.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
(b)           The Registration Statement filed hereunder shall be on an
appropriate form as determined by the Board of Directors.  Subject to the terms
of this Agreement, the Company shall cause a Registration Statement filed
hereunder to be declared effective under the Securities Act as promptly as
possible after the filing thereof but in no event later than the one (1) year
anniversary of the Closing Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities Act until the
earlier of: (i) the date on which all Registrable Securities covered by such
Registration Statement may be resold without registration and without regard to
any volume or manner-of-sale limitations by reason of Rule 144, without the
requirement for the Company to be in compliance with the current public
information under Rule 144 or any other rule of similar effect; (ii) the date on
which all Registrable Securities covered by such Registration Statement have
been sold pursuant to a Prospectus or Rule 144 or any other rule of similar
effect; or (iii) as otherwise mutually agreed to between the parties hereto (the
“Effectiveness Period”).  The Company shall telephonically request effectiveness
of a Registration Statement as of 5:00 p.m. New York City time on a Trading
Day.  The Company shall immediately notify the Holders via facsimile or by
e-mail of the effectiveness of such Registration Statement on the same Trading
Day that the Company telephonically confirms effectiveness with the Commission,
which shall be the date requested for effectiveness of such Registration
Statement.  The Company shall, by 9:30 a.m. New York City time on the Trading
Day after the effective date of such Registration Statement, file a final
Prospectus with the Commission as required by Rule 424.
 
(c)           If, and for so long as the Company shall elect to pay dividends in
the form of Common Stock, the Company shall take the following actions:
 
(i)          The Company shall, at its cost, as promptly as practicable file
with the Commission and thereafter shall use its commercially reasonable efforts
to cause to be declared effective (unless it becomes effective automatically
upon filing) a registration statement (the “Shelf Registration Statement”) on an
appropriate form under the Securities Act relating to the offer and sale of
Registrable Securities delivered to Holders in connection with dividends
declared in the form of Common Stock, by the Holders thereof from time to time
in accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act; provided, however,
that no Holder (other than Holders party to this Agreement on the date hereof)
shall be entitled to have the Registrable Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by
all the provisions of this Agreement applicable to such Holder.
 
(ii)         The Company shall use its commercially reasonable efforts to keep
the Shelf Registration Statement continuously effective, or replace such Shelf
Registration Statement, in order to permit the prospectus included therein to be
lawfully delivered by the Holders of the relevant Securities, for such period of
time that will terminate when all the Securities covered by the Shelf
Registration Statement (i) have been sold pursuant thereto or (ii) can be sold
pursuant to Rule 144 under the Securities Act, or any successor rule thereof,
without any limitations under clauses (c), (e), (f) and (h) of Rule 144.
 
(iii)        Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement, amendment or supplement, (i) to comply
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations of the Commission and (ii) not to contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
 
(iv)        Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall be entitled to postpone for a reasonable period of
time (not to exceed ninety (90) days) the filing or effectiveness of, or suspend
for a reasonable period of time (not to exceed ninety (90) days) the rights of
the Holders to make offers or sales pursuant to, any Shelf Registration
Statement otherwise required to be prepared, filed and made and kept effective
by it hereunder if there has been a determination by the Board of Directors that
filing, amending or supplementing, or making offers or sales pursuant to, such
Shelf Registration Statement would have a material adverse effect on (i) any
proposal or plan by the Company or any of its subsidiaries to engage in any
financing, acquisition, divestiture, joint venture, merger, consolidation,
tender offer or other significant transaction or (ii) the pursuit or defense of
any material third party claim, and the Company advises the Holders of such
postponement or suspension; provided, however, that the Company shall have the
right to so postpone only one (1) time during any period of twelve (12)
consecutive months.  If so advised, the Holders shall comply therewith and, if
in connection with such advice, the Holders receive material non-public
information from the Company, they shall keep such information confidential and
shall not effect (or allow others for whom they could reasonably be expected to
have responsibility to effect) transactions in securities of the Company until
such information becomes public or, if sooner, the expiration of such ninety
(90) day period.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
3.           Registration Procedures.  In connection with the Company’s
registration obligations hereunder, the Company shall:
 
(a)         Not less than ten (10) Trading Days prior to the filing of such
Registration Statement and not less than three (3) Trading Days prior to the
filing of any related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be incorporated
therein by reference), the Company shall (i) furnish to each Holder that has
Registrable Securities constituting at least 35% of the aggregate Registrable
Securities included in such Registration Statement (each, “Significant Holder”)
copies of all such documents proposed to be filed, which documents (other than
those incorporated or deemed to be incorporated by reference) will be subject to
the review of such Significant Holders, and (ii) cause its officers and
directors, counsel and independent registered public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to each Significant Holder, to conduct a reasonable investigation within
the meaning of the Securities Act.  The Company shall not file a Registration
Statement or any amendments or supplements thereto to which the Significant
Holders shall reasonably object in good faith, provided that, the Company is
notified of such objection in writing no later than five (5) Trading Days after
the Significant Holders have been so furnished copies of a Registration
Statement or one (1) Trading Day after the Significant Holders have been so
furnished copies of any related Prospectus or amendments or supplements
thereto.  Each Holder agrees to furnish to the Company a completed questionnaire
in the form attached to this Agreement as Annex A (a “Selling Stockholder
Questionnaire”) promptly after it has been requested by the Company, but in no
event less than five (5) Trading Days prior to the filing date of the
Registration Statement.
 
(b)         (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep a Registration Statement
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities, (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
424, (iii) respond as promptly as reasonably possible to any comments received
from the Commission with respect to a Registration Statement or any amendment
thereto and provide as promptly as reasonably possible to the Significant
Holders true and complete copies of all correspondence from and to the
Commission relating to a Registration Statement (provided that, the Company may
excise any information contained therein which would constitute material
non-public information as to any Significant Holder which has not executed a
confidentiality agreement with respect thereto with the Company), and (iv)
comply in all material respects with the applicable provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
(c)         Provide notice to the Holders whose Registrable Securities are to be
sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be
accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably possible (and, in
the case of clause (i)(A) below, not less than one (1) Trading Day prior to such
filing) and (if requested by any such Person) confirm such notice in writing no
later than one (1) Trading Day following the day:
 
(i)          (A)          with respect to the Significant Holders and all other
Holders whose Registrable Securities are to be sold in such registration, notice
of when a Prospectus or any Prospectus supplement or post-effective amendment to
a Registration Statement is proposed to be filed;
 
(B)         with respect only to the Significant Holders, notice when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and
 
(C)         with respect to the Significant Holders and all other Holders whose
Registrable Securities are to be sold in such registration, notice of when the
Registration Statement or any post-effective amendment thereto has become
effective;
 
(ii)         with respect only to the Significant Holders, notice of any request
by the Commission or any other federal or state governmental authority for
amendments or supplements to a Registration Statement or Prospectus or for
additional information;
 
(iii)        with respect to the Significant Holders and all other Holders whose
Registrable Securities are to be sold in such registration, notice of the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose;
 
(iv)        with respect to the Significant Holders and all other Holders whose
Registrable Securities are to be sold in such registration, notice 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;
 
(v)         with respect to the Significant Holders and all other Holders whose
Registrable Securities are to be sold in such registration, notice of the
occurrence of any event or passage of time that makes the financial statements
included in a Registration Statement ineligible for inclusion therein or any
statement made in a Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement,
Prospectus or other documents so that, in the case of a Registration Statement
or the Prospectus, as the case may be, 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, in light of the
circumstances under which they were made, not misleading; and

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
(vi)        with respect to the Significant Holders and all other Holders whose
Registrable Securities are to be sold in such registration, notice of the
occurrence or existence of any pending corporate development with respect to the
Company that the Company believes may be material and that, in the determination
of the Company, makes it not in the best interest of the Company to allow
continued availability of a Registration Statement or Prospectus, provided that,
any and all of such information shall remain confidential to each Holder until
such information otherwise becomes public, unless disclosure by a Holder is
required by law; provided, further, that notwithstanding each Holder’s agreement
to keep such information confidential, each such Holder makes no acknowledgement
that any such information is material, non-public information.
 
(d)         Use its best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order stopping or suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
 
(e)         Furnish to each Holder, without charge, at least one conformed copy
of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical
form.
 
(f)          Subject to the terms of this Agreement, the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving of any notice pursuant to Section
3(d).
 
(g)         The Company shall cooperate with any broker-dealer through which a
Holder proposes to resell its Registrable Securities in effecting a filing with
the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as
requested by any such Holder, and the Company shall pay the filing fee required
by such filing within two (2) Business Days of request therefor.
 
(h)         Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.
 
(i)          If requested by a Holder, cooperate with such Holder to facilitate
and coordinate with the Company’s transfer agent the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holder may request.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
(j)          Upon the occurrence of any event contemplated by Section 3(c), as
promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and
its stockholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will 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.  If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 3(c) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus.  The Company will use its best efforts to
ensure that the use of the Prospectus may be resumed as promptly as is
reasonably practicable.  The Company shall be entitled to exercise its right
under this Section 3(j) to suspend the availability of a Registration Statement
and Prospectus for a period not to exceed 60 calendar days (which need not be
consecutive days) in any 12-month period.
 
(k)         Comply with all applicable rules and regulations of the Commission.
 
(l)          The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the
natural persons thereof that have voting and dispositive control over the
shares.
 
4.           Registration Expenses.  All fees and expenses incident to the
performance of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, reasonable fees and expenses of the Company’s
counsel and independent registered public accountants) (A) with respect to
filings made with the Commission, (B) with respect to filings required to be
made with any Trading Market on which the Common Stock is then listed for
trading, (C) in compliance with applicable state securities or Blue Sky laws
reasonably agreed to by the Company in writing (including, without limitation,
fees and disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities) and (D) with respect
to any sales of Registrable Securities in an underwritten offering any filing
fees payable to FINRA pursuant to FINRA Rule 5110, so long as the broker is
receiving no more than a customary brokerage commission in connection with such
sale, (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities), (iii) fees and disbursements
of counsel for the Company, (iv) Securities Act liability insurance, if the
Company so desires such insurance, and (v) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement.  In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.  In no event shall
the Company be responsible for any broker or similar commissions of any Holder
or, except to the extent provided for in the Transaction Documents, any legal
fees or other costs of the Holders.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
5.           Indemnification.
 
(a)         Indemnification by the Company.  The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees (and any other Persons with a functionally equivalent role of a
Person holding such titles, notwithstanding a lack of such title or any other
title) of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, members, stockholders, partners, agents and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1) any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, (2) any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading or (3) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law, or any rule or
regulation thereunder, in connection with the performance of its obligations
under this Agreement, except to the extent, but only to the extent, that (i)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use
in a Registration Statement, such Prospectus or in any amendment or supplement
thereto (it being understood that the Holder has approved Annex A hereto for
this purpose) or (ii) in the case of an occurrence of an event of the type
specified in Section 3(c)(iii)-(vi), the use by such Holder of an outdated,
defective or otherwise unavailable Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated, defective or otherwise
unavailable for use by such Holder and prior to the receipt by such Holder of
the Advice contemplated in Section 6(c).  The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding arising from
or in connection with the transactions contemplated by this Agreement of which
the Company is aware.
 
(b)         Indemnification by Holders.  Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, 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, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or relating to: (x) such Holder’s failure
to comply with the prospectus delivery requirements of the Securities Act, (y)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or (z) any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion in
such Registration Statement or such Prospectus or (ii) in the case of an
occurrence of an event of the type specified in Section 3(c)(iii)-(vi), the use
by such Holder of an outdated, defective or otherwise unavailable Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated, defective or otherwise unavailable for use by such Holder and prior to
the receipt by such Holder of the Advice contemplated in Section 6(c).  A Holder
shall notify the Company promptly of the institution, thread or assertion of any
Proceeding arising from or in connection with the transactions contemplated by
this Agreement of which the Holder is aware.  In no event shall the liability of
any selling Holder under this Section 5(b) be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
(c)         Conduct of Indemnification Proceedings.  If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that, the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have prejudiced the Indemnifying Party.
 
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses, (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding, or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying Party).  The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed.  No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten (10) Trading Days of written notice thereof to
the Indemnifying Party; provided, that, the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined not to be entitled to indemnification hereunder.

(d)         Contribution.  If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the
amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party 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 and Indemnified
Party shall 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 relates 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 shall
be deemed to include, subject to the limitations set forth in this Agreement,
any reasonable attorneys’ or other fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section 5 was available to such party in accordance with its terms.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(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 provisions of this Section 5(d), no Holder shall
be required to contribute pursuant to this Section 5(d), in the aggregate, any
amount in excess of the amount by which the net proceeds actually received by
such Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.

The indemnity and contribution agreements contained in this Section 5 are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

6.           Miscellaneous.
 
(a)         Remedies.  (i)  Additional Dividends Under Certain
Circumstances.  Additional dividends (the “Additional Dividends”) with respect
to the Preferred Stock shall be assessed if the Registration Statement is not
declared effective by the Commission on or prior to the one (1) year anniversary
of the Closing Date as provided in Section 2(b) hereof (such event, a
“Registration Default”). Additional Dividends shall accrue on the Preferred
Stock over and above the dividend rate set forth in the title of the Securities
from and including the date on which such Registration Default shall occur to
but excluding the date on which such Registration Default has been cured. The
rate of the Additional Dividends will be 1.00% per annum for the first 30-day
period (or pro rata portion thereof) immediately following the occurrence of a
Registration Default, and such rate will increase by an additional 1.00% per
annum with respect to each subsequent 30-day period (or pro rata portion
thereof) until such Registration Default has been cured. Additional Dividends
shall be paid on Dividend Payment Dates. Such Additional Dividends will be in
addition to any other dividends payable from time to time with respect to the
Preferred Stock.
 
(ii)         In the event of a breach by the Company or by a Holder of any of
their respective obligations under this Agreement, each Holder or the Company,
as the case may be, in addition to being entitled to exercise all rights granted
by law and under this Agreement, including recovery of damages, shall be
entitled to specific performance of its rights under this Agreement.  Each of
the Company and each Holder agrees that monetary damages would not provide
adequate compensation for any losses 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 shall not
assert or shall waive the defense that a remedy at law would be adequate.
 
(b)         Compliance.  Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to a Registration
Statement.
 
(c)         Discontinued Disposition.  By its acquisition of Registrable
Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(c)(iii)
through (vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised in
writing (the “Advice”) by the Company that the use of the applicable Prospectus
(as it may have been supplemented or amended) may be resumed.  The Company will
use its best efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable.  The Company agrees and acknowledges that any
periods during which the Holder is required to discontinue the disposition of
the Registrable Securities hereunder shall be subject to the provisions of
Section 3(b).

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
(d)         Piggy-Back Registrations.  If, at any time during the Effectiveness
Period, there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen days after the date
of the delivery of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; provided, however,
that the Company shall not be required to register any Registrable Securities
pursuant to this Section 6(d) that are eligible for resale pursuant to Rule 144
promulgated by the Commission pursuant to the Securities Act or that are the
subject of a then effective Registration Statement.
 
(e)         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 same shall be in writing and signed by the Company and the
Holders of at least 85% of the then outstanding Registrable Securities
(including, for this purpose any Registrable Securities issuable upon exercise
or conversion of any Security issued and issuable under the Purchase
Agreement).  If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in compliance with
the previous sentence, then the number of Registrable Securities to be
registered for each Holder shall be reduced pro rata among all Holders and each
Holder shall have the right to designate which of its Registrable Securities
shall be omitted from such Registration Statement.  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 a Holder or some Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by such Holder or Holders of all of the Registrable Securities to which
such waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the first sentence of this Section 6(e).
 
(f)          Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.
 
(g)         Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder.  The Company may not
assign (except by merger) its rights or obligations hereunder without the prior
written consent of all of the Holders of the then outstanding Registrable
Securities.  Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under Section 5.6 of the Purchase
Agreement.
 
(h)         No Inconsistent Agreements.  Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof.  Neither the Company nor any of its
Subsidiaries has previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that have not been
satisfied in full.

 

--------------------------------------------------------------------------------

 

EXHIBIT 10.4
 
(i)          Execution and Counterparts.  This Agreement may be executed in two
or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart.  In the event that any
signature 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.
 
(j)          Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.
 
(k)         Cumulative Remedies.  The remedies provided herein are cumulative
and not exclusive of any other remedies provided by law.
 
(l)          Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable 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 that may be hereafter declared invalid, illegal, void or
unenforceable.
 
(m)        Headings. The headings in this Agreement are for convenience only, do
not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
 
(n)         Independent Nature of Holders’ Obligations and Rights.  The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any proceeding for such purpose.

********************

 

--------------------------------------------------------------------------------