Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
          This Registration Rights Agreement (this “Agreement”) is made and
entered into as of September 25, 2006 and amended and restated as of August 28,
2007, by and between Silicon Mountain Holdings, Inc. (the “Company”), and Laurus
Master Fund, Ltd. (the “Purchaser”).
          This Agreement is made pursuant to the Security and Purchase
Agreement, dated as of the date hereof, by and among the Purchaser, the Company
and various subsidiaries of the Company (as amended, restated, modified or
supplemented from time to time, the “Security Agreement”), and pursuant to the
Secured Convertible Term Note and Warrants referred to therein.
          The Company and the Purchaser hereby agree as follows:
     1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Security Agreement shall have the meanings given such
terms in the Security Agreement. As used in this Agreement, the following terms
shall have the following meanings:
          “Commission” means the Securities and Exchange Commission.
          “Common Stock” means shares of the Company’s common stock, par value
$.01 per share.
          “Effectiveness Date” means, (i) with respect to the Registration
Statement required to be filed in connection with the shares of Common Stock
issuable upon conversion of the Secured Convertible Term Note and exercise of
the Warrants issued on the date hereof, a date no later than one hundred eighty
(180) days following the Public Transaction Closing Date and (ii) with respect
to each additional Registration Statement required to be filed hereunder (if
any), a date no later than sixty (60) days following the applicable Filing
Date..
          “Effectiveness Period” has the meaning set forth in Section 2(a).
          “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and any successor statute.
          “Filing Date” means, with respect to (1) with respect to the
Registration Statement required to be filed in connection with the shares of
Common Stock issuable upon conversion of the Secured Convertible Term Note and
exercise of the Warrants issued on the date hereof, sixty (60) days following
the Public Transaction Closing Date (2) the Registration Statement required to
be filed in connection with the shares of Common Stock issuable to the Holder
upon exercise of a Warrant (other than the Warrant issued on the date hereof),
the date which is sixty (60) days after the issuance of such Warrant, and
(3) with respect to the Registration Statement required to be filed in
connection with the shares of Common Stock issuable to the Holder as a result of
adjustments to the Fixed Conversion Price made pursuant to the Secured
Convertible Term Note or to the Exercise Price made pursuant to the Warrant,
sixty (60) days after the occurrence of such event or the date of the adjustment
of the Fixed Conversion Price or Exercise Price.
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          “Holder” or “Holders” means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities, other then
those purchasing Registrable Securities in a market transaction.
          “Indemnified Party” has the meaning set forth in Section 5(c).
          “Indemnifying Party” has the meaning set forth in Section 5(c).
          “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
          “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 under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
          “Public Transaction Closing Date” shall have the meaning provided such
term in the Security Agreement.
          “Registrable Securities” means the shares of Common Stock issuable
upon conversion of the Secured Convertible Term Note and the exercise of the
Warrants.
          “Registration Statement” means each registration statement required to
be filed hereunder, including the Prospectus therein, amendments and supplements
to 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 such registration statement.
          “Rule 144” means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
          “Rule 415” means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
          “Secured Convertible Term Note” shall have the meaning set forth in
the Security Agreement.
          “Securities Act” means the Securities Act of 1933, as amended, and any
successor statute.
          “Security Agreement” has the meaning given to such term in the
Preamble hereto.
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          “Trading Market” means any of the NASD Over The Counter Bulletin
Board, NASDAQ Capital Market, the NASDAQ National Market, the American Stock
Exchange or the New York Stock Exchange
          “Warrants” means the Common Stock purchase warrants issued in
connection with the Security Agreement, whether on the date thereof or
thereafter.
     2. Registration.
          (a) On or prior to each Filing Date, the Company shall prepare and
file with the Commission a Registration Statement covering the Registrable
Securities for a selling stockholder resale offering to be made on a continuous
basis pursuant to Rule 415. Each Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith). The Company shall cause each
Registration Statement to become effective and remain effective as provided
herein. The Company shall use its best efforts to cause each Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event no later than the
Effectiveness Date. The Company shall use its best efforts to keep each
Registration Statement continuously effective under the Securities Act until the
date which is the earlier date of when (i) all Registrable Securities covered by
such Registration Statement have been sold or (ii) all Registrable Securities
covered by such Registration Statement may be sold immediately without
registration under the Securities Act and without volume restrictions pursuant
to Rule 144(k), as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent and the affected Holders (each, an “Effectiveness Period”).
          (b) If: (i) the Registration Statement is not filed on or prior to the
Filing Date; (ii) the Registration Statement is not declared effective by the
Commission by the Effectiveness Date; (iii) after the Registration Statement is
filed with and declared effective by the Commission, the Registration Statement
ceases to be effective (by suspension or otherwise) as to all Registrable
Securities to which it is required to relate at any time prior to the expiration
of the Effectiveness Period (without being succeeded immediately by an
additional registration statement filed and declared effective) for a period of
time which shall exceed 30 days in the aggregate per year or more than 20
consecutive calendar days (defined as a period of 365 days commencing on the
date the Registration Statement is declared effective); or (iv) the Common Stock
is not listed or quoted, or is suspended from trading on any Trading Market for
a period of three (3) consecutive Trading Days (provided the Company shall not
have been able to cure such trading suspension within 30 days of the notice
thereof or list the Common Stock on another Trading Market); (any such failure
or breach being referred to as an “Event,” and for purposes of clause (i) or
(ii) the date on which such Event occurs, or for purposes of clause (iii) the
date which such 30 day or 20 consecutive day period (as the case may be) is
exceeded, or for purposes of clause (iv) the date on which such three
(3) Trading Day period is exceeded, being referred to as “Event Date”), then
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as liquidated damages and not as a penalty, equal to 0.5% for
each thirty (30) day period (prorated for partial periods) on a daily basis of
the original principal amount of the Secured Convertible Term Note; provided
that, the maximum aggregate amount of
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liquidated damages that may be charged to the Company pursuant to this Section
2(b) shall not exceed 10% of the initial Principal Amount of the Secured
Convertible Term Note. While such Event continues, such liquidated damages shall
be paid not less often than each thirty (30) days. Any unpaid liquidated damages
as of the date when an Event has been cured by the Company shall be paid within
three (3) days following the date on which such Event has been cured by the
Company.
          (c) Within three business days of the Effectiveness Date, the Company
shall cause its counsel to issue a blanket opinion to the same effect as the
form attached hereto as Exhibit A, to the transfer agent stating that the shares
are subject to an effective registration statement and can be reissued free of
restrictive legend upon notice of a sale by the Purchaser and confirmation by
the Purchaser that it has complied with the prospectus delivery requirements,
provided that the Company has not advised the transfer agent orally or in
writing that the opinion has been withdrawn. Copies of the blanket opinion
required by this Section 2(b) shall be delivered to the Purchaser within the
time frame set forth above.
     3. Registration Procedures. If and whenever the Company is required by the
provisions hereof to effect the registration of any Registrable Securities under
the Securities Act, the Company will, as expeditiously as possible:
          (a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities, respond as promptly as possible to any
comments received from the Commission, and use its best efforts to cause such
Registration Statement to become and remain effective for the Effectiveness
Period with respect thereto, and promptly provide to the Purchaser copies of all
filings and Commission letters of comment relating thereto;
          (b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such Registration Statement and to keep such Registration Statement effective
until the expiration of the Effectiveness Period applicable to such Registration
Statement;
          (c) furnish to the Purchaser such number of copies of the Registration
Statement and the Prospectus included therein (including each preliminary
Prospectus) as the Purchaser reasonably may request to facilitate the public
sale or disposition of the Registrable Securities covered by such Registration
Statement;
          (d) use its best efforts to register or qualify the Purchaser’s
Registrable Securities covered by such Registration Statement under the
securities or “blue sky” laws of such jurisdictions within the United States as
the Purchaser may reasonably request, provided, however, that the Company shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
          (e) list the Registrable Securities covered by such Registration
Statement with any securities exchange on which the Common Stock of the Company
is then listed;
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          (f) immediately notify the Purchaser at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the Prospectus contained in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing; and
          (g) make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, all publicly available,
non-confidential financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company’s officers, directors and
employees to supply all publicly available, non-confidential information
reasonably requested by the attorney, accountant or agent of the Purchaser.
     4. Registration Expenses. All expenses relating to the Company’s compliance
with Sections 2 and 3 hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or “blue sky” laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, and fees of, and disbursements incurred by, (so
long as such fees and disbursements do not exceed $7,500) one counsel for the
Holders, are called “Registration Expenses”. All selling commissions applicable
to the sale of Registrable Securities, including any fees and disbursements of
any special counsel to the Holders beyond those included in Registration
Expenses, are called “Selling Expenses.” The Company shall only be responsible
for all Registration Expenses.
     5. Indemnification.
          (a) In the event of a registration of any Registrable Securities under
the Securities Act pursuant to this Agreement, the Company will indemnify and
hold harmless each Holder, and its officers, directors and each other person, if
any, who controls such Holder within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Holder, or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities Act
pursuant to this Agreement, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse such Holder, and each such person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by or on
behalf of the Purchaser or any such person in writing specifically for use in
any such document.
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          (b) In the event of a registration of the Registrable Securities under
the Securities Act pursuant to this Agreement, the Purchaser will indemnify and
hold harmless the Company, and its officers, directors and each other person, if
any, who controls the Company within the meaning of the Securities Act, against
all losses, claims, damages or liabilities, joint or several, to which the
Company or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact which was furnished in writing by the
Purchaser to the Company expressly for use in (and such information is contained
in) the Registration Statement under which such Registrable Securities were
registered under the Securities Act pursuant to this Agreement, any preliminary
Prospectus or final Prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Purchaser will be liable in any
such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished in writing to the Company by or on behalf of the Purchaser
specifically for use in any such document. Notwithstanding the provisions of
this paragraph, the Purchaser shall not be required to indemnify any person or
entity in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any such
registration under the Securities Act.
          (c) Promptly after receipt by a party entitled to claim
indemnification hereunder (an “Indemnified Party”) of notice of the commencement
of any action, such Indemnified Party shall, if a claim for indemnification in
respect thereof is to be made against a party hereto obligated to indemnify such
Indemnified Party (an “Indemnifying Party”), notify the Indemnifying Party in
writing thereof, but the omission so to notify the Indemnifying Party shall not
relieve it from any liability which it may have to such Indemnified Party other
than under this Section 5(c) and shall only relieve it from any liability which
it may have to such Indemnified Party under this Section 5(c) if and to the
extent the Indemnifying Party is prejudiced by such omission. In case any such
action shall be brought against any Indemnified Party and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such Indemnified
Party, and, after notice from the Indemnifying Party to such Indemnified Party
of its election so to assume and undertake the defense thereof, the Indemnifying
Party shall not be liable to such Indemnified Party under this Section 5(c) for
any legal expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof; if the Indemnified Party retains its own counsel, then
the Indemnified Party shall pay all fees, costs and expenses of such counsel,
provided, however, that, if the defendants in any such action include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the Indemnifying
Party or if the interests of the Indemnified Party reasonably may be deemed to
conflict with the interests of the Indemnifying Party, the Indemnified Party
shall have the right to
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select one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred.
          (d) In order to provide for just and equitable contribution in the
event of joint liability under the Securities Act in any case in which either
(i) the Purchaser, or any officer, director or controlling person of the
Purchaser, makes a claim for indemnification pursuant to this Section 5 but it
is judicially determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 5 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required on
the part of the Purchaser or such officer, director or controlling person of the
Purchaser in circumstances for which indemnification is provided under this
Section 5; then, and in each such case, the Company and the Purchaser will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that the
Purchaser is responsible only for the portion represented by the percentage that
the public offering price of its securities offered by the Registration
Statement bears to the public offering price of all securities offered by such
Registration Statement, provided, however, that, in any such case, (A) the
Purchaser will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
     6. Representations and Warranties.
          (a) Silicon Mountain Memory, Incorporated (“SMM”) has furnished the
Purchaser with copies of: SMM’s and its Subsidiaries’ (x) consolidated audited
balance sheet, statement of retained earnings, statement of operations and
statement of cash flows for its fiscal years ended December 31, 2004 and
December 31, 2005 and (y) consolidated unaudited balance sheet, statement of
retained earnings, statement of operations and statement of cash flows for its
fiscal quarters ended March 31, 2006 and June 30, 2006 (the forgoing clause
(x) and (y), collectively, the “Financial Statements”). Such Financial
Statements have been prepared in accordance with generally accepted accounting
principles as in effect in the United States, in each case, applied on a
consistent basis during the periods involved (except as may be otherwise
indicated in such financial statements or the notes thereto). No Financial
Statement contained any untrue statement of a material fact or omitted 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. The Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may be
otherwise indicated in such financial statements or the notes thereto) and
fairly present in all material respects the financial condition, the results of
operations and cash flows of the SMM and its Subsidiaries, on a consolidated
basis, as of, and for, the periods presented in each such Financial Statement.
          (b) The Company shall ensure that the Common Stock is listed or
quoted, as the case may be, for trading on a Principal Market by no later than
the date that is the sixth month
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anniversary of the Public Transaction Closing Date. Following such listing or
quotation, the Company shall do all things necessary for the continuation of
such listing or quotation.
          (c) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Securities pursuant to the
Security Agreement to be integrated with prior offerings by the Company for
purposes of the Securities Act which would prevent the Company from selling the
Common Stock pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its affiliates or subsidiaries take any action or steps that would cause the
offering of the Common Stock to be integrated with other offerings (other than
such concurrent offering to the Purchaser) and which would prevent the Company
from selling the Common Stock pursuant to Rule 506 under the Securities Act, or
any applicable exchange-related stockholder approval provisions.
          (d) The Secured Convertible Term Note, the Warrants and the shares of
Common Stock that the Purchaser may acquire pursuant to the Secured Convertible
Term Note and the Warrants are all restricted securities under the Securities
Act as of the date of this Agreement. The Company will not issue any stop
transfer order or other order impeding the sale and delivery of any of the
Registrable Securities at such time as such Registrable Securities are
registered for public sale or an exemption from registration is available,
except as required by federal or state securities laws.
          (e) The Company understands the nature of the Registrable Securities
issuable upon the conversion of the Secured Convertible Term Note and the
exercise of each Warrant and recognizes that the issuance of such Registrable
Securities may have a potential dilutive effect. The Company specifically
acknowledges that its obligation to issue the Registrable Securities is binding
upon the Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company.
          (f) Except for agreements made in the ordinary course of business,
there is no agreement that has not been filed with the Commission as an exhibit
to a registration statement or to a form required to be filed by the Company
under the Exchange Act, the breach of which could reasonably be expected to have
a material and adverse effect on the Company and its subsidiaries, or would
prohibit or otherwise interfere with the ability of the Company to enter into
and perform any of its obligations under this Agreement in any material respect.
          (g) The Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for the full conversion of the
Secured Convertible Term Note and the full exercise of the Warrants.
     7. Miscellaneous.
          (a) Remedies. 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,
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including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.
          (b) No Piggyback on Registrations. Except as and to the extent set
forth on Schedule 7(b) hereto, or with the consent of Purchaser, neither the
Company nor any of its security holders (other than the Holders in such capacity
pursuant hereto) may include securities of the Company in any Registration
Statement other than the Registrable Securities, and the Company shall not after
the date hereof enter into any agreement providing any such right for inclusion
of shares in the Registration Statement to any of its security holders. Except
as and to the extent specified in Schedule 7(b) hereto, the Company has not
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been fully
satisfied.
          (c) 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 any
Registration Statement.
          (d) Discontinued Disposition. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of a Discontinuation Event (as defined below), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
applicable Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph. For purposes of this Agreement, a “Discontinuation Event” shall mean
(i) 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 (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); (ii) any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to such Registration Statement or Prospectus or
for additional information; (iii) the issuance by the Commission of any stop
order suspending the effectiveness of such Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) 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/or (v) the occurrence of any
event or passage of time that makes the financial statements included in such
Registration Statement ineligible for inclusion therein or any statement made in
such 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 such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or 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
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make the statements therein, in light of the circumstances under which they were
made, not misleading.
          (e) Piggy-Back Registrations. If at any time after the date hererof
there is not an effective Registration Statement covering all of the Registrable
Securities required to be covered hereunder 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 stock option
or other employee benefit plans, then the Company shall send to each Holder
written notice of such determination and, if within fifteen (15) days after
receipt 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 that are not otherwise covered by a registration statement and that
such Holder requests to be registered, to the extent the Company may do so
without violating registration rights of others which exist as of the date of
this Agreement, subject to customary underwriter cutbacks applicable to all
holders of registration rights and subject to obtaining any required consent of
any selling stockholder(s) to such inclusion under such registration statement.
          (f) 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 the then outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of certain Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by Holders of at least a majority 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 immediately preceding sentence.
          (g) Notices. Any notice or request hereunder may be given to the
Company or the Purchaser at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
Section 7(g). Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, hand delivery, overnight mail, Federal
Express or other national overnight next day carrier (collectively, “Courier”)
or telecopy (confirmed by mail). Notices and requests shall be, in the case of
those by hand delivery, deemed to have been given when delivered to any party to
whom it is addressed, in the case of those by mail or overnight mail, deemed to
have been given three (3) business days after the date when deposited in the
mail or with the overnight mail carrier, in the case of a Courier, the next
business day following timely delivery of the package with the Courier, and, in
the case of a telecopy, when confirmed. The address for such notices and
communications shall be as follows:

     
If to the Company, to:
  Silicon Mountain Memory, Incorporated
 
                 4755 Walnut Street

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  Boulder, Colorado 80301
 
  Attention:
 
  Rudolph (Tré) A. Cates III
Fax: (303) 938-1166
 
   
With a copy to:
  Patton Boggs LLP
 
  1660 Lincoln Street, Suite 1900
 
  Denver, Colorado 80264
 
  Attention: Alan Talesnick, Esq.
 
  Telephone: (303) 894-6378
 
  Facsimile: (303) 894-9239
 
   
If to a Purchaser:
  To the address set forth under such Purchaser name on the signature pages
hereto.
 
   
If to any other Person who is then the registered Holder:
  To the address of such Holder as it appears in the stock transfer books of the
Company

or such other address as may be designated in writing hereafter in accordance
with this Section 7(g) by such Person.
          (h) 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 its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Security Agreement.
          (i) Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
          (j) Governing Law, Jurisdiction and Waiver of Jury Trial. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company hereby
consents and agrees that the state or federal courts located in the County of
New York, State of New York shall have exclusion jurisdiction to hear and
determine any Proceeding between the Company, on the one hand, and the
Purchaser, on the other hand, pertaining to this Agreement or to any matter
arising out of or related to this Agreement; provided, that the Purchaser and
the Company acknowledge that any appeals from those courts may have to be heard
by a court located outside of the County of New York, State of New York, and
further provided, that nothing in this Agreement shall be
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11

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deemed or operate to preclude the Purchaser from bringing a Proceeding in any
other jurisdiction to collect the obligations, to realize on the Collateral or
any other security for the obligations, or to enforce a judgment or other court
order in favor of the Purchaser. The Company expressly submits and consents in
advance to such jurisdiction in any Proceeding commenced in any such court, and
the Company hereby waives any objection which it may have based upon lack of
personal jurisdiction, improper venue or forum non conveniens. The Company
hereby waives personal service of the summons, complaint and other process
issued in any such Proceeding and agrees that service of such summons, complaint
and other process may be made by registered or certified mail addressed to the
Company at the address set forth in Section 7(g) and that service so made shall
be deemed completed upon the earlier of the Company’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage prepaid. The
parties hereto desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the parties hereto waive all rights to
trial by jury in any Proceeding brought to resolve any dispute, whether arising
in contract, tort, or otherwise between the Purchaser and/or the Company arising
out of, connected with, related or incidental to the relationship established
between then in connection with this Agreement. If either party hereto shall
commence a Proceeding to enforce any provisions of this Agreement, the Security
Agreement or any other Ancillary Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Proceeding.
          (k) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any 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 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 of
reference only and shall not limit or otherwise affect the meaning hereof.
[Balance of page intentionally left blank; signature page follows]
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          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

            SILICON MOUNTAIN MEMORY, INCORPORATED
      By:   /s/ Rudolph (Tré) A. Cates III       Rudolph (Tré) A. Cates III     
  President and Chief Executive Officer        LAURUS MASTER FUND, LTD.
      By:   /s/ David Grin       Name:   David Grin       Title:   Director    
  Address for Notices:

335 Madison Avenue, 10th Floor
New York, New York 10027
Attention: David Grin
Facsimile: 212-541-4434
                       

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EXHIBIT A
                    , 200     
[Continental Stock Transfer
& Trust Company
Two Broadway
New York, New York 10004
Attn: William Seegraber]

      Re: Silicon Mountain Holdings, Inc. Registration Statement on Form [S-3]

Ladies and Gentlemen:
     As counsel to Silicon Mountain Holdings, Inc., a Colorado corporation (the
“Company”), we have been requested to render our opinion to you in connection
with the resale by the individuals or entitles listed on Schedule A attached
hereto (the “Selling Stockholders”), of an aggregate of                     
shares (the “Shares”) of the Company’s Common Stock.
     A Registration Statement on Form [S-3] under the Securities Act of 1933, as
amended (the “Act”), with respect to the resale of the Shares was declared
effective by the Securities and Exchange Commission on [date]. Enclosed is the
Prospectus dated [date]. We understand that the Shares are to be offered and
sold in the manner described in the Prospectus.
     Based upon the foregoing, upon request by the Selling Stockholders at any
time while the registration statement remains effective, it is our opinion that
the Shares have been registered for resale under the Act and new certificates
evidencing the Shares upon their transfer or re-registration by the Selling
Stockholders may be issued without restrictive legend. We will advise you if the
registration statement is not available or effective at any point in the future.

            Very truly yours,

[Company counsel]
                       

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Schedule A to Exhibit A

                      Shares Selling Stockholder   R/N/O     Being Offered  

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SCHEDULE 7(b)
None.
Registration Rights Agreement