Prepared by MERRILL CORPORATION





Exhibit
4.3


 


Registration
Rights Agreement


 


ADVANCED POWER TECHNOLOGY, INC.


 


 


                This
Registration Rights Agreement (the “Agreement”) is entered into as of the ____ day
of _____________, 2001, by and among ADVANCED POWER TECHNOLOGY,
Inc., a Delaware corporation (the “Company”), and the investors
listed on Exhibit A hereto, referred to hereinafter as the
“Investors” and each individually as an “Investor.”


RECITALS


Whereas, in connection with the merger of GHz
Technology, Inc. ("GHz") with and into GHz Acquisition, Inc., a
wholly owned subsidiary of the Company ("Sub"), the Investors will
receive shares of the Company’s Common Stock (the "Common Stock")
pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”)
of even date herewith (the “Merger”);


Whereas, the obligations in the Merger Agreement
are conditioned upon the execution and delivery of this Agreement; and


Whereas, in connection with the consummation of
the Merger, the parties desire to enter into this Agreement in order to grant
registration rights to the Investors as set forth below.


Now, Therefore, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


AGREEMENT


SECTION
1.                            GENERAL.


1.1          Definitions.  As used
in this Agreement the following terms shall have the following respective
meanings:


(a)           “Exchange Act”means the Securities Exchange Act of 1934, as amended.


(b)           “Form S-3”means such form under the Securities Act as in effect
on the date hereof or any successor or similar registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.


(c)           “Holder”means any
person owning of record Registrable Securities that have not been sold to the
public or any assignee of record of such Registrable Securities in accordance
with Section 2.10 hereof.


 















 


(d)           “Initiating Holder” means Summit Ventures III, L.P. or
Summit Investors IV, L.P.


(e)           “Register,”
“registered,” and “registration”refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration
statement or document.


(f)            “Registrable Securities”means (a) Common Stock
of the Company issued or issuable upon consummation of the Merger and (b) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
such above-described securities. 
Notwithstanding the foregoing, Registrable Securities shall not include
any securities sold by a person to the public either pursuant to a registration
statement or Rule 144 or sold in a private transaction in which the
transferor’s rights under Section 2 of this Agreement are not
assigned.


(g)           “Registration Expenses”shall mean all expenses
incurred by the Company in complying with Sections 2.2, 2.3 and 2.4
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company,
reasonable fees and disbursements not to exceed fifteen thousand dollars
($15,000) of a single special counsel for the Holders, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).


(h)           “SEC”
or “Commission”means the Securities and Exchange Commission.


(i)            “Securities Act”shall mean the Securities Act of 1933, as
amended.


(j)            “Selling Expenses”shall mean all underwriting discounts and
selling commissions applicable to the sale.


(k)           “Special Registration Statement” shall mean (i) a
registration statement relating to any employee benefit plan, (ii) with respect
to any corporate reorganization or transaction under Rule 145 of the
Securities Act, other than any registration statements related to the resale of
securities issued in such a transaction, or (iii) a registration related to
stock issued upon conversion of debt securities.


SECTION
2.                            REGISTRATION;
RESTRICTIONS ON TRANSFER.


2.1          INTENTIONALLY OMITTED.


2.2          Demand Registration.


(a)           Subject to the conditions of this Section 2.2,
if the Company shall receive a written request from an Initiating Holder that
the Company file a registration statement under the Securities Act covering the
registration of at least $1,000,000 of Registrable Securities (a “Qualified
Public Offering”)), then the Company shall, within ten (10) business
days of the


 















 


receipt thereof, give written notice of such request
to all Holders, and subject to the limitations of this Section 2.2,
effect, as expeditiously as reasonably possible, the registration under the
Securities Act of all Registrable Securities that the Holders request to be
registered.  A written request pursuant
to this Section 2.2(a) shall not be effective if received by the Company
less than 150 days after the Closing Date of the Merger.


(b)           If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 or any request pursuant to Section 2.4
and the Company shall include such information in the written notice referred
to in Section 2.2(a) or Section 2.4(a), as
applicable.  In such event, the right of
any Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein.  All Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). 
Notwithstanding any other provision of this Section 2.2 or Section 2.4,
if the underwriter advises the Company that marketing factors require a
limitation of the number of securities to be underwritten (including
Registrable Securities) then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Initiating Holders of such Registrable Securities on a pro rata
basis based on the number of Registrable Securities held by all Initiating
Holders and then to the remaining Holders, reduced by the number of Registrable
Securities such remaining Holders may lawfully sell pursuant to Rule 144 or 145
of the Securities Act in a ninety (90) day period; provided, however, that the
number of shares of Registrable Securities to be included in such underwriting
and registration shall not be reduced unless all other securities of the
Company are first entirely excluded from the underwriting and
registration.  Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.


(c)           The Company shall not be required to effect a
registration pursuant to this Section 2.2:


(i)            during the period starting with the date of filing of,
and ending on the date ninety (90) days following the effective date of a
registration statement (other than a Special Registration Statement) with
respect to which Initiating Holders were entitled to include not less than
250,000 shares of Common Stock (or such lesser amount as they requested be
included); provided
that the Company makes reasonable good faith efforts to cause such registration
statement to become effective;


(ii)           after the Company has effected one (1) registration
pursuant to this Section 2.2, and such registration has been
declared or ordered effective;


(iii)         if within ten (10) business days of receipt of a
written request from an Initiating Holder pursuant to Section 2.2(a),
the Company gives notice to the Holders of the


 















 


Company’s bona fide intention to file a registration
statement (other than a Special Registration Statement of the type described in
Section 1.1(k)(i)) within ninety (90) days; provided, however, that the Company may
not exercise this right more than one time;


(iv)          if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate
signed by the Chairman of the Board stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be effected at
such time, in which event the Company shall have the right to defer such filing
for a period of not more than sixty (60) days after receipt of the request of
the Initiating Holders; provided, however, that the Company may
not exercise this right more than one time;


(v)            if the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.4 below;


(vi)          in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance;
or


(vii)         other than during the period commencing six (6) months
after the closing date of the Merger and ending twelve (12) months after the
closing date of the Merger.


2.3          Piggyback
Registrations.  The Company shall notify all Holders of
Registrable Securities in writing at least fifteen (15) days prior to the
filing of any registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding Special Registration Statements) and will afford each
such Holder an opportunity to include in such registration statement all or
part of such Registrable Securities held by such Holder.  Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. 
Such notice shall state the intended method of disposition of the
Registrable Securities by such Holder. 
If a Holder decides not to include all of its Registrable Securities in
any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities
in any subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.


(a)           Underwriting.  If the registration statement under which the Company gives
notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities.  In such event, the right of any such Holder
to be included in a registration pursuant to this Section 2.3 shall
be conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein.  All Holders
proposing to distribute their Registrable Securities through such underwriting
shall enter into an underwriting agreement in


 















 


customary form with the underwriter or underwriters
selected for such underwriting by the Company. 
Notwithstanding any other provision of this Agreement, if the
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares
that may be included in the underwriting shall be allocated, first, to the
Company; second, to the Initiating Holders on a pro rata basis based on the
number of Registrable Securities held by all Initiating Holders; third, to the
remaining Holders on a pro rata basis based on the total number
of Registrable Securities held by the Holders reduced by the number of
Registrable Securities that such remaining Holders may lawfully sell pursuant
to Rule 144 or 145 of the Securities Act in a ninety (90) day period; and
fourth, to any shareholder of the Company (other than a Holder) on a pro rata
basis.  No such reduction shall reduce
the amount of securities of the selling Holders included in the registration
below twenty percent (20%) of the total amount of securities included in such
registration.  If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter, delivered at
least ten (10) business days prior to the effective date of the registration
statement.  Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration.  For any Holder
which is a partnership or corporation, the partners, retired partners and
shareholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing person shall be deemed to be a single “Holder,” and any pro rata
reduction with respect to such “Holder” shall be based upon the aggregate
amount of shares carrying registration rights owned by all entities and
individuals included in such “Holder,” as defined in this sentence.


(b)           Right to Terminate Registration.  The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 2.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration.  The Registration Expenses of such withdrawn registration shall be
borne by the Company in accordance with Section 2.5 hereof.


2.4          Form
S-3 Registration.  In case the Company shall receive, not
less than one hundred fifty (150) days after the closing date of the merger,
from one or more Initiating Holders a written request or requests that the
Company effect a registration on Form S-3 (or any successor to Form
S-3) or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by any Holder, the Company will: 


(a)           as soon as practicable, but not earlier than six (6)
months after the date hereof, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Initiating
Holder’s or Holders’ Registrable Securities as are specified in such request; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:


(i)            if Form S-3 is not available for such offering by
the Holders, or


 















 


(ii)           if the Initiating Holders, together with the holders
of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than five hundred thousand
dollars ($500,000), or


(iii)         if within ten (10) business days of receipt of a
written request from  any Initiating
Holder pursuant to this Section 2.4, the Company gives notice to
such Initiating Holder of the Company’s bona fide intention to makea public offering within sixty (60)
days including pursuant to a Special Registration Statement (other than of the
type described in Section 1.1(k)(I)); provided, however, that the Company may
not exercise this right more than one time;


(iv)          if the Company shall furnish to the Initiating Holders
a certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event
the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than sixty (60) days after
receipt of the request of the Initiating Holder under this Section 2.4,
provided,
however, that the Company may not exercise this right more than one
time; or


(v)            in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.


(b)           Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable Securities and
other securities so requested to be registered as soon as practicable after
receipt of the requests of the Initiating Holder.  Registrations effected pursuant to this Section 2.4
shall not be counted as demands for registration or registrations effected
pursuant to Sections 2.2 or 2.3, respectively.


2.5          Expenses
of Registration.  Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any
registration under Section 2.3 or Section 2.4 herein
shall be borne by the Company.  All
Selling Expenses incurred in connection with any registrations hereunder, shall
be borne by the holders of the securities so registered pro rata on the basis of the
number of shares so registered.  The
Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.2 or Section 2.4, the
request of which has been subsequently withdrawn by the Initiating Holders
unless the withdrawal is based upon material adverse information concerning the
Company of which the Initiating Holders were not aware at the time of such
request.  If the Holders are required to
pay the Registration Expenses, such expenses shall be borne by the Holders of
Registrable Securities requesting such registration in proportion to the number
of shares for which registration was requested.  If the Company is required to pay the Registration Expenses of a
withdrawn offering, then the Holders shall not forfeit their rights pursuant to
Section 2.2 to a demand registration.


 















 


2.6          Obligations
of the Company.  Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:


(a)           Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective, and, upon the request of
the Initiating Holders, keep such registration statement effective until the
first anniversary hereof, or, if earlier, until the Holder or Holders have
completed the distribution related thereto; provided, however, that at any time, upon
written notice to the participating Holders and for a period not to exceed
sixty (60) days thereafter (the “Suspension Period”), the Company may delay the
filing or effectiveness of any registration statement or suspend the use or effectiveness
of any registration statement (and the Initiating Holders hereby agree not to
offer or sell any Registrable Securities pursuant to such registration
statement during the Suspension Period) if the Company reasonably believes that
the Company may, in the absence of such delay or suspension hereunder, be
required under state or federal securities laws to disclose any corporate
development the disclosure of which could reasonably be expected to have a
material adverse effect upon the Company, its shareholders, a potentially
significant transaction or event involving the Company, or any negotiations,
discussions, or proposals directly relating thereto.  No more than one (1) such Suspension Period shall occur in any
twelve (12) month period.  In the event
that the Company shall exercise its rights hereunder, the applicable time
period during which the registration statement is to remain effective shall be
extended by a period of time equal to the duration of the Suspension Period.  The Company may extend the Suspension Period
for an additional consecutive sixty (60) days with the consent of the
Initiating Holders, which consent shall not be unreasonably withheld. If so
directed by the Company, the Initiating Holders shall use their best efforts to
deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies then in such Initiating Holders’ possession, of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice;


(b)           Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the period set forth in
paragraph (a) above;


(c)           Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;


(d)           Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided
that the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;


 















 


(e)           In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter(s) of such
offering.  Each Holder participating in
such underwriting shall also enter into and perform its obligations under such
an agreement;


(f)            Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included 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 the light of the circumstances
then existing. The Company will use reasonable efforts to amend or supplement
such prospectus in order to cause such prospectus not to include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;


(g)           Cause all such Registrable Securities to be listed on
each securities exchange or nationally recognized quotation system on which
similar securities issued by the Company are then listed; and


(h)           Use its reasonable efforts to furnish, on the date
that such Registrable Securities are delivered to the underwriters for sale, if
such securities are being sold through underwriters, (i) an opinion, dated
as of such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities
and (ii) a letter, dated as of such date, from the independent certified
public accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering addressed to the underwriters.


2.7          Termination
of Registration Rights  All registration rights granted under this Section
2 shall terminate and be of no further force and effect one (1) year after
the closing date of the Merger.  In
addition, a Holder’s registration rights shall expire if (a) such Holder
(together with its affiliates) holds less than 1% of the Company’s outstanding
Common Stock (treating all shares of convertible Preferred Stock on an as
converted basis) and (b) all Registrable Securities held by and issuable
to such Holder (and its affiliates) may be sold under Rule 144 during any
ninety (90) day period.


2.8          Delay of Registration; Furnishing
Information.


(a)           No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Section 2.


(b)           It shall be a condition precedent to the obligations
of the Company to each selling Holder to take any action pursuant to Sections 2.2,
2.3 or 2.4 that such selling Holder


 















 


shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended method
of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.


2.9          Indemnification.  In the event any Registrable Securities
are included in a registration statement under Sections 2.2, 2.3 or 2.4:


(a)           To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors
of each Holder, any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a “Violation”) by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
(ii) 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, or (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration
statement; and the Company will pay as incurred to each such Holder, partner,
officer, director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such
Holder, partner, officer, director, underwriter or controlling person of such
Holder.


(b)           To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers
and each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder’s partners, directors
or officers or any person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance upon
and in


 















 


conformity with written information furnished by such
Holder under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each such Holder
will pay as incurred any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, underwriter or other
Holder, or partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action if it is judicially determined that there was such
a Violation; provided, however, that the indemnity agreement contained in
this Section 2.9(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; provided further, that in no event shall
any indemnity under this Section 2.9(b) exceed the netproceeds
from the offering received by such Holder.


(c)           Promptly after receipt by an indemnified party under
this Section 2.9 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section 2.9,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding.  The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this Section 2.9.


(d)           If the indemnification provided for in this Section 2.9
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the Violation(s) that
resulted in such loss, claim, damage or liability, as well as any other
relevant equitable considerations.  The
relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission; provided,
that in no event shall any contribution by a Holder hereunder exceed the net
proceeds from the offering received by such Holder.


 















 


(e)           The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this Agreement.  No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.


2.10        Assignment
of Registration Rights.  The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of Registrable Securities that
(a) is a subsidiary, parent, general partner, limited partner, retired partner,
member or retired member, stockholder or shareholder of a Holder, (b) is a
Holder’s family member or trust for the benefit of an individual Holder or a
Holder’s family member, or (c) is an entity affiliated by common control (or
other related entity) with such Holder; provided, however, (i) the transferor
shall, within ten (10) days after such transfer, furnish to the Company written
notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned
and (ii) such transferee shall agree in writing to be subject to all
restrictions set forth in this Agreement.


2.11        “Market
Stand-Off” Agreement. 
Each Holder hereby agrees that such Holder shall not sell, transfer,
make any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale, any
Common Stock (or other securities) of the Company held by such Holder (other
than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the
Company not to exceed the earlier of ninety (90) days following the effective
date of a registration statement of the Company filed under the Securities Act
or the first anniversary of this Agreement with respect to which Initiating
Holders were entitled to include not less than 250,000 shares of Common Stock
(or such lesser amount as they requested be included); provided that such agreement
shall apply to all officers and directors of the Company.


2.12        Agreement
to Furnish Information. 
Each Holder agrees to execute and deliver such other agreements as may
be reasonably requested by the Company or the underwriter that are consistent
with the Holder’s obligations under Section 2.11 or that are necessary
to give further effect thereto.  In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, each Holder shall
provide, within ten (10) days of such request, such information as may be
required by the Company or such representative in connection with the
completion of any public offering of the Company’s securities pursuant to a
registration statement filed under the Securities Act.  The obligations described in Section 2.11
and this Section 2.12 shall not apply to a Special Registration.  The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities)
subject to the foregoing restriction until the end of the earlier of ninety
(90) days or the first anniversary of this Agreement.  Each Holder agrees that any transferee of any shares of
Registrable Securities shall be bound by Sections 2.11 and 2.12.  The underwriters of the Company’s stock are
intended third party beneficiaries of Sections 2.11 and 2.12 and shall
have the right, power and authority to enforce the provisions hereof as though
they were a party hereto.


 















 


2.13        Rule
144 Reporting.  With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:


(a)           Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or
analogous rule promulgated under the Securities Act;


(b)           File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Exchange Act; and


(c)           So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
of the Securities Act, and of the Exchange Act; a copy of the most recent
annual or quarterly report of the Company; and such other reports and documents
as a Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration.


SECTION
3.                            MISCELLANEOUS.


3.1          Governing
Law.  This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements
among Delaware residents entered into and to be performed entirely within
Delaware.


3.2          Survival.  The representations, warranties,
covenants, and agreements made herein shall survive any investigation made by
any Holder and the closing of the transactions contemplated hereby.  All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.


3.3          Successors
and Assigns.  Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding upon,
the successors, assigns, heirs, executors, and administrators of the parties
hereto and shall inure to the benefit of and be enforceable by each person who
shall be a holder of Registrable Securities from time to time; provided,
however, that prior to the receipt by the Company of adequate
written notice of the transfer of any Registrable Securities specifying the
full name and address of the transferee, the Company may deem and treat the
person listed as the holder of such shares in its records as the absolute owner
and holder of such shares for all purposes, including the payment of dividends
or any redemption price.


3.4          Entire
Agreement.  This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.


 















 


3.5          Severability.  In the event one or more of the
provisions of this Agreement should, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.


3.6          Amendment and Waiver.


(a)           Except as otherwise expressly provided, this Agreement
may be amended or modified only upon the written consent of the Company and the
Initiating Holders.


(b)           Except as otherwise expressly provided, the
obligations of the Company and the rights of the Holders under this Agreement
may be waived only with the written consent of the Initiating Holders.


3.7          Delays
or Omissions.  It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring.  It is further agreed that any waiver,
permit, consent, or approval of any kind or character on any Holder’s part of
any breach, default or noncompliance under the Agreement or any waiver on such
Holder’s part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in
such writing.  All remedies, either
under this Agreement, by law, or otherwise afforded to Holders, shall be
cumulative and not alternative.


3.8          Notices.  All notices required or permitted
hereunder shall be in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified, (b) when sent
by confirmed electronic mail or facsimile if sent during normal business hours
of the recipient; if not, then on the next business day, (c) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.  All
communications shall be sent to the party to be notified at the address as set
forth on the signature pages hereof or Exhibit A hereto or at such other
address as such party may designate by ten (10) days advance written notice to
the other parties hereto.


3.9          Attorneys’
Fees.  In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.


3.10        Titles
and Subtitles.  The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.


 















 


3.11        Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.


3.12        Aggregation
of Stock. 
All shares of Registrable Securities held or acquired by affiliated
entities or persons or persons or entities under common management or control
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement.


 















 


In Witness Whereof, the parties hereto have executed this
Registration Rights Agreement as of the date set forth in the first paragraph
hereof.




	
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  ADVANCED
  POWER TECHNOLOGY, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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