Document:

Unassociated Document

 

CLOSING AGREEMENT

 

This CLOSING AGREEMENT (this “Agreement”) dated as of June 3, 2013, is by and between Hudson Bay Master Fund Ltd., a Cayman Islands company ("Hudson Bay"), Iroquois Master Fund Ltd., a Cayman Islands company ("Iroquois" and, collectively with Hudson Bay, the "Investors"), Converted Organics, Inc., a Delaware corporation (“Parent”) and Michael Eisenberg, in his capacity as Stockholders’ Representative (the “Stockholders’ Representative”).

 

RECITALS:

 

WHEREAS, pursuant to the Agreement and Plan of Merger (as amended from time to time in accordance with its terms, the “Merger Agreement”), dated as of June 3, 2013, by Parent, Finjan, Inc., a Delaware corporation (the “Company”) and COIN Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), among other things, at the Effective Time, Merger Sub will be merged with and into the Company, with the Merger Sub surviving the Merger, on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”);

 

WHEREAS, pursuant to the Merger Agreement, immediately following the Merger, the Parent shall change its name to Finjan Holdings, Inc., through a short-form merger, pursuant to Section 253 of the General Corporation Law of the State of Delaware;

 

WHEREAS, immediately prior to the Effective Time, each Investor owns, beneficially and of record, the securities of Parent set forth opposite its name on Exhibit A hereto under the heading “Investor Securities” (the “Investor Securities”) and, immediately following the Effective Time  will own the number of shares of Common Stock of Parent set forth opposite its name on Exhibit A hereto under the heading "Exchange Shares" (the "Exchange Shares") following consummation of the Exchange (as described herein);

 

WHEREAS, the Investors hereby acknowledge and agree that they will derive substantial benefit from the consummation of the Merger; and

 

WHEREAS, as additional consideration to the stockholders of the Company immediately prior to the Effective Time (the “Stockholders”) for their shares of the Company, Parent has caused the Investors to enter into this Agreement for the benefit of the Stockholders.

 

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

 

ARTICLE I.

DEFINITIONS

 

Section 1.01.                      Definitions.  Capitalized terms used in this Agreement and not defined herein have the meanings ascribed to such terms in the Merger Agreement.

 

  

  

  

 

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

 

Section 2.01.                      Representations and Warranties of the Investors.  Each Investor, severally and not jointly, hereby represents and warrants to the Stockholders with respect to only itself as follows:

 

(a)           Organization and Good Standing.  Such Investor is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, with all requisite power and authority required to conduct its business as presently conducted.

 

(b)           Authority.  Such Investor has all requisite power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder.  The execution and delivery by such Investor of this Agreement and the performance by such Investor of its obligations hereunder have been duly authorized by all requisite action of such Investor and no other action on the part of such Investor or its members, partners or its securityholders, as applicable, is necessary to authorize the execution, delivery or performance by such Investor of this Agreement.

 

(c)           Valid and Binding Agreement.  This Agreement has been duly executed and delivered by such Investor and, assuming that this Agreement has been duly authorized, executed and delivered by the Stockholders, constitutes the legal, valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and (ii) general principles of equity.

 

(d)           Non-Contravention.  The execution and delivery of this Agreement by such Investor and the performance by such Investor of its obligations hereunder does not and will not (i) violate any provision of the Organizational Documents of such Investor, (ii) conflict with or violate any Law or order of any Governmental Authority applicable to such Investor or its assets or properties, (iii) require any permit, authorization, consent, approval, exemption or other action by, notice to or filing with, any Person or Governmental Authority, (iv) violate, conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under any permit or Contract to which such Investor is a party or by which any of its properties or assets are bound, or (v) result in the creation or imposition of any Lien on any part of the properties or assets of such Investor (including the Investor Securities and the Exchange Shares).

 

(e)           Ownership of the Investor Securities and Exchange Shares.  As of the date hereof, such Investor is, and immediately prior to the Effective Time such Investor will be, the record and beneficial owner of, and has, and as of immediately prior to the Effective Time will have, good and valid title to, the Investor Securities, free and clear of all Liens (except for restrictions or limitations on transfer imposed by applicable federal or state securities laws that do not affect or prohibit the transactions contemplated by the Exchange Agreement), and has, and as of immediately prior to the Effective Time will have, full and unrestricted power to dispose of and to exercise all rights thereunder (other than as restricted by the Exchange Agreement (as defined below)), without the consent or approval of, or any other action on the part of, any other Person.  As of immediately following the Exchange (as defined below), such Investor will (i) be the beneficial owner and the sole record owner of the Exchange Shares free and clear of all Liens (except for restrictions or limitations on transfer imposed by applicable federal or state securities laws that do not affect or prohibit the transactions contemplated by the Exchange Agreement), (ii) have good and valid title to the Exchange Shares, and (iii) will have full and unrestricted power to dispose of and vote all of the Exchange Shares without the consent or approval of, or any other action on the part of, any other Person.  None of the Investor Securities are, and none of the Exchange Shares will be, held by such Investor subject to any proxy, voting agreement, voting trust, power of attorney, consent or other agreement, arrangement or instrument with respect to the voting of such Investor Securities or Exchange Shares, as the case may be.  The Investor Securities constitute, and as of immediately prior to the Effective Time will constitute, all of the securities of Parent that are owned beneficially or of record by such Investor and neither such Investor nor any of its Affiliates own, nor as of immediately prior to the Effective Time will own, beneficially or of record, or have any right to acquire (whether currently, upon lapse of time, following the satisfaction of any conditions, upon the occurrence of any event or any combination of the foregoing) any securities of Parent other than the ownership of the Investor Shares until consummation of the Exchange and the right to acquire the Exchange Shares upon consummation of the Exchange. Other than the transactions contemplated by the Exchange Agreement, there is no outstanding Contract, vote, plan, pending proposal, or other right of any Person to acquire all or any of the Investor Securities or the Exchange Shares. For purposes herein, the “Exchange" shall have the meaning ascribed thereto in that certain Exchange Agreement, of even date herewith, between the Investors and Parent (the "Exchange Agreement").

 

  

2

  

 

(f)           To such Investor's knowledge: (i) the California Subsidiary is a limited liability company, duly formed under the laws of the State of California, (ii) Parent owns 100% of the membership interests, free and clear of any Liens (except for restrictions or limitations on transfer imposed by applicable federal or state securities laws), and is the sole managing member of the California Subsidiary and (iii) the California Subsidiary has no outstanding options, rights or commitments to issue shares of equity securities, and there are no outstanding securities convertible or exercisable into or exchangeable for any other equity securities of the California Subsidiary.

 

(g)           Liabilities.  Schedule 2.01(g) hereto lists, to such Investor’s knowledge, all Effective Time Liabilities of Parent and all Parent Subsidiaries immediately prior to the Effective Time.  As used herein, “knowledge” and “know” means, when referring to any Person, the actual knowledge of such Person of a particular matter or fact.  An Investor will be deemed to have “knowledge” of a particular fact or other matter if any individual who is serving, or who has served, as an executive officer, director, manager, managing member, managing director, general partner or other similar function of such Investor, has actual “knowledge” of such fact or other matter, or had actual “knowledge” during the time of such service of such fact or other matter.  As used herein, "Effective Time Liabilities" for any entity shall mean all obligations, liabilities or Indebtedness (including, without limitation, accounts payable) of such entity existing as of, or arising out of circumstances or events existing or occurring at or prior to the Effective Time, whether known or unknown, accrued, absolute, contingent, liquidated or unliquidated or due or to become due, whether or not (i) set forth or reserved against in the Latest Parent Balance Sheet or the notes accompanying the Latest Parent Balance Sheet or (ii) in respect of executory obligations.

 

  

3

  

 

Section 2.02.                      Representations and Warranties of Parent.  The Parent hereby represents and warrants to the Investors with respect to only itself as follows:

 

(a)           Organization and Good Standing.  Parent is duly incorporated, validly existing and in good standing under the Laws of the State of Delaware, with all requisite power and authority required to conduct its business as presently conducted.

 

(b)           Authority.  Parent has all requisite corporate power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder.  The execution and delivery by the Parent of this Agreement and the performance by the Parent of its obligations hereunder have been duly authorized by all requisite corporate action of Parent and no other action on the part of Parent or its stockholders is necessary to authorize the execution, delivery or performance by the Parent of this Agreement.

 

(c)           Valid and Binding Agreement.  This Agreement has been duly executed and delivered by the Parent and, assuming that this Agreement has been duly authorized, executed and delivered by the Investors, constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and (ii) general principles of equity.

 

(d)           Non-Contravention.  The execution and delivery of this Agreement by the Parent and the performance by the Parent of its obligations hereunder does not and will not (i) violate any provision of the Organizational Documents of Parent, (ii) conflict with or violate any Law or order of any Governmental Authority applicable to Parent or its assets or properties, (iii) violate, conflict with, result in a material breach of, or constitute (with or without notice or lapse of time or both) a material default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under, any permit or Contract to which Parent is a party or by which any of its properties or assets are bound or (v) result in the creation or imposition of any Lien on any part of the properties or assets of Parent.

 

ARTICLE III.

PAYMENT AND INDEMNITY

 

Section 3.01.                      (a)  Known Effective Time Liability Payments.  Within five (5) Business Days following the Effective Time, the Investors shall send to the appropriate creditors payments in the amounts listed on Schedule 2.01(g) under the heading “Sent Amounts” satisfactory to discharge all Known Effective Liabilities (as defined below) listed on Schedule 2.01(g) under the heading “Sent Liabilities”.  Each Investor severally (based on each Investor's relative ownership, as of immediately following the Effective Time, of Exchange Shares) and not jointly with any other Investor, shall be obligated to pay to the Parent, immediately following the Effective Time, in accordance with the wire information to be provided by the Parent to each Investor prior to the Effective Time, the amounts set forth under the heading “Item 5 - Amount Due to Parent” on Schedule 2.01(g).  The Company shall pay to each Investor, immediately following the Effective Time, in accordance with the wire information to be provided by each  Investor to the Company prior to the Effective Time, it pro rata share (based on each Investor's relative ownership, as of immediately following the Effective Time, of Exchange Shares) of the aggregate amount listed on Schedule 2.01(g) under the heading "Info Only Item 4 - Finjan Owes IMF/HB”.  If following the Effective Time, the Parent or any Subsidiary has paid any Sent Liability (including any portion thereof) and/or any additional accrued penalty, interest or other similar payment in respect thereof (“Penalty Payments”), subject to the provisions of the immediately succeeding sentence, each Investor severally (based on each Investor's relative ownership, as of immediately following the Effective Time, of Exchange Shares) and not jointly with the other Investor, shall be obligated to pay to the Parent, from time to time, within five (5) Business Days following receipt from Parent of notice of payment thereof an amount equal to any and all such payments made by Parent or such Subsidiary of any such Sent Liability (including any portion thereof) and/or Penalty Payments.  Notwithstanding the foregoing, prior to paying any Sent Liability (or any portion thereof) and/or Penalty Payments, Parent shall notify each Investor in writing via email, facsimile or regular mail (a "Sent Liability Payment Notice") of the proposed payment, and if within five (5) Business Days of receipt of a Sent Liability Payment Notice any Investor provides the Parent with reasonable evidence that such liability is no longer outstanding, Parent shall consult in good faith with such Investor during the three (3) Business Day period following the date the Investor has provided such evidence to the Parent in determining whether payment of such Sent Liability and/or Penalty payments is appropriate.  To the extent that any payment is made by an Investor pursuant to this subsection in respect of a Sent Liability and/or Penalty Payment, each such Investor shall be subrogated to all rights of the Parent with respect to such Sent Liability and/or Penalty Payment for which payment to the Parent by the Investors has been made.  As used herein, "Known Effective Time Liabilities" means all Effective Time Liabilities of the Parent or any Parent Subsidiary which such Investor has knowledge of on the date hereof as listed on Schedule 2.01(g) (other than those listed under the heading “Excluded Liabilities” on said Schedule), as well as any additional obligations, liabilities or Indebtedness that are listed on Schedule 2.01(g), whether or not they fit within the definition of “Effective Time Liabilities” (other than those listed under the heading “Excluded Liabilities” on Schedule 2.01(g). 
 

  

4

  

 

(b)           Unknown Effective Time Liability Payments.  Subject to the terms of this Section 3.01, from and after such time as all of the Unknown Liability Conditions (as defined below) have been satisfied, each Investor severally (based on its relative ownership, as of immediately following the Effective Time, of Exchange Shares) and not jointly with any other Investor, shall be obligated to pay to the Stockholders, from time to time, on a dollar-for-dollar basis, an amount equal to any and all payments made by Parent in respect of Unknown Effective Time Liabilities (as defined below) prior to the one-year anniversary of the Effective Time (including, without limitation, any Unknown Effective Time Liabilities paid by Parent prior to the satisfaction of the Unknown Liability Conditions (“Pre-Condition Payments”)) (“Unknown Reimbursement Amount”).  The Unknown Reimbursement Amounts to be paid by the Investors pursuant to this Agreement shall not exceed $1,000,000 in the aggregate for all of the Investors. Within five (5) Business Days following receipt from Parent or the Stockholders’ Representative of notice of the payment of an Unknown Effective Time Liability by Parent (or, in the case of Pre-Condition Payments, within five (5) Business Days following satisfaction of the Unknown Liability Conditions), each Investor shall pay its Unknown Reimbursement Amount in cash by wire transfer of immediately available funds to the Stockholders’ Representative for the benefit of the Stockholders to an account directed by the Stockholders’ Representative.

 

  

5

  

 

(c)           The Stockholders’ Representative shall remit each such Unknown Reimbursement Amount to the respective accounts directed by the Stockholders within five (5) Business Days following receipt thereof by the Stockholders’ Representative.  Notwithstanding anything in this Agreement to the contrary, (i) no Unknown Reimbursement Amounts will be payable hereunder until such time as payments by the Parent, in respect of Unknown Effective time Liabilities has equaled or exceeded $100,000, and (ii) following the first payment of Unknown Reimbursement Amount, the Investors shall only be required to pay Unknown Reimbursement Amounts from time to time once the Unknown Effective Time Liabilities incurred since the payment of the immediately preceding Unknown Reimbursement Amounts exceed $50,000 in the aggregate, provided that all previously incurred Unknown Reimbursement Amounts are otherwise fully paid.

 

(d)           Definitions.  The “Unknown Liability Conditions” means each of the following conditions: during four consecutive five-Trading Day periods (each a "Five-Trading Day Period" and the four consecutive Five-Trading Day Periods, the "Measuring Period") after the date hereof and prior to the one-year anniversary of the date hereof, (a) the arithmetic average of the Volume Weighted Average Price of the Common Stock for the five Trading Days in each such Five-Trading Day Period is equal to or greater than $0.2777 (subject to appropriate adjustment to reflect any stock split, stock dividend, reclassification or similar transaction), (b) the sum of the daily dollar trading volume of the Common Stock of Parent as reported by Bloomberg (as defined below) for the five Trading Days during each such Five-Trading Day Period shall be at least $1,000,000 (subject to appropriate adjustment to reflect any stock split, stock dividend, reclassification or similar transaction), (c) on each Trading Day during the Measuring Period, either (x) a registration statement shall be effective under the Securities Act of 1933, as amended (the “Securities Act”) , and available for the resale of all Exchange Shares held by the Investors in accordance with the terms of the Registration Rights Agreement or (y) all Exchange Shares held by the Investors shall be eligible for sale without volume restriction pursuant to Rule 144(b)(1) and without registration under the Securities Act.  “Volume Weighted Average Price” shall mean , the volume weighted average sale price of a share of Common Stock on the principal securities exchange, trading market or quotation system where such security is listed, traded or quoted as reported by Bloomberg Financial Markets or an equivalent, reliable reporting service mutually acceptable to the Investors and the Company (“Bloomberg”) or, if no volume weighted average sale price is reported for such security, then the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security that are listed in the over the counter market by the Financial Industry Regulatory Authority, Inc. or in the “pink sheets” by the Pink OTC Markets, Inc. If the Volume Weighted Average Price cannot be calculated for such security on such date in the manner provided above, the condition set forth in clause (a) of Section 3.01(d) shall not be satisfied on such date.  “Trading Day” shall mean any day on which the Common Stock is traded for any period on the principal securities exchange or other securities market or quotation system on which the Common Stock is then being traded or quoted.  “Unknown Effective Time Liabilities” shall mean all Effective Time Liabilities of the Parent other than Known Effective Time Liabilities.

 

Section 3.02.                      Indemnification of Stockholders.  Each Investor, severally and not jointly, shall indemnify, hold harmless and defend each Stockholder, its Affiliates and their respective officers, directors, partners, managers, members, employees, agents and Affiliates (each, an “Indemnified Person”) from and against any and all losses, liabilities, damages, reductions in value, costs and expenses, including, inter alia, costs of investigation and defense and reasonable fees and expenses of lawyers, experts and other professionals  arising out of, or resulting from any failure of any representation or warranty made by such Investor in this Agreement to be true and correct as of the date of this Agreement, except for representations and warranties that speak of a specific date, which shall be true and correct as of such date (“Indemnifiable Damages”).

 

  

6

  

 

(a)           Indemnification Procedures.  The Investors shall reimburse the applicable Indemnified Person promptly as any such Indemnifiable Damages arise or are incurred. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive any termination of this Agreement.

 

(b)           Procedure for Indemnifiable Third Party Legal Claims.  Promptly after receipt by an Indemnified Person of notice of the commencement of any action (including any governmental action), such Indemnified Person shall, if Indemnifiable Damages in respect thereof are to be sought against the Investors under this Article III, deliver to the Investors a written notice of the commencement thereof. Any delay or failure to so notify the Investors shall relieve the Investors of their respective obligations hereunder only to the extent that it is prejudiced by reason of such delay or failure. The Investors shall have the right to participate in, and, to the extent the Investors so desire, to assume control of the defense thereof with counsel reasonably satisfactory to the Indemnified Person(s); provided, however, that an Indemnified Person shall have the right to retain its own counsel with the reasonable fees and expenses of not more than one counsel for all such Indemnified Persons to be paid, severally and not jointly, by the Investors, if the Investors fail to promptly assume the defense of such claim or if, in the reasonable opinion of counsel for the Indemnified Person, the representation by such counsel of the Indemnified Person and the Investors would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding. The Indemnified Person shall reasonably cooperate with the Investors in connection with any negotiation or defense of any such action and shall furnish to the Investors all information reasonably available to the Indemnified Person which relates to such action.  The Investors shall keep the Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  No Investor shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the Investor shall not unreasonably withhold, delay or condition its consent.  The Investors shall not, without the prior written consent of the Indemnified Person, effect any settlement of, consent to the judgment of any judgment in, or otherwise seek to terminate, any pending or threatened proceeding unless such settlement includes the payment of only monetary damages which payment is assumed by the Investors, and such settlement includes an express unconditional release of such Indemnified Person from all liabilities asserted or potential claims against such Indemnified Person. The Investors shall pay for only one separate legal counsel for the Indemnified Persons, and such legal counsel shall be selected by Indemnified Persons.

 

Section 3.03.                      Limits of Liability. Notwithstanding anything to the contrary contained in this Agreement, the following limitations shall apply to claims under this Article III:

 

  

7

  

 

(a)           The amount of any Indemnifiable Damages to which the Stockholders are entitled with respect to Section 3.01 shall be reduced by (I) the amount of any payment receivable (including through a right of indemnification or otherwise) by the Parent with respect to any such Indemnifiable Damages, from any insurance provider or any other third party and the amount of any payment received by the Parent in return or reimbursement of any such Indemnifiable Damages, (II) the amount of any tax benefit realized by the Parent which is attributable to any such Indemnifiable Damages, and (III) the amount of any amounts paid pursuant to Section 3.01(a) or (b) in respect of any such Indemnifiable Damages.  If any benefit described in clauses (I) and (II) of this Section 3.03(a) is received by the Parent but any such Indemnifiable Damages or Unknown Reimbursement Amount, as applicable, actually paid by any Investor hereunder was not offset by such benefit received, the Parent shall so notify such Investors and pay an amount equal to such benefit received by wire transfer of immediately available funds to such Investors within three (3) Business Days of receipt of such benefit.

 

(b)           In no event shall any Investor have any obligation or liability for (A) any such Indemnifiable Damages that are consequential, in the nature of lost profits (including, without limitation, loss of profit or revenue, any multiple of reduced cash flow or any adjustment based on price to earnings or similar ratios), interference with operations, or loss of customers, tenants, lenders, investors or buyers, diminution in the value of property, special or punitive or otherwise not actual out-of-pocket damages, or (B) any such Indemnifiable Damages arising from or relating to, directly or indirectly, any act, omission or transaction carried out by or at the express written request, or with the written consent of, the Parent before, on or after the Effective Date, including, without limitation, any change in the accounting policies, practices or procedures of the Parent.

 

Section 3.04.                      Liability Mitigation.  The Parent shall, and the Parent shall, and shall cause the Company and its subsidiaries to, take reasonable steps to mitigate all such Indemnifiable Damages upon and after becoming aware of any event which could reasonably be expected to give rise to any such Indemnifiable Damages with respect to which payment or indemnification may be requested hereunder.  Such mitigation would include, for example and without limitation, pursuit of tax benefits, indemnification from other sources and pursuit of insurance.

 

ARTICLE IV.

GENERAL

 

Section 4.01.                      Notices.  Any notice to be given by any party to this Agreement shall be given in writing and may be effected by facsimile, personal delivery, overnight courier, e-mail or sent by certified, United States Mail, postage prepaid, addressed to the relevant party hereto at the address, e-mail or facsimile number set forth on the signature page hereto.  The date of service for any notice sent in compliance with the requirements of this Section 4.01 shall be (i) the date such notice is personally delivered, (ii) three days after the date of mailing if sent by certified or registered mail, (iii) one day after the date of delivery to the overnight courier if sent by overnight courier or (iv) the next succeeding Business Day after transmission by e-mail or facsimile.

 

Section 4.02.                      No Third Party Beneficiaries.  Except as to the Stockholders (who are intended to and shall be express third party beneficiaries of Articles II and III) and any Indemnified Persons (who are intended to and shall be express third party beneficiaries of Article III of this Agreement), nothing in this Agreement, express or implied, is intended to or shall confer upon the Person (other than the parties to this Agreement) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

  

8

  

 

Section 4.03.                      Governing Law.  This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any applicable principles of conflict of laws that would cause the Laws of another state otherwise to govern this Agreement.

 

Section 4.04.                      Severability.  If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

Section 4.05.                      Successors and Assigns.  This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Without limiting the foregoing, the Parent shall be permitted to assign this Agreement to any party that acquires the Parent or its assets, whether by merger, combination, reorganization, stock sale, sale of assets or otherwise. A Stockholder may assign this Agreement, in whole or in part, to any transferee of shares of Common Stock of such Stockholder with respect to such transferred shares, provided that notice of such transfer shall be sent to the Investors.  Neither Investor may assign its rights or obligations under this Agreement except with the prior written consent of all Stockholders, which consent may be given or withheld in such party’s sole discretion.

 

Section 4.06.                      Interpretation.  Interpretation of this Agreement shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires, (ii) references to the terms article, section and schedule are references to the articles, sections and schedules to this Agreement unless otherwise specified, (iii) the word “including” and words of similar import shall mean “including without limitation,” (iv) the word “or” shall not be exclusive, (v) the headings are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (vi) a reference to any Person includes such Person’s successors and permitted assigns, (vii) any reference to “days” means calendar days unless Business Days are expressly specified and (viii) this Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

 

Section 4.07.                      Amendments; Waivers.  This Agreement may not be amended without the express written agreement signed by all of the parties to this Agreement.  No provision of this Agreement may be waived without the express written agreement signed by the party making such waiver.  The failure of any party to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights.

 

  

9

  

 

Section 4.08.                      Entire Agreement.  This Agreement (together with the Merger Agreement and the other Transaction Documents) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties to this Agreement with respect to the subject matter of this Agreement.

 

Section 4.09.                      Remedies Cumulative.  Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a party to this Agreement will be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at law or in equity.  The exercise by a party to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.

 

Section 4.10.                      Counterparts; Effectiveness.  This Agreement and any amendment hereto may be executed and delivered in two or more identical counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.  In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.  No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract, and each party hereto forever waives any such defense.

 

Section 4.11.                      Specific Performance.  The parties to this Agreement agree that irreparable damage would occur and that the parties to this Agreement would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties to this Agreement shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case without the necessity of posting bond or other security or showing actual damages, and this being in addition to any other remedy to which they are entitled at law or in equity.

 

Section 4.12.                      Submission to Jurisdiction.  Each of the parties hereto irrevocably agrees that all claims, controversies and disputes of any kind or nature relating in any way to the enforcement or interpretation of this Agreement or to the parties’ dealings, rights or obligations in connection herewith, shall be brought exclusively in the Court of Chancery of the State of Delaware or, if such court shall not have jurisdiction, any federal court of the United States located in the State of Delaware, or, if neither the Court of Chancery of the State of Delaware nor any such federal court has jurisdiction, any other state court located in the State of Delaware.  Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the actions contemplated by this Agreement in any court or tribunal other than the aforesaid courts.  Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement and the rights and obligations arising hereunder or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder, (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 4.12, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by the applicable law, any claim that (a) the suit, action or proceeding in such court is brought in an inconvenient forum, (b) the venue of such suit, action or proceeding is improper or (c) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.  Each of the parties hereto agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 4.01 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof.  Notwithstanding the foregoing in this Section 4.12, a party may commence any action or proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.

 

  

10

  

 

Section 4.13.                      WAIVER OF JURY TRIAL.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION, CONTROVERSY OR OTHER LEGAL ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (II) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.13.

 

[Remainder of Page Intentionally Left Blank

 Signature Pages Follow.]

 

  

11

  

 

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

 

	  	
INVESTORS:

	  	
IROQUOIS MASTER FUND LTD.

	 	 
	  	
By:  /s/ Joshua Silverman

	  	
Name: Joshua Silverman

	  	
Title: Authorized Signatory

	  	  
	  	
Address:

c/o Iroquois Capital Management, LLC

641 Lexington Avenue, 26th Floor

New York, NY  10022

	  	
Facsimile: 212-207-3452

	  	
Email: JSilverman@icfund.com

	  	  
	  	
HUDSON BAY MASTER FUND LTD.

	 	 
	  	
By:  /s/ Yoav Roth

	  	
Name: Yoav Roth

	  	
Title: Authorized Signatory

	  	  
	  	
Address:

c/o Hudson Bay Capital management LP

777 Third Avenue, 30th Floor

New York, NY 10017

	  	
Facsimile: 646-214-7946

	  	
Email:

investments@hudsonbaycapital.com

operations@hudsonbaycapital.com

 

 

  

  

  

 

	  	
PARENT:

	  	
CONVERTED ORGANICS, INC.

	 	 
	  	
By: /s/ Edward Gildea

	  	
Name: Edward Gildea                                                                   

	  	
Title: President                                                                   

 

  

  

  

 

	  	
STOCKHOLDERS' REPRESENTATIVE:

	  	
By:  /s/ Michael Eisenberg

	  	
Name:  Michael Eisenberg 

	  	
Title:  

	  	
Address:  _________________________

 

          _________________________

 

          _________________________

	  	  
	  	
Facsimile:  _________________________

	  	
Email:  ____________________________

 

  

  

  

 

SCHEDULE A

 

OWNERSHIP

 

Hudson Bay Master Fund Ltd.

	
Senior Secured Convertible Notes

	
Issuance Date

	
Aggregate Principal Amount

	
March 13, 2012

	
$300,100

	
February 5, 2013

	
$187,000

	
April 1, 2013

	
$7,150

	
May 1, 2013

	
$41,700

	
May 8, 2013

	
$15,000

	
May 30, 2013

	
$45,300

	
Warrants

	
Issuance Date

	
Shares of Common Stock Issuable Upon Exercise

	
May 27, 2009

	
        33.33

	
February 5, 2013

	
77,916,666

	
April 1, 2013

	
1,191,667

	
May 1, 2013

	
11,583,333

	
March 13, 2012

	
213,125,000

	
May 8, 2013

	
3,409,091

	
May 30, 2013

	
9,437,500

 

1% Series A Convertible Preferred Stock

 

6,640 shares

 

  

  

  

 

Iroquois Master Fund Ltd.

	
Senior Secured Convertible Notes

	
Issuance Date

	
Aggregate Principal Amount

	
March 1, 2012

	
$41,700

	
April 1, 2013

	
$7,150

	
March 12, 2012

	
$87,600

	
March 13, 2012

	
$86,900

	
April 11, 2012

	
$125,600

	
February 1, 2013

	
$187,000

	
May 8, 2013

	
$15,000

	
May 30, 2013

	
$45,300

 

	
Warrants

	
Issuance Date

	
Shares of Common Stock Issuable Upon Exercise

	
May 1, 2013

	
11,583,333

	
April 1, 2013

	
1,191,667

	
March 12, 2012

	
135,000,000

	
April 11, 2012

	
70,000,000

	
February 1, 2013

	
77,916,666

	
January 31, 2013

	
8,125,000

	
May 8, 2013

	
3,409,091

	
May 30, 2013

	
9,437,500

1% Series A Convertible Preferred Stock

1,898 sharesUnassociated Document

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of June 3, 2013, by Converted Organics, Inc., a Delaware corporation (the “Company”), and each of the investors signatory hereto (each an “Investor” and collectively the “Investors”).

 

WHEREAS, pursuant to the Agreement and Plan of Merger, made and entered into on June 3, 2013 (the “Merger Agreement”), by and among the Company, COIN Merger Sub, a Delaware corporation and a wholly-owned subsidiary of the Company, and Finjan, Inc., a Delaware corporation (“Finjan”), as of the Effective Time (as defined in the Merger Agreement), each share of common stock, par value $0.01 per share, of Finjan held by Investors who owned Finjan common stock immediately prior to the Effective Time (“Finjan Investors”) shall be converted into the right to receive shares of Common Stock (as hereinafter defined), upon the terms and subject to the conditions contained in the Merger Agreement;

 

WHEREAS, pursuant to the Exchange Agreement (as defined in the Merger Agreement), immediately following the Effective Time, each of Hudson Bay Master Fund Ltd. and Iroquois Master Fund Ltd. will exchange its Investor Securities for Exchange Shares (each as defined in the Exchange Agreement) (the “Exchange”);

 

WHEREAS, pursuant to the Merger Agreement, immediately following the Merger, the Company shall change its name to Finjan Holdings, Inc., through a short-form merger pursuant to Section 253 of the General Corporation Law of the State of Delaware; and

 

WHEREAS, pursuant to the Merger Agreement, the Company agreed to grant certain registration rights with respect to the shares of Common Stock issued to the Investors in connection with the Merger and the Exchange, and the Company desires to grant such registration rights upon the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.           REGISTRATION RIGHTS.

 

1.1           Definitions.  Capitalized terms used and not otherwise defined herein that are defined in the Merger Agreement shall have the meanings given such terms in the Merger Agreement.  For purposes of this Agreement:

 

(a)           Common Stock.  The term “Common Stock” means the Company’s common stock, $0.0001 par value per share.

 

(b)           Exchange Act.  The term “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

  

  

  

 

(c)           Holder.  The term “Holder” means any person owning of record Registrable Securities or any assignee of record of such Registrable Securities to whom rights set forth herein have been duly assigned in accordance with this Agreement.

 

(d)           Registrable Securities.  The term “Registrable Securities” means (i) an aggregate of 245,604,624 shares of Common Stock issued by the Company to certain of the Investors in the Merger (ii) an aggregate of 21,473,628 shares of Common Stock issued by the Company to certain of the Investors pursuant to the Exchange Agreement and (iii) any shares of Common Stock of the Company issued or issuable  in respect of the shares described in clauses (i) and (ii) as a dividend or other distribution with respect thereto, in exchange for or in replacement of such shares, or as a result of a stock split, recapitalization, merger or other reorganization.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when:  (a) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such registration statement; (b) such securities shall have been transferred pursuant to Rule 144 of the Securities Act, and such securities may thereafter be re-sold without registration under the Securities Act; (c) such securities are eligible to be sold without registration under the Securities Act pursuant to and in accordance with Rule 144(b)(1) under the Securities Act without volume restrictions; or (d) such securities shall have ceased to be outstanding.

 

(e)           Registration.  The terms “register,” “registration” and “registered” 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.

 

(f)           SEC.  The term “SEC” or “Commission” means the U.S. Securities and Exchange Commission.

 

(g)           Securities Act.  The term “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

1.2           Registrations on behalf of Holders.

 

(a)           Registration.  As soon as reasonably practicable after the date of this Agreement but in any event no later than the 45th calendar day following the Closing Date (the “Filing Deadline”), the Company shall prepare and file a registration statement on Form S-1 (or on such other form as the Company shall then be eligible to use) providing for the resale of the Registrable Securities by the Holders pursuant to Rule 415 of the Securities Act (as amended or supplemented, the “Registration Statement”).  The Company shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective by the SEC as soon as reasonably practicable following the date of such filing.   The Registration Statement shall provide for the resale from time to time, and pursuant to any method or combination of methods legally available (including, without limitation, an underwritten offering, a direct sale to purchasers, a sale through brokers or agents, or a sale over the Internet) by the Holders of any and all Registrable Securities.

 

  

2

  

 

(b)           One-Time Deferral  Notwithstanding the foregoing, if the Company shall furnish to the selling Holders a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company it would be detrimental to the Company and its shareholders to file the Registration Statement because such filing would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the one-time right to defer such filing for a period of not more than forty-five (45) days after the date of delivery of such certificate; provided, however, the Company shall not register any securities for its own account or that of any other shareholder during such forty-five (45) day period other than in connection with a significant acquisition, corporate reorganization, or other similar transaction involving the Company.

 

(c)           Expenses.  All expenses incurred in connection with a registration pursuant to this Section 1.2, including without limitation all registration, qualification, printers’, accounting and Company counsel fees shall be borne by the Company.  Each Holder participating in a registration pursuant to this Section 1.2 shall bear such Holder’s proportionate share (based on the number of shares sold by such Holder over the total number of shares included in such registration at the time it is declared effective) of all discounts, commissions or other amounts payable to underwriters or brokers, if any, in connection with such offering.

 

1.3           Rule 415; Cutback  Subject to the last sentence of this Section 1.3, if at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires any Investor to be named as an “underwriter”, the Company shall use its commercially reasonable efforts to persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Investors is an “underwriter”.  In the event that, despite the Company’s commercially reasonable efforts and compliance with the terms of this Section 1.3, the SEC refuses to alter its position, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”).  Any cut-back imposed on the Investors pursuant to this Section 1.3 shall be allocated among the Investors on a pro rata basis, unless the SEC Restrictions otherwise require or provide or the Investors otherwise agree.  The Company shall use its commercially reasonable efforts to effect the registration of the Cut Back Shares as soon as practicable after the Company is able to effect such registration in accordance with any SEC Restrictions (such date, the “Restriction Termination Date” of such Cut Back Shares).  From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Agreement shall again be applicable to such Cut Back Shares; provided, however, that the Filing Deadline for the Registration Statement including such Cut Back Shares shall be ten (10) business days after such Restriction Termination Date.  To the extent the SEC does not permit some or all of the Registrable Securities not previously registered on a registration statement hereunder to be registered on a resale registration statement, the Company shall file additional registration statements successively trying to register on each such additional registration statement the maximum number of remaining Registrable Securities until all Registrable Securities have been registered for resale with the SEC.  Notwithstanding any contrary provision contained in this Agreement, in the event the SEC directly or indirectly indicates to the Company that a particular Investor or Investors (but not all of the Investors) should be identified as an “underwriter” in a Registration Statement or indicates, directly or indirectly (including, without limitation, through statements that could reasonably be concluded to relate to a particular Investor or Investors (but not all of the Investors)), that the exclusion of any such Investor or Investors as a selling stockholder under a Registration Statement would mitigate the need to remove some or all of the Registrable Securities held by other Holders from a Registration Statement or the applicability of SEC restrictions, then the Company shall have the right, exercisable in its sole discretion, to exclude the Registrable Securities held by such Investors from the Registration Statement to such extent and such excluded Registrable Securities shall thereafter cease to be Registrable Securities, provided, however, for the avoidance of doubt, the Company shall use its commercially reasonable efforts (including responding to one round of SEC comment on the issue) to advance any such Investor’s view that such Investor should not be identified as an “underwriter”.

 

  

3

  

 

1.4           Obligations of the Company.  When required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible:

 

(a)           Use its commercially reasonable efforts to prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective as soon as reasonably practicable, and to remain continuously effective until the earlier of (i) such time as all of such Registrable Securities have been publicly sold by the Holders or (ii) such time as no Registrable Securities are outstanding, whichever occurs earlier (the “Effectiveness Period”).

 

(b)           Prepare and file with the SEC (and promptly respond to any comments from the SEC in respect of) such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement until such time as all of such Registrable Securities registered thereunder shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.  In the case of amendments and supplements to a registration statement which are required to be filed pursuant to this Agreement by reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such registration statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the Exchange Act report is filed which created the requirement for the Company to amend or supplement such registration statement.

 

  

4

  

 

(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 the Registrable Securities owned by them that are included in such registration statement.

 

(d)           Use commercially 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. The Company shall promptly notify each selling Holder of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

 

(e)           Notify each selling 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 occurrence 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 and promptly prepare a supplement or amendment to such registration statement to correct such untrue statement or omission, and deliver such number of copies of any supplement or amendment to each selling Holder as such Holder may reasonably request.

 

(f)           Use its commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness of any Registration Statement prepared hereunder, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, (ii) if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify each Holder who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

(g)           Use its commercially reasonable efforts either to cause all the Registrable Securities covered by a registration statement prepared hereunder to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 1.4(g).

 

(h)           Cooperate with the Holders who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a registration statement filed hereunder and enable such certificates to be in such denominations or amounts, as the case may be, as such Holders may reasonably request and registered in such names as such Holders may request.

 

  

5

  

 

(i)           If requested by a selling Holder, use its commercially reasonable efforts to (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as a selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any registration statement if reasonably requested by a selling Holder holding any Registrable Securities.

 

(j)           Notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed.

 

(k)           After such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

(l)           Neither the Company nor any subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or filing with the SEC or any trading market where any securities of the Company are listed or traded without such Investor’s consent.

 

(m)           Notwithstanding any other provision of this Agreement, from and after the time a registration statement filed under this Section 1 covering Registrable Securities is declared effective, the Company shall have the right to suspend the registration statement and the related prospectus for a period of time in order to prevent premature disclosure of any material non-public information related to corporate developments by delivering notice of such suspension to the Holders, provided, however, that the Company may exercise the right to such suspension for a period not to exceed ninety (90) days.  From and after the date of a notice of suspension under this Section 1.4(m), each selling Holder agrees not to use the registration statement or the related prospectus for resale of any Registrable Security until the earlier of (1) notice from the Company that such suspension has been lifted or (2) the 91st day following the giving of the notice of suspension.

 

1.5           Obligations of Holders.

 

(a)           Each Holder shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such reasonable documents in connection with such registration as the Company may reasonably request.  Each Holder shall provide such information to the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if such Holder elects to have any of the Registrable Securities included in the Registration Statement.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 1.2 or Subsections 1.4(a), (b), (d), (g) or (i) that the selling Holders shall furnish to the Company the information required to be furnished pursuant to this Section 1.5(a).

 

  

6

  

 

(b)           Each Holder agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Holder has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

(c)           Each Holder agrees that, upon receipt of any notice from the Company of either (i) the commencement of a suspension of the registration statement pursuant to Section 1.4(m) or (ii) the happening of an event described in Section 1.4(e), such Holder will immediately discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities, until the Holder is advised by the Company that such dispositions may again be made.

 

1.6           Delay of Registration.  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 1.

 

1.7           Indemnification.  In the event any Registrable Securities are included in a registration statement under Section 1.2:

 

(a)           By the Company.  To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers, directors, members, employees and agents of each Holder and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons 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, the “Violations” and, individually, a “Violation”):

 

(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; or

 

(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 federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement.

 

  

7

  

 

The Company will promptly reimburse each such person to be indemnified pursuant to this Section 1.7(a) for any legal or other expenses reasonably incurred by them, after a request for reimbursement has been received by the Company, in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Section 1.7(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 for use in connection with such registration under this Agreement by such Holder, partner, officer, director, member, employee, agent or controlling person of such Holder.

 

(b)           By Selling Holders.  To the extent permitted by law, each selling Holder will be required severally and not jointly to indemnify and hold harmless the Company, each of its directors, employees, agents, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons 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 expressly for use in connection with such registration under this Agreement or, in the case of a Violation described in clause (a)(iii) of this Section 1.7, the Violation relates to a violation or alleged violation by such Holder.  Each such Holder will promptly reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, partner, officer, director, controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action after a request for reimbursement has been received by the indemnifying Holder; provided, however, that the indemnity agreement contained in this Section 1.7(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 selling Holder (which consent shall not be unreasonably withheld); and provided further, that the total amounts payable in indemnity by a selling Holder under this Section 1.7(b) in respect of any Violation shall not exceed the net proceeds received by such Holder in the registered offering out of which such Violation arises.

 

(c)           Notice.  Promptly after receipt by an indemnified party under this Section  1.7 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  1.7, deliver to the indemnifying party a written notice of the commencement thereof.  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 (together with all other indemnified parties that may be represented without conflict by one counsel) 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 conflict of 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 1.7, 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 1.7.

 

  

8

  

 

(d)           Defect Eliminated in Final Prospectus.  The foregoing indemnity agreements of the Company and selling Holders are subject to the condition that, insofar as they relate to any Violation made in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the registration statement in question becomes effective or the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus was furnished to the indemnified party or filed with the SEC prior to the sale of Registrable Securities to the person asserting the loss, liability, claim or damage and such Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act.

 

(e)           Contribution.  If the indemnification provided for in this Section 1.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by such indemnified party with respect to such loss, liability, claim, damage or expense in the proportion that is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations.  The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party pursuant to a registration under this Agreement, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  In any such case, (A) no such Holder will be required to contribute any amount in excess of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

(f)           Survival.  The obligations of the Company and selling Holders under this Section 1.7 shall survive the completion of any offering of Registrable Securities in a registration statement, and otherwise.

 

1.8           Rule 144 Reporting.  With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration, the Company agrees to:

 

  

9

  

 

(a)           Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act;

 

(b)           Use reasonable efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

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

 

1.9           Additional Shares.  The Company, at its option, may register, under any registration statement and any filings with any state securities commissions filed pursuant to this Agreement, any number of unissued shares of Common Stock of the Company or any shares of Common Stock or other securities of the Company owned by any other securityholder(s) of the Company, subject to Section 1.3.

 

2.           ASSIGNMENT AND AMENDMENT.

 

2.1           Assignment.  The registration rights of a Holder under Section 1 hereof may be assigned to an assignee or transferee of such Holder’s Registrable Securities; provided, however that no party may assign any of its rights hereunder, and any purported transfer of such rights shall be void, unless (i) the assignment of Registrable Securities to which the assignment of rights hereunder relates was effected in accordance with applicable law and the Lock-Up Agreement entered into by and between the Company and such Holder (the "Lock-Up Agreement") and the further disposition of such Registrable Securities by the assignee is restricted under the Securities Act, (ii) the Company is given written notice by the assigning party at the time of such assignment stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned and (iii) the assignee executes and delivers to the Company joinder agreements in forms reasonably satisfactory to the Company pursuant to which the assignee agrees to be bound by the terms of this Agreement as an Investor and the Lock-Up Agreement (to the extent applicable pursuant to and in accordance with the terms and provisions of the Lock-Up Agreement) as a Stockholder; and provided further that any such assignee shall receive such assigned rights subject to all the terms, restrictions and conditions of this Agreement, including without limitation the provisions of this Section 2.

 

2.2           Amendment and Waiver of Rights.  Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders (and/or any of their permitted successors and assignors) holding a majority of all of the Registrable Securities, provided that the consent of the Holders shall not be required after such time as the Holders shall not hold any Registrable Securities.  Any amendment or waiver effected in accordance with this Section 2.2 shall be binding upon each Holder, each permitted successor or assignee of such Holder and the Company.

 

  

10

  

 

3.           GENERAL PROVISIONS.

 

3.1           Notices.  Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following:  (i) at the time of personal delivery, if delivery is in person; (ii) at the time of transmission by facsimile or electronic mail address, addressed to the other party at its facsimile number or electronic mail address specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by printed confirmation sheet verifying successful transmission of the facsimile or electronic mail; (iii) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (iv) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries.

 

All notices not delivered personally or by facsimile or electronic mail will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address or facsimile number or electronic mail address as follows, or at such other address or facsimile number or electronic mail address as such other party may designate by one of the indicated means of notice herein to the other parties hereto as follows:

 

(a)           if to a Holder, at such Holder’s address as set forth on the Holder's signature page hereto or such other address provided by the Holder to the Company, or, if the Holder does not provide its address to the Company on the signature page hereto or otherwise, at such Holder’s address as set forth in the books and records of the Company.

 

(b)           if to the Company, marked “Attention:  Shimon Steinmetz”, at Finjan Holdings, Inc. (f/k/a Converted Organics, Inc.), 261 Madison Avenue, New York, NY 10016, E-mail: shimon@finjan.com, Facsimile: (917) 591-4351.

 

3.2           Entire Agreement.  This Agreement and the documents referred to herein, together with all the Exhibits hereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

 

3.3           Governing Law; Jurisdiction; Waiver of Jury Trial.  This Agreement will be governed by and construed in accordance with the laws of the State of Delaware , without giving effect to that body of laws pertaining to conflict of laws.  Each of the parties hereto hereby irrevocably consents to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the registration of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, in care of the address as set forth above or such other address as the undersigned shall furnish in writing to the other.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

  

11

  

 

3.4           Severability.  If any provision of this Agreement is is prohibited by law or otherwise determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity, illegality or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity, illegality or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.   The parties will endeavor in good faith negotiations to replace the prohibited, invalid, illegal or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

3.5           Third Parties.  Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and assigns and other than as set forth in Section 1.7, any rights or remedies under or by reason of this Agreement.

 

3.6           Successors And Assigns.  Subject to the provisions of Section 2.1, this Agreement, and the rights and obligations of the parties hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives.

 

3.7           Titles and Headings.  The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement.

 

3.8           Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.

 

3.9           Further Assurances.  The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

3.10           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.

 

[Signature Page Follows]

 

  

12

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above.

 

	 	
CONVERTED ORGANICS, INC.

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

 

[SIGNATURE PAGE OF INVESTORS FOLLOWS]

 

REGISTRATION RIGHTS AGREEMENT

  

  

  

 

                                                                                      

	Name of Investor:    	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 
	 	 	 	 
	Address of Investor:  	 	 	 
	 	 	 	 
	 	 	 	 

 

 

[SIGNATURE PAGE OF INVESTORS]

REGISTRATION RIGHTS AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00218-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00218-of-00352.parquet"}]]