Document:

exv10w4

 

EXHIBIT 10.4

2006 NON-EMPLOYEE DIRECTOR

RESTRICTED STOCK AGREEMENT

          This 2006 Non-Employee Director Restricted Stock Agreement (this “Agreement”) is between
Oceaneering international, inc. (the “Company”) and ______(the “Participant”), a
non-employee Director, regarding an award (“Award”) of ______shares of Common Stock (as defined
in the 2005 Incentive plan of oceaneering international, inc. (the “Plan”), such Common
Stock comprising this Award referred to herein as “Restricted Stock”) awarded to the Participant
effective February 2, 2006 (the “Award Date”), such number of shares subject to adjustment as
provided in Section 15 of the Plan, and further subject to the following terms and conditions:

     1. Relationship to Plan. This Award is subject to all of the terms, conditions and provisions of
the Plan and administrative interpretations thereunder, if any, which have been adopted by the
Board thereunder and are in effect on the date hereof. Except as defined or otherwise specifically
provided herein, capitalized terms shall have the same meanings ascribed to them under the Plan.

     2. Vesting and Lapse of Restrictions.

     (a) All shares of Restricted Stock subject to this Award shall vest in full (and all
restrictions thereon shall lapse) on the first anniversary of the Award Date, provided the
Participant is a Director on such anniversary.

     (b) All shares of Restricted Stock (and any substitute security and cash component
distributed in connection with a Change of Control) subject to this Award shall vest in full
(and all restrictions thereon shall lapse), irrespective of the provision set forth in
subparagraph (a) above, provided that the Participant has been in continuous service as a
Director since the Award Date, upon the earlier to occur of:

     (i) the Participant’s death; or

     (ii) a Change of Control.

     (c) For purposes of this Agreement:

     (i) “Change of Control” means:

     (A) any Person is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company’s outstanding Voting Securities, other
than through the purchase of Voting Securities directly from the Company
through a private placement; or

     (B) individuals who constitute the Board on the date hereof (the
“Incumbent Board”) cease for any reason to constitute at least a majority
thereof, provided that any person becoming a Director subsequent to the

 

 

date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the Directors
comprising the Incumbent Board shall from and after such election be deemed
to be a member of the Incumbent Board; or

     (C) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than 60% of the
outstanding Voting Securities of the surviving or resulting corporation or
entity shall then be owned by the former shareholders of the Company; or

     (D) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of the Voting
Securities of the Company then outstanding; or

     (E) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which:

     (1) the Incumbent Board does not have authority (whether by law
or contract) to directly control the use or further disposition of
such assets; and

     (2) the financial results of the Company and such Person are not
consolidated for financial reporting purposes.

     (F) Anything else in this definition to the contrary notwithstanding,
no Change of Control shall be deemed to have occurred by virtue of any
transaction which results in the Participant, or a group of Persons which
includes the Participant, acquiring more than 20% of either the combined
voting power of the Company’s outstanding Voting Securities or the Voting
Securities of any other corporation or entity which acquires all or
substantially all of the assets of the Company, whether by way of merger,
consolidation, sale of such assets or otherwise.

     (ii) “Person” means, any individual, corporation, partnership, group,
association or other “person,” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, and the related
rules and regulations promulgated thereunder.

     (iii) “Voting Securities” means, with respect to any corporation or
other business enterprise, those securities, which under ordinary
circumstances are entitled to vote for the election of directors or others
charged with comparable duties under applicable law.

     3. Forfeiture of Award. If the Participant’s service as a Director terminates under any
circumstances (except those provided in Paragraph 2 of this Agreement or in any other written
agreement between the Participant and the Company which provides for vesting of the

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Restricted Stock granted hereby), all unvested Restricted Stock as of the termination date shall be
forfeited.

     4. Registration of Shares. The Participant’s right to receive the Restricted Stock shall be
evidenced by book entry registration (or by such other manner as the Committee may determine) at
the beginning of the Restriction Period. Upon termination of the Restriction Period, a certificate
representing such shares shall be delivered upon written request to the Participant as promptly as
is reasonably practicable following such termination.

     5. Code Section 83(b) Election. The Participant shall be permitted to make an election under Code
Section 83(b), to include an amount in income in respect of the Award of Restricted Stock in
accordance with the requirements of Code Section 83(b).

     6. Dividends and Voting Rights. The Participant is entitled to receive all dividends and other
distributions made with respect to Restricted Stock registered in his name and is entitled to vote
or execute proxies with respect to such registered Restricted Stock, unless and until the
Restricted Stock is forfeited.

     7. Delivery of Shares. The Company shall not be obligated to deliver any shares of Common Stock if
counsel to the Company determines that such sale or delivery would violate any applicable law or
any rule or regulation of any governmental authority or any rule or regulation of, or agreement of
the Company with, any securities exchange or association upon which the Common Stock is listed or
quoted. The Company shall in no event be obligated to take any affirmative action in order to
cause the delivery of shares of Common Stock to comply with any such law, rule, regulation or
agreement.

     8. Notices. Unless the Company notifies the Participant in writing of a different procedure, any
notice or other communication to the Company with respect to this Agreement or the Plan shall be in
writing addressed to the Corporate Secretary of the Company and shall be: (a) by registered or
certified United States mail, postage prepaid, to 11911 FM 529, Houston, Texas 77041-3011; or (b)
by hand delivery or otherwise to 11911 FM 529, Houston, Texas 77041-3011. Any such notice shall be
deemed effectively delivered or given upon receipt.

          Notwithstanding the foregoing, in the event that the address of the Company’s principal
executive offices is changed prior to the date of any exercise of this Award, notices shall instead
be made pursuant to the foregoing provisions at the then current address of the Company’s principal
executive offices.

          Any notice or other communication to the Participant with respect to this Agreement or the
Plan shall be given in writing and shall be deemed effectively delivered or given upon receipt or,
in the case of notices mailed by the Company to the Participant, five days after deposit in the
United States mail, postage prepaid, addressed to the Participant at the address specified at the
end of this Agreement or at such other address as the Participant hereafter designates by written
notice to the Company.

     9. Assignment of Award. Except as otherwise permitted by the Committee and as provided in the
immediately following paragraph, the Participant’s rights under the Plan and this Agreement are
personal, and no assignment or transfer of the Participant’s rights under and interest in this
Award may be made by the Participant other than by a domestic relations order. This Award is
payable during his lifetime only to the Participant, or in the case of a Participant

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who is mentally incapacitated, this Award shall be payable to his guardian or legal representative.

          The Participant may designate a beneficiary or beneficiaries (the “Beneficiary”) to whom the
Award under this Agreement, if any, will pass upon the Participant’s death and may change such
designation from time to time by filing with the Company a written designation of Beneficiary on
the form attached hereto as Exhibit A, or such other form as may be prescribed by the Committee;
provided that no such designation shall be effective unless so filed prior to the death of the
Participant and no such designation shall be effective as of a date prior to receipt by the
Company. The Participant may change his Beneficiary without the consent of any prior Beneficiary
by filing a new designation with the Company. The last such designation that the Company receives
in accordance with the foregoing provisions will be controlling. Following the Participant’s
death, the Award, if any, will pass to the designated Beneficiary and such person will be deemed
the Participant for purposes of any applicable provisions of this Agreement. If no such
designation is made or if the designated Beneficiary does not survive the Participant’s death, the
Award shall pass by will or, if none, then by the laws of descent and distribution.

     10. Withholding. The Company’s obligation to deliver shares of Restricted Stock to the Participant
upon the vesting of such shares shall be subject to the satisfaction of all applicable federal,
state and local income and employment tax withholding requirements (the “Required Withholding”).
The Company may withhold from the Restricted Stock that would otherwise have been delivered to the
Participant the number of shares necessary to satisfy the Participant’s Required Withholding, and
deliver the remaining shares of Restricted Stock to the Participant, unless the Participant has
made arrangements with the Company for the Participant to deliver to the Company cash, check, other
available funds or shares of previously owned Common Stock for the full amount of the Required
Withholding by 5:00 p.m. Central Standard Time on the date the shares of Restricted Stock become
vested. The amount of the Required Withholding and the number of shares to satisfy the
Participant’s Required Withholding shall be based on the Fair Market Value of the shares on the
date prior to the applicable date of vesting.

     11. Stock
Certificates. Certificates representing the Common Stock issued pursuant to the Award
will bear all legends required by law and necessary or advisable to effectuate the provisions of
the Plan and this Award. The Company may place a “stop transfer” order against shares of the
Common Stock issued pursuant to this Award until all restrictions and conditions set forth in the
Plan or this Agreement and in the legends referred to in this Section 11 have been complied with.

     12. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be
enforceable by the Participant, the Company and their respective permitted successors and assigns
(including personal representatives, heirs and legatees), except that the Participant may not
assign any rights or obligations under this Agreement except to the extent and in the manner
expressly permitted in Section 9 of this Agreement.

     13. No Service as Director Guaranteed. No provision of this Agreement shall confer any right upon
the Participant to continued service with the Company as a Director.

     14. Code
Section 409A Compliance.  If any provision of this Agreement would result in the
imposition of an excise tax under Section 409A of the Code and related regulations

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and Treasury pronouncements (“Section 409A”), that provision will be reformed to avoid imposition
of the excise tax and no action taken to comply with Section 409A shall be deemed to impair a
benefit under this Agreement.

     15. Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with
the laws of the State of Texas, excluding any choice of law provision thereof that would result in
the application of the laws of any other jurisdiction.

     16. Amendment. Except as set forth herein, this Agreement cannot be modified, altered or amended
except by an agreement, in writing, signed by both the Company and the Participant.

	 	 	 
	 

	 	OCEANEERING INTERNATIONAL,
	 

	 	INC.
	 
	 	 
	Award Date: February 2, 2006

	 	By:                                                                                 
	 

	 	Name:                                                                                
	 

	 	Title:                                                                                 

          The Participant hereby accepts the foregoing 2006 Non-Employee Director Restricted Stock
Agreement, subject to the terms and provisions of the Plan and administrative interpretations
thereof referred to above.

	 	 	 
	 

	 	PARTICIPANT:
	 
	 	 
	Date:                                         

	 	                                                                                                    
	 
	 	 
	 

	 	Participant’s Address:
	 
	 	 
	 

	 	                                                                                                    
	 

	 	                                                                                                    
	 

	 	                                                                                                    

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Exhibit A to 2006 Non-Employee Director

Restricted Stock Agreement

Designation of Beneficiary

          I,                                          (“Participant”), hereby declare that upon my death,
                                         (the “Beneficiary”) of                                         ___(address), who is my
___(relationship), will be entitled to the Award which may become payable
under the Plan and all other rights accorded the Participant under the Participant’s 2006
Non-Employee Director Restricted Stock Agreement (capitalized terms used but not defined herein
have the respective meanings assigned to them in such agreement).

          It is understood that this designation of Beneficiary is made pursuant to the Agreement and is
subject to the conditions stated therein, including the Beneficiary’s survival of Participant. If
any such condition is not satisfied, such rights shall devolve according to the Participant’s last
will and testament, or if none, then the laws of descent and distribution.

          It is further understood that all prior designations of beneficiary under the Agreement are
hereby revoked upon the filing of this designation with the Company. This designation of
Beneficiary may only be revoked in writing, signed by the Participant, and filed with the Corporate
Secretary of the Company prior to the Participant’s death.

	 	 	 
	 

	 	                                                                                                    
	 

	 	Participant
	 
	 	 
	 

	 	                                                                                                    
	 

	 	Date

-6-exv4w2

 

Exhibit 4.2

EXECUTION COPY

NGTV

INVESTOR RIGHTS AGREEMENT

February 12, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I — GENERAL
	 	 	3	 
	1.1 Definitions
	 	 	3	 
	ARTICLE II — REGISTRATION; RESTRICTIONS ON TRANSFER
	 	 	6	 
	2.1 Restrictions on Transfer
	 	 	6	 
	2.2 Demand Registration
	 	 	7	 
	2.3 Piggyback Registrations
	 	 	9	 
	2.4
Form S-3 Registration
	 	 	10	 
	2.5 Expenses of Registration
	 	 	12	 
	2.6 Obligations of the Company
	 	 	12	 
	2.7 Termination of Company’s Registration Obligation
	 	 	14	 
	2.8 Delay of Registration; Furnishing Information
	 	 	14	 
	2.9 Indemnification
	 	 	15	 
	2.10 Assignment of Registration Rights
	 	 	18	 
	2.11 Amendment of Registration Rights
	 	 	18	 
	2.12 Limitation on Subsequent Registration Rights
	 	 	18	 
	2.13 Rule 144 Reporting
	 	 	18	 
	ARTICLE III — COVENANTS OF THE COMPANY
	 	 	19	 
	3.1 Basic Financial Information and Reporting
	 	 	19	 
	3.2 Confidentiality of Records
	 	 	20	 
	3.3 Termination of Covenants
	 	 	20	 
	ARTICLE IV — RIGHTS OF FIRST REFUSAL
	 	 	21	 
	4.1 Subsequent Offerings
	 	 	21	 
	4.2 Exercise of Rights
	 	 	21	 
	4.3 Issuance of Equity Securities to Other Persons
	 	 	21	 
	4.4 Termination and Waiver of Rights of First Refusal
	 	 	21	 
	4.5 Transfer of Rights of First Refusal
	 	 	22	 
	4.6 Excluded Securities
	 	 	22	 
	ARTICLE V — MISCELLANEOUS
	 	 	23	 
	5.1 Governing Law
	 	 	23	 
	5.2 Survival
	 	 	23	 
	5.3 Successors and Assigns
	 	 	23	 
	5.4 Entire Agreement
	 	 	23	 
	5.5 Severability
	 	 	24	 
	5.6 Amendment and Waiver
	 	 	24	 
	5.7 Delays or Omissions
	 	 	24	 
	5.8 Notices
	 	 	24	 
	5.9 Titles and Subtitles
	 	 	25	 
	5.10 Counterparts
	 	 	25	 
	5.11 Further Assurances
	 	 	25	 
	5.12 Interpretation
	 	 	25	 
	5.13 Rights Cumulative
	 	 	25	 

 

 

     This Investor Rights Agreement (this “Agreement”) is entered into as of February 12. 2004, by
and among NGTV , a California corporation (the “Company”) and the persons and entities
listed on Schedule A hereto, (the “Investors” and each individually as an “Investor”), Kourosh Taj,
Janak Vibhakar (each referred to herein as a “Founder” and collectively as the “Founders”) and Gene
Simmons LLC, Allan Brown and Richard Abramson LLC (each referred to herein as a “Principal
Shareholder” and collectively as the “Principal Shareholders”).

RECITALS

     WHEREAS, pursuant to the terms of the Subscription Agreements and the Agency Agreement, the
Investors are purchasing units (“Units”) of the Company (the “Financing”) each Unit consisting of
one share of Common Stock of the Company (a “Unit
Share”) and one-half of a warrant (each a
“Warrant”) each whole Warrant entitling the holder to purchase one share of Common Stock (a “Warrant Share”) for $0.365 for a period of 12 months following the Closing Date (as defined in the
Subscription Agreements);

     WHEREAS, the obligations of the Investors pursuant to the Subscription Agreements are
conditional, among other things, upon the execution and delivery of this Agreement;

     WHEREAS, as part of the Financing, the HJG Note has been converted into Units in accordance
with the terms thereof and the Agency Agreement; and

     WHEREAS, in connection with the consummation of the Financing, the parties desire to enter
into this Agreement to grant registration, information rights and other 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 agree
hereto as follows:

ARTICLE I — GENERAL

1.1 Definitions

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

     “Agency Agreement” means the Agency Agreement dated the date hereof by and between the Company
and the Agent;

     “Agent” means Standard Securities Capital Corporation;

     “Agent’s Compensation Shares” means the shares of Common Stock of the Company issued upon
exercise by the Agent of the Agent’s Compensation Option in accordance with its terms;

 

4.

     “Agent’s Warrant Shares” means the shares of Common Stock of the Company issued upon exercise
of the Agent’s Warrants, in accordance with its terms;

     “Canadian Go Public Transaction” means a transaction whereby the Company becomes a publicly
traded company on a recognized stock exchange in Canada whether pursuant to: (i) a final prospectus
for which a receipt has been issued by a securities commission or similar regulatory body in
Canada; or (ii) pursuant to a reverse take-over, statutory amalgamation, statutory arrangement or
similar transaction involving the Company and which, in each case, results in the Common Stock of
the Company or the common stock of the resulting issuer being listed on a recognized stock exchange
in Canada;

     “Common Stock” means the shares of common stock in the capital of the Company;

     “Executive Officers” means the Chief Executive Officer, Chief Financial Officer, and such
other officers who are in a position to direct the policy of the Company;

     “Exchange Act” means the Securities Exchange Act of 1934, as amended;

     “Financing” has the meaning given to such term in the Recitals;

     “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;

     “Founder Shares” mean all shares of Common Stock registered in the respective names of the
Founders or beneficially owned by them as of the date hereof and as more specifically set out in
Schedule B and any other securities issuable with respect to or in exchange for such shares of
Common Stock;

     “Founders” means Janak Vibhakar and Kourosh Taj;

     “HJG Note” means the promissory note dated as of January 16, 2004 evidencing the loan in the
amount of $250,000 made by HJG Partnership to the Company;

     “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.

     “Initial Offering” means the Company’s first firm commitment underwritten public offering of
its Common Stock to the general public registered under the Securities Act.

     “Principal Shareholder Shares” mean all shares of Common Stock registered in the respective
names of the Principal Shareholders or beneficially owned by them as of the date hereof and as more
specifically set out in Schedule C and any other securities issuable with respect to or in exchange
for such shares of Common Stock, including with respect to such

 

5.

options to acquire Common Stock held by the Principal Shareholders respectively and as set out
in Schedule C;

     “Principal Shareholders” mean Gene Simmons LLC, [Allan Brown] and Richard Abramson LLC;

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

     “Registrable Securities” means (i) the Shares, the Warrant Shares, the Agent’s Compensation
Shares and the Agent’s Warrant Shares, if any, and (ii) any other securities issued or issuable
with respect to or in a exchange for Registrable 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;

     “Registrable Securities then outstanding” means the number of shares determined by calculating
the total number of shares of the Company’s Common Stock that are Registrable Securities and either
(a) are then issued and outstanding or (b) are issuable pursuant to then exercisable or convertible
securities;

     “Registration Expenses” means 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 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);

     “SEC” or “Commission” means the Securities and Exchange Commission;

     “Securities Act” means the Securities Act of 1933, as amended;

     “Selling Expenses” means all underwriting discounts and selling commissions applicable to the
securities registered by the Holders;

     “Shares” means the shares of Common Stock forming part of the Units issued pursuant to the
terms of the Agency Agreement and the Subscription Agreements including those issued shares
pursuant to the mandatory conversion requirements contained in the HJG Note and those Shares issued
to Modena Investments Inc. pursuant to its convertible note;

     “Special Registration Statement” shall mean a registration statement relating to any employee
benefit plan or with respect to any corporate reorganization or other transaction under Rule 145 of
the Securities Act;

 

6.

     “Subscription Agreements” means the subscription agreements entered into between the Investors
and the Company in respect of the purchase of Units;

     “Units” has the meaning given to such terms in the Recitals;

     “Warrants” has the meaning given to such term in the Recitals;

     “Warrant Shares” has the meaning given to such term in the Recitals;

ARTICLE II  — REGISTRATION; RESTRICTIONS ON TRANSFER

2.1 Restrictions on Transfer

(a) Each Holder will not make any disposition of all or any portion of the Common
Stock or Registrable Securities unless and until:

(i) There is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

(ii) (A) The transferee has agreed in writing to be bound by the terms of
this Agreement, (B) such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C)
if reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances or where the disposition is made by an Investor who is not a
U.S. Person within the meaning of Regulation D under the Securities Act and
such trade is completed wholly outside of the United States.

(iii) Notwithstanding the provisions of paragraphs (i) and (ii) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by a Holder which is (A) a partnership to its partners or former
partners in accordance with partnership interests, (B) a corporation to its
shareholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance
with their interest in the limited liability company, (D) to the Holder’s
family member or trust for the benefit of an individual Holder, or (E)
otherwise an “affiliate” of a Holder as such term is defined in Rule 405 of
the Securities Act; provided that in each case the transferee will be
subject to the terms of this Agreement to the same extent as if he were an
original Holder hereunder.

 

7.

(iv) The provisions of paragraphs (i) and (ii) above shall not apply where
the disposition is made by an Investor who is not a U.S. Person and where
such disposition is made in connection with a Canadian Go Public Transaction
or otherwise pursuant to an exemption to the prospectus and registration
requirements under applicable Canadian securities laws.

(b) Each certificate representing Common Stock or Registrable Securities shall
(unless otherwise permitted by the provisions of the Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.”

(c) The Company shall be obligated to reissue promptly unlegended certificates at
the request of any holder thereof if the holder shall have obtained an opinion of
counsel (which counsel may be counsel to the Company) reasonably acceptable to the
Company to the effect that the securities proposed to be disposed of may lawfully be
so disposed of without registration, qualification or legend.

(d) Any legend endorsed on an instrument pursuant to applicable state securities
laws and the stop-transfer instructions with respect to such securities shall be
removed upon receipt by the Company of an order of the appropriate blue sky
authority authorizing such removal.

2.2 Demand Registration

(a) Subject to the conditions of this Section 2.2, if after the six month
anniversary of the closing of the Company’s Initial Offering the Company shall
receive a written request from the Holder or Holders of at least fifty percent (50%)
of the Shares requesting that the Company file a registration statement under the
Securities Act covering the registration of the Registrable Securities (the
“Initiating Holders”), then the Company shall, and subject to the limitations of
this Section 2.2 use its reasonable best efforts to cause such shares to be
registered.

(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

 

8.

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 Holders of such Registrable Securities on a pro rata basis based on
the number of Registrable Securities held by all such Holders (including the
Initiating Holders); provided, however, that the number of shares of Registrable
Securities to be included in such underwriting and registration shall not be reduced
unless, first, all securities of the Company held by the Founders are entirely
excluded from the underwriting and registration and then all other securities of the
Company are 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) after the Company has effected two (2) registrations pursuant to this
Section 2.2, and such registrations have been declared or ordered effective;

(ii) during the period starting with the date of filing of, and ending on
the date one hundred eighty (180) days following the effective date of the
registration statement pertaining to a public offering, other than pursuant
to a Special Registration Statement; provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective;

(iii) if within thirty (30) days of receipt of a written request from
Initiating Holders pursuant to Section 2.2(a), the Company gives notice to
the Holders, of the Company’s intention to make a public offering, other
than pursuant to a Special Registration Statement, within ninety (90) days,
which notice may be delivered only once in any twelve (12) month period;

(iv) if the Company shall furnish to Holders requesting a registration
statement pursuant to this Section 2.2, a certificate signed by the Chairman

 

9.

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 one hundred twenty (120) days after receipt of
the request of the Initiating Holders; provided that such right to delay a
request shall be exercised by the Company not more than once in any twelve
(12) month period;

(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; or

(vi) if a Canadian Go Public Transaction has been consummated.

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 the Agreement, if the Company and its
underwriter determines in good faith that market conditions require a limitation of
the number of shares to be underwritten (including to zero), the number of shares
that may be included in the underwriting shall be allocated, first, to the Company;
second, to the Holders (excluding the

 

10.

Founders) on a pro rata basis based on the total number of Registrable Securities
held by the Holders; third, to the Founders on a pro rata basis, and fourth, to any
stockholder of the Company (other than a Holder or a Founder) on a pro rata basis.
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 fifteen (15) business days prior to the effective date of the
registration statement, provided that the Company shall have provided the Holders
written notice of the proposed 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,
corporation or limited liability company, the partners, retired partners,
shareholders, members and retired members of such Holder, or the estates and family
members of any such partners, retired partners, members and retired members and any
trusts for the benefit of any of the foregoing persons 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.

For the purposes of Section 2.3, “Holder” or “Holders” shall be deemed to include the Founders and
the Principal Shareholders and “Registrable Securities” shall be deemed to include the Founder
Shares and Principal Shareholder Shares.

To the extent that the Principal Shareholders and Founders exercise their Piggy Back Registration
Rights as provided for in Section 2.3, then any other reference in this Agreement to “Holder” or
“Holders” or “Registrable Securities” including, without limitation, in Sections 2.5 and 2.9
hereof, which refer to Section 2.3 shall be deemed to include the Founders and Founder Shares and
the Principal Shareholders and Principal Shareholder Shares, as applicable.

2.4 Form S-3 Registration

     In case the Company shall receive from any Holder or Holders of Registrable Securities 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 such Holder or
Holders, in excess of $1 million, the Company will:

(a) promptly give written notice of the proposed registration, and any related
qualification or compliance, to all other Holders of Registrable Securities; and

 

11.

(b) as soon as practicable, 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 Holder’s or Holders’ Registrable
Securities as are specified in such request, together with all or such portion of
the Registrable Securities of any other Holder or Holders joining in such request as
are specified in a written request given within fifteen (15) days after receipt of
such written notice from the Company; 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 the amount of securities to be sold pursuant to such registration on
Form S-3 is less than $1 million;

(ii) if Form S-3 is not available for such offering by the Holders;

(iii) if within thirty (30) days of receipt of a written request from any
Holder or Holders pursuant to this Section 2.4, the Company gives notice to
such Holder or Holders of the Company’s intention to make a public offering
within ninety (90) days, other than pursuant to a Special Registration
Statement, which notice may be delivered only once in any twelve-month
period;

(iv) if the Company shall furnish to the 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 ninety (90) days after receipt of the request
of the Holder or Holders under this Section 2.4; provided that such right to
delay a request shall be exercised by the Company not more than once in any
twelve (12) month period;

(v) if the Company has, within the twelve (12) month period preceding the
date of such request, already effected two (2) registrations on Form S-3 for
the Holders pursuant to this Section 2.4; or

(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.

(c) 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 request or requests of the
Holders. Registrations effected pursuant to this Section 2.4 shall not be counted as

 

12.

demands for registration or registrations effected pursuant to Sections 2.2 or 2.3,
respectively.

2.5 Expenses of Registration

     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, and all expenses in excess of $15,000 for any special audit required in connection with
a demand registration 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 2.4, the request of which
has been subsequently withdrawn by the Initiating Holders unless (a) 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 or (b) the Holders of a majority of Registrable Securities agree to
forfeit their right to one requested registration pursuant to Section 2.2 or Section 2.4, as
applicable, in which event such right shall be forfeited by all Holders). If the Holders are
required to pay the Registration Expenses, such expenses shall be borne by the holders of
securities (including 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 pursuant to clause (a) above, then the Holders shall
not forfeit their rights pursuant to Section 2.2 or Section 2.4 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 its best efforts to cause such registration statement
to become effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration statement
continuously effective for a period of up to ninety (90) days or until the
distribution contemplated in the Registration Statement has been completed;
provided, however, that (i) such 90-day period shall be extended for a period of
time equal to the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous or delayed
basis, such 90-day period shall be extended, if necessary, to keep the registration
statement effective continuously until all such Registrable Securities are sold,
provided that Rule 415, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis, and provided further that applicable
rules under the Securities Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective amendment which (I) includes
any prospectus required by Section 10(a)(3) of the Securities Act or

 

13.

(II) reflects facts or events representing a material or fundamental change in the
information set forth in the registration statement, the incorporation by reference
of information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement.

(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 to facilitate the
disposition of Registrable Securities owned by them.

(d) Use its best 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 unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act.

(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) In the event of any underwritten public offering, cooperate with the selling
Holders, the underwriters participating in the offering and their counsel in any due
diligence investigation reasonably requested by the selling Holders or the
underwriters in connection therewith, and participate, to the extent reasonably
requested by the managing underwriter for the offering or the selling Holder, in
efforts to sell the Registrable Securities under the offering (including, without
limitation, participating in “roadshow” meetings with prospective investors) that
would be customary for underwritten primary offerings of a comparable amount of
equity securities by the Company.

(g) Cause all such Registrable Securities registered pursuant hereunder to be listed
on each securities exchange on which similar securities issued by the Company are
then listed.

 

14.

(h) Provide a transfer agent and registrar for all Registrable Securities registered
pursuant hereunder and a CUSIP number for all such Registrable Securities, in each
case not later than the effective date of such registration.

(i) 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 its best efforts to
amend or supplement such prospectus 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.

(j) Furnish, at the request of any Holder requesting registration of Registrable
Securities, on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters, or,
if such securities are not being sold through underwriters, on the date that the
registration statement with respect to such Registrable Securities becomes
effective, (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, or to the Holders requesting registration of Registrable
Securities if no underwriter is involved, 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, if
any, and to the Holders requesting registration of Registrable Securities if no
underwriter is involved.

2.7 Termination of Company’s Registration Obligation

     The registration obligations of the Company set out in Section 2.2, 2.3 or 2.4 shall terminate
upon the earlier of the following:

(a) the date which is five (5) years following the completion of the Initial
Offering; and

(b) the date following the completion of the Initial Offering on which each Holder
holds less than one percent (1%) of the then issued and outstanding shares of Common
Stock and such shares may be immediately sold pursuant to Rule 144 during any ninety
(90) day period.

2.8 Delay of Registration; Furnishing Information

 

15.

(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 take any
action pursuant to Section 2.2, 2.3 or 2.4 that the selling Holders 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.

(c) The Company shall have no obligation with respect to any registration requested
pursuant to Section 2.2 or Section 2.4 if, due to the operation of subsection
2.2(b), the number of shares or the anticipated aggregate offering price of the
Registrable Securities to be included in the registration does not equal or exceed
the number of shares or the anticipated aggregate offering price required to
originally trigger the Company’s obligation to initiate such registration as
specified in Section 2.2 or Section 2.4, whichever is applicable.

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, members 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, member, 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

 

16.

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, member, officer, director, underwriter or controlling
person of such Holder.

(b) To the extent permitted by law, each Holder will (on a several and not a joint
and several basis), 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, members, 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, member, controlling person, underwriter or other such Holder, or partner,
member, 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, member, 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 exceed the net proceeds 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,

 

17.

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
(together with all other indemnified parties which may be represented without
conflict by one counsel) 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 hand 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.

(f) Any indemnity obligation of a Holder hereunder pursuant to Section 2.9(b) is a
several and distinct obligation of such Holder and no other Holder shall have any
obligation or liability to indemnify the Company in respect of such Holder’s
obligations to indemnify.

 

18.

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 which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member or retired member of
a Holder, (b) is a Holder’s family member or trust for the benefit of such Holder, (c) acquires at
least Two Hundred Fifty Thousand (250,000) shares of Registrable Securities (as adjusted for stock
splits and combinations); or (d) is otherwise an “affiliate” of a Holder as such term is defined
under Rule 405 of the Securities Act, provided, however, (i) the transferor shall, within ten (10)
business 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 to be subject to all restrictions
set forth in this Agreement.

2.11 Amendment of Registration Rights

     Any provision of this Section 2 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 of at least a majority of the outstanding
Shares. Any amendment or waiver effected in accordance with this Section 2.11 shall be binding upon
each Holder and the Company. By acceptance of any benefits under this Section 2, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.

2.12 Limitation on Subsequent Registration Rights

     The Company shall not, without the prior written consent of the Holders of at least a majority
of the Registrable Securities then outstanding, enter into any agreement with any holder or
prospective holder of any securities of the Company that would grant such holder registration
rights pari passu or senior to those granted to the Holders hereunder.

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, at all times after the effective date of the first registration
filed by the Company for an offering of its securities to the general public;

(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

 

19.

compliance with the reporting requirements of said Rule 144 of the Securities Act;
and of the Exchange Act (at any time after it has become subject to such reporting
requirements); 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.

ARTICLE III — COVENANTS OF THE COMPANY

3.1 Basic Financial Information and Reporting

(a) The Company will maintain true books and records of account in which full and
correct entries will be made of all its business transactions pursuant to a system
of accounting established and administered in accordance with generally accepted
accounting principles consistently applied, and will set aside on its books all such
proper accruals and reserves as shall be required under generally accepted
accounting principles consistently applied.

(b) As soon as practicable after the end of each fiscal year of the Company
commencing fiscal year 2004, and in any event within ninety (90) days thereafter,
the Company will furnish each Investor, so long as the Investor continues to hold
Shares, an audited balance sheet of the Company, as at the end of such fiscal year,
and an audited statement of income and an audited statement of cash flows of the
Company, for such year, all prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable detail.
Such financial statements shall be accompanied by a report and opinion thereon by
independent public accountants of national standing selected by the Company’s Board
of Directors.

(c) The Company will furnish each Investor, so long as the Investor continues to
hold Shares, as soon as practicable after the end of the first, second and third
quarterly accounting periods in each fiscal year of the Company, and in any event
within forty-five (45) days thereafter, an unaudited balance sheet of the Company as
of the end of each such quarterly period, and an unaudited statement of income and a
statement of cash flows of the Company for such period and for the current fiscal
year to date, prepared in accordance with generally accepted accounting principles
consistently applied, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.

(d) The Company will furnish each Investor (i) at least thirty (30) days prior to
the beginning of each fiscal year an annual budget and operating plans for such
fiscal year (and as soon as available, any subsequent revisions thereto); and (ii)
as soon as practicable after the end of each month, and in any event within thirty
(30) days thereafter, an unaudited balance sheet of the Company as of the end of
each such month, and an unaudited statement of income and a statement of cash flows
of the Company for such month and for the current fiscal year to date,

 

20.

including a comparison to plan figures for such period, prepared in accordance with
generally accepted accounting principles consistently applied, with the exception
that no notes need be attached to such statements and year-end audit adjustments may
not have been made.

(e) The obligations of the Company under this Section 3.1 will terminate upon an
Initial Offering.

3.2 Confidentiality of Records

     Each Investor agrees to use, and to use its best efforts to insure that its authorized
representatives use, the same degree of care as such Investor uses to protect its own confidential
information to keep confidential any information furnished to it which the Company identifies as
being confidential or proprietary (so long as such information is not in the public domain), except
that such Investor may disclose such proprietary or confidential information to any partner,
subsidiary or parent of such Investor for the purpose of evaluating its investment in the Company
as long as such partner, subsidiary or parent is advised of the confidentiality provisions of this
Section 3.3.

3.3 Termination of Covenants

     All covenants of the Company contained in Section 3 of this Agreement shall expire and
terminate as to each Investor upon the earlier of (i) the effective date of the registration
statement pertaining to the Initial Offering or (ii) upon (a) the sale, lease or other disposition
of all or substantially all of the assets of the Company or (b) an acquisition of the Company by
another corporation or entity by consolidation, merger or other reorganization in which the holders
of the Company’s outstanding voting stock immediately prior to such transaction own, immediately
after such transaction, securities representing less than fifty percent (50%) of the voting power
of the corporation or other entity surviving such transaction; provided that this Section 3.5 shall
not apply to a merger effected exclusively for the purpose of changing the domicile of the Company
(a “Change in Control”).

 

21.

ARTICLE IV — RIGHTS OF FIRST REFUSAL

4.1 Subsequent Offerings

     Each Investor shall have a right of first refusal to purchase its pro rata share of all Equity
Securities, as defined below, that the Company may, from time to time, propose to sell and issue
after the date of this Agreement, other than the Equity Securities excluded by Section 4.6 hereof.
Each Investor’s pro rata share is equal to the ratio of (a) the number of shares of the Company’s
Common Stock (including the Shares) which such Investor is deemed to be a holder immediately prior
to the issuance of such Equity Securities to (b) the total number of shares of the Company’s
outstanding Common Stock (including all Shares) held by all Investors immediately prior to the
issuance of the Equity Securities. The term “Equity Securities” shall mean (i) any Common Stock or
other security of the Company, (ii) any security convertible, with or without consideration, into
any Common Stock or other security (including any option to purchase such a convertible security),
(iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock or
other security or (iv) any such warrant or right.

4.2 Exercise of Rights

     If the Company proposes to issue any Equity Securities, it shall give each Investor written
notice of its intention, describing the Equity Securities, the price and the terms and conditions
upon which the Company proposes to issue the same. Each Investor shall have fifteen (15) days from
the giving of such notice to agree to purchase its pro rata share of the Equity Securities for the
price and upon the terms and conditions specified in the notice by giving written notice to the
Company and stating therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity Securities to any
Investor who would cause the Company to be in violation of applicable federal securities laws by
virtue of such offer or sale.

4.3 Issuance of Equity Securities to Other Persons

     If not all of the Investors elect to purchase their pro rata share of the Equity Securities,
then the Company shall promptly notify in writing the Investor who does so elect and shall offer
such Investor the right to acquire such unsubscribed shares. The Investor shall have five (5) days
after receipt of such notice to notify the Company of its election to purchase all or a portion
thereof of the unsubscribed shares. If the Investors fail to exercise in full the rights of first
refusal, the Company shall have ninety (90) days thereafter to sell the Equity Securities in
respect of which the Investor’s rights were not exercised, at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than specified in the Company’s
notice to the Investors pursuant to Section 4.2 hereof. If the Company has not sold such Equity
Securities within ninety (90) days of the notice provided pursuant to Section 4.2, the Company
shall not thereafter issue or sell any Equity Securities, without first offering such securities to
the Investors in the manner provided above.

4.4 Termination and Waiver of Rights of First Refusal

     The rights of first refusal established by this Section 4 shall not apply to, and shall
terminate upon the earlier of (i) effective date of the registration statement pertaining to the

 

22.

Company’s Initial Offering, (ii) a Change in Control as defined in Section 3.9 hereof or (iii)
with respect to an individual Investor, when such Investor is no longer a Holder.

4.5 Transfer of Rights of First Refusal

     The rights of first refusal of each Investor under this Section 4 may be transferred to the
same parties, subject to the same restrictions as any transfer of registration rights pursuant to
Section 2.10.

4.6 Excluded Securities

     The rights of first refusal established by this Section 4 shall have no application to the
issuance of any of the following Equity Securities approved by the Board of Directors:

(a) up to an aggregate amount of Six Million Eight Hundred Forty-One Thousand Eight
Hundred and Twenty-One (6,841,821) shares of Common Stock (and/or options, warrants
or other Common Stock purchase rights issued pursuant to such options, warrants or
other rights) as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like issued or to be issued after the Issue Date (as
defined in the Company’s Articles of Incorporation) to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary, pursuant
to stock purchase or stock option plans or other arrangements;

(b) stock issued pursuant to any rights or agreements outstanding as of the date of
this Agreement, warrants outstanding as of the date of this Agreement; and stock
issued pursuant to any such rights or agreements granted after the date of this
Agreement;

(c) any Equity Securities issued for consideration other than cash pursuant to a
merger, consolidation, acquisition or similar business combination approved by the
Board of Directors, including all the representatives designated by the holders of
the Registrable Securities;

(d) shares of Common Stock issued in connection with any stock split, stock dividend
or recapitalization by the Company;

(e) any Common Stock or warrants to purchase common stock, up to an aggregate of 5%
of the Company’s outstanding Common Stock, issued pursuant to any arm’s length
equipment leasing, loan arrangement or debt financing from a bank or similar
financial or lending institution;

(f) any Equity Securities that are issued by the Company in a firm commitment
underwritten public offering pursuant to a registration statement filed under the
Securities Act with an aggregate offering price of the securities of at least Ten
Million dollars ($10,000,000) (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to those shares); and

 

23.

(g) any Common Stock or warrants to purchase common stock up to an aggregate of 5%
of the Company’s outstanding Common Stock, issued in connection with strategic
transactions involving the Company and other entities, including (i) joint ventures,
manufacturing, marketing or distribution arrangements, (ii) technology transfer or
development arrangements or (iii) advisory board members, special industry
consultants and content providers; provided that such strategic transactions and the
issuance of shares therein are approved by the Board of Directors.

ARTICLE V — MISCELLANEOUS

5.1 Governing Law

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

5.2 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.

5.3 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.

5.4 Entire Agreement

     This Agreement, the Exhibits and Schedules hereto, the Purchase Agreement and each of the
exhibits thereto and the other documents delivered pursuant thereto constitute 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.

 

24.

5.5 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
and the parties and the parties hereto shall, to the extent permissible by applicable law, amend
this Agreement so as to make effective and enforceable the intent of this Agreement.

5.6 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 holders of at least a
majority of the Registrable Securities.

(b) Except as otherwise expressly provided, the obligations of the Company and the
rights of the Holders under this Agreement may be waived (either generally or in a
particular instance and retroactively or prospectively) only with the written
consent of the holders of at least a majority of the Registrable Securities.

(c) For the purposes of determining the number of Holder or investors entitled to
vote or exercise any rights hereunder, the Company shall be entitled to rely solely
on the list of record holders of its stock as maintained by or on behalf of the
Company.

5.7 Delays or Omissions

     It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any
Investor, upon any breach, default or noncompliance of the Company under this Agreement or the
Subscription Agreements 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 Investor’s part of any breach,
default or noncompliance under the Agreement or the Purchase Agreement, or any waiver on such
Investor’s part of any provisions or conditions of this Agreement or the Purchase 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 Investors shall be
cumulative and not alternative.

5.8 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

 

25.

receipt. All communications shall be sent to the party to be notified at the address as set
forth on the signature pages hereof or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.

5.9 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.

5.10 Counterparts

     This Agreement may be executed in any number of counterparts, including counterparts
transmitted by facsimile, each of which shall be deemed an original, but all of which together
shall constitute one instrument.

5.11 Further Assurances

     Each party will cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written assurances as may be
reasonably requested by any other party to evidence and reflect the transactions described herein
and contemplated hereby, and to carry this Agreement into effect.

5.12 Interpretation

     If any claim is made by a party relating to any conflict, omission or ambiguity in the
provisions of this Agreement, no presumption or burden of proof or persuasion will be implied
because this Agreement was prepared by or at the request of any party or its counsel. The parties
waive any statute or rule of law to the contrary.

5.13 Rights Cumulative

     Each and all of the various rights, powers and remedies of the parties hereto will be
considered to be cumulative with and in addition to any other rights, powers and remedies which
such parties may have at law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy will neither constitute
the exclusive election thereof nor the waiver of any other right, power or remedy available to such
party.

 

26.

     IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights Agreement as of the
date set forth in the first paragraph hereof.

	 	 	 	 	 	 	 	 
	COMPANY:	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	NGTV	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	By:

	 	/s/ Kourosh Taj	 	 	 	 	 
	 

	 	 	 	 	 	 	 
	 

	 	Name: Kourosh Taj	 	 	 	 	 
	 

	 	Title: CEO	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	FOUNDERS:	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	/s/ Kourosh Taj	 	 	 	 	 
	 	 	 	 
	Kourosh Taj	 	Witness	 
	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 
	Address
	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	/s/ Janak Vibhakar	 	 	 	 	 
	 	 	 	 
	Janak Vibhakar	 	Witness	 
	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 
	Address	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	PRINCIPAL SHAREHOLDERS:	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	GENE SIMMONS LLC	 	RICHARD ABRAMSON LLC	 
	 
	 	 	 	 	 	 	 
	Per:

	 	/s/ Gene Simmons
	 	Per:	 	/s/ Richard Abramson	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 
	 	 	 	 
	Address	 	Address	 
	 
	 	 	 	 	 	 	 
	/s/ Allan Brown	 	 	 	 	 
	 	 	 	 
	Allan Brown	 	Witness	 
	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 
	Address	 	 	 	 	 

 

27.

	 	 	 	 	 	 	 	 	 
	INVESTORS:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BTR GLOBAL GROWTH TRADING LIMITED	 	AEGON CAPITAL MANAGEMENT INC.	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Danny Guy
	 	Per:
	 	/s/ John Kim	 	 
	 

	 	 
	 	 	 	 	 	 
	Danny Guy, Director	 	John Kim, Vice President, P.M.	 	 
	 
	 	 	 	 	 	 	 	 
	BTR GLOBAL ARBITRAGE TRADING LIMITED	 	BLUMONT STRATEGIC PARTNERSHIP	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Danny Guy
	 	Per:
	 	/s/	 	 
	 

	 	 
	 	 	 	 	 	 
	Danny Guy, Director	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BTR GLOBAL OPPORTUNITY TRADING

LIMITED	 	STANDARD MERCANTILE BANCORP LP	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Danny Guy
	 	Per:
	 	/s/	 	 
	 

	 	 
	 	 	 	 	 	 
	Danny Guy, Director	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	HJG PARTNERSHIP	 	MISTY MANAGEMENT INC.	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/
	 	Per:
	 	/s/ Larry Torkin	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 	 	 	Larry Torkin, President	 	 
	 
	 	 	 	 	 	 	 	 
	CASURINA PERFORMANCE FUND	 	FRONT STREET CANADIAN HEDGE	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/
	 	Per:
	 	/s/ Frank Mersch	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 	 	 	Frank Mersch, Vice-President	 	 
	 
	 	 	 	 	 	 	 	 
	CASURINA LIMITED PARTNERSHIP	 	FRONT STREET INVESTMENT MANAGEMENT INC.	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/
	 	Per:
	 	/s/ Frank Mersch	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 	 	 	Frank Mersch, Vice-President	 	 
	 
	 	 	 	 	 	 	 	 
	MODENA INVESTMENTS INC.	 	1274639 ONTARIO LTD.	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Cindy DeFrancesio
	 	Per:
	 	/s/	 	 
	 

	 	 
	 	 	 	 	 	 
	Cindy DeFrancesio, President	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	FOUNTAINHEAD CAPITAL ADVISORS LTD.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Emlyn David	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Emlyn David, President	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Denise Petican	 	 	 	 	 	 
	 	 	 	 	 
	Denise Petican	 	Witness	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Bernie Zaionz	 	 	 	 	 	 
	 	 	 	 	 
	Bernie Zaionz	 	Witness	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Irwin Singer	 	 	 	 	 	 
	 	 	 	 	 
	Irwin Singer	 	Witness	 	 

 

28.

	 	 	 	 	 	 	 	 	 
	/s/ Richard Glatt	 	 	 	 	 	 
	 	 	 	 	 
	Richard Glatt	 	Witness	 	 

 

 

Schedule A

INVESTORS

	 	 	 
	Name	 	Address
	BTR Global Growth Trading Limited
	 	 
	 
	 	 
	BTR Global Arbitrage Trading Limited
	 	 
	 
	 	 
	BTR Global Opportunity Trading Limited
	 	 
	 
	 	 
	Aegon Capital Management Inc.
	 	 
	 
	 	 
	Blumont Strategic Partnership
	 	 
	 
	 	 
	Front Street Canadian Hedge
	 	 
	 
	 	 
	Front Street Investment Management Inc.
	 	 
	 
	 	 
	Casurina Performance Fund
	 	 
	 
	 	 
	Casurina Limited Partnership
	 	 
	 
	 	 
	Standard Mercantile Bancorp LP
	 	 
	 
	 	 
	HJG Partnership
	 	 

 

30.

	 	 	 
	Name	 	Address
	Modena Investments Inc.
	 	 
	 
	 	 
	Denise Petican
	 	 
	 
	 	 
	Misty Management Inc
	 	 
	 
	 	 
	Bernie Zaionz
	 	 
	 
	 	 
	1274639 Ontario Ltd.
	 	 
	 
	 	 
	Irwin Singer
	 	 
	 
	 	 
	Richard Glatt
	 	 
	 
	 	 
	Fountainhead Capital Advisors Ltd.
	 	 

 

 

Schedule B

FOUNDER SHARES

	 	 	 	 	 
	Name of Founder	 	Shares of Common Stock
	Kourosh Taj
	 	 	7,800,000	 
	 
	Janak Vibhakar
	 	 	14,505,000	 

 

 

Schedule C

PRINCIPAL SHAREHOLDER SHARES

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Name of Principal Shareholder	 	Shares of Common Stock	 	 	Common Stock Options	 
	Gene Simmons LLC
	 	5,623,977	 	 	2,280,607	 
	 
	Allan Brown
	 	5,623,977	 	 	2,280,607	 
	 
	Richard Abramson LLC
	 	5,623,977	 	 	2,280,607

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