EXHIBIT
10.2
FIRST AMENDED AND
RESTATED
REGISTRATION RIGHTS
AGREEMENT
THIS FIRST AMENDED AND RESTATED REGISTRATION
RIGHTS AGREEMENT (“Agreement”) is made and entered into
as of ____________, 2007 by and among Small World Kids, Inc., a
Nevada corporation (the “Company”), and the investors
listed on Exhibit A attached hereto (each a “Purchaser”
and collectively the “Purchasers”).
RECITALS
A. Certain of the Purchasers purchased Secured
Subordinated Convertible Notes (the “October 2006
Notes”) in the aggregate Face Amount of $330,000 pursuant to
the terms of that certain Note Purchase Agreement, dated as of
October 6, 2006 (the “Original Purchase Agreement”), as
amended as of the date hereof (the “April 2007
Amendment”, which together with the Original Purchase
Agreement is referred to as the “October 2006 Purchase
Agreement”). In connection with the October 2006 Notes, the
Company issued to those Purchasers Common Stock Purchase Warrants,
which were subsequently substituted with Class A-2 Preferred Stock
Warrants (the “October 2006 Warrants”) exercisable for
shares of the Company’s Class A-2 Convertible Preferred Stock
(the “Class A-2 Preferred Stock”). The Class A-2
Preferred Stock is convertible into shares of the Company’s
Common Stock.
B. The Company and the Purchasers who acquired the
October 2006 Notes and the October 2006 Warrants entered into that
certain Registration Rights Agreement, dated as of October 6, 2006
(the “Original Registration Rights Agreement”). Those
parties intend that the Original Registration Rights Agreement
shall be amended and restated in its entirety by this
Agreement.
C. Certain of the Purchasers purchased Secured
Subordinated Convertible Notes (the “April 2007 Notes”)
in the aggregate Face Amount of at least $750,000 pursuant to the
terms of that certain Note Purchase Agreement, dated as of the date
hereof (the “April 2007 Purchase Agreement”). In
connection with the April 2007 Notes, the Company issued to those
Purchasers Class A-2 Preferred Stock Warrants exercisable for
shares of the Company’s Class A-2 Preferred Stock (the
“April 2007 Warrants”).
D. The October 2006 Purchase Agreement and the
April 2007 Purchase Agreement are collectively referred to as the
“Purchase Agreements.” The October 2006 Notes and the
April 2007 Notes are collectively referred to as the
“Notes.” The October 2006 Warrants and the April 2007
Warrants are collectively referred to as the
“Warrants.”
E. Entering into this Agreement is required
pursuant to the terms of the April 2007 Amendment and is a
condition precedent to the obligation of the Purchasers to purchase
the April 2007 Notes under the April 2007 Purchase
Agreement.
F. The capitalized terms used in this Agreement
that are not defined herein shall have the meanings ascribed to
them in the Purchase Agreements.
TERMS AND
CONDITIONS
NOW THEREFORE, in consideration of the mutual
agreements, covenants and conditions and releases contained herein,
the Company and THE Purchasers hereby agree as follows:
1.
Definitions
. As used herein:
1.1 The term “Holder” means any person
owning or having the right to acquire Registrable Shares or any
assignee thereof in accordance with Section 2.8 hereof.
1.2 The terms “register,”
“registered,” and “registration” refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act (as defined below)
and the applicable rules and regulations thereunder, and the
declaration or ordering of the effectiveness of such registration
statement.
1.3 For the purposes hereof, the term
“Registrable Shares” means and includes (i) the shares
of Common Stock of the Company issued or issuable, directly or
indirectly, upon conversion of the Class A-2 Preferred Shares, and
(ii) any shares or other securities issued or issuable as a result
of a stock split, dividend or other distribution with respect to or
in exchange for or in replacement of the shares referenced in (i),
excluding in all cases, however, any Registrable Shares sold by a
Person in a transaction in which his or her rights under Section 2
are not assigned.
1.4 The term “Ownership Percentage”
means and includes, with respect to each Holder of Registrable
Shares requesting inclusion of Registrable Shares in an offering
pursuant to this Agreement, the number of Registrable Shares held
by such Holder divided by the aggregate of (i) all Registrable
Shares held by all Holders requesting registration in such offering
and (ii) the total number of all other securities entitled to
registration pursuant to any agreement with the Company and held by
others participating in the underwriting.
1.5 The term “Securities Act” means the
Securities Act of 1933, as amended.
1.6 The term “Exchange Act” means the
Securities Exchange Act of 1934, as amended.
1.7 The term “SEC” means the Securities
and Exchange Commission.
1.8 The term “Public Offering” means and
includes the closing of an underwritten public offering pursuant to
an effective registration statement under the Securities Act,
covering the offer and sale of securities to the general public for
the account of the Company.
2.1
“Piggy Back”
Registration . If at any
time the Company shall determine to register under the Securities
Act (including pursuant to a demand of any stockholder of the
Company exercising registration rights) any of its Common Stock
(other than a registration relating solely to the sale of
securities to participants in a Company employee benefits plan, a
registration on any form which does not include substantially the
same information as would be required to be included in a
registration statement covering the sale of the Registrable
Shares), it shall send to each Holder written notice of such
determination and, if within twenty (20) days after receipt of such
notice, such Holder shall so request in writing, the Company shall
use its best efforts to include in such registration statement all
of the Registrable Shares that such Holder requests to be
registered, except that if, in connection with any offering
involving an underwriting of Common Stock to be issued by the
Company, the managing underwriter shall impose a limitation on the
number of shares of Common Stock included in any such registration
statement because, in such underwriter’s judgment, such
limitation is necessary based on market conditions, the Company
shall be obligated to include in such registration statement, with
respect to the requesting Holder, only an amount of Registrable
Shares equal to the product of (i) the number of Registrable Shares
that remain available for registration after the
underwriter’s cut back and (ii) such Holder’s Ownership
Percentage, as that term is defined in Section 1.4. If any Holder
disapproves of the terms of such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the
underwriter. Notwithstanding anything herein to the contrary, the
amount of Registrable Securities to otherwise be included in any
registration statement shall be subject to the limitations imposed
by Rule 415 under the Securities Act as determined by counsel to
the Company.
(a) The Company will use its best efforts to
maintain the effectiveness for the period described in the plan of
distribution set forth in the registration statement.
(b) The Company will from time to time amend or
supplement such registration statement and the prospectus contained
therein as and to the extent necessary to comply with the
Securities Act and any applicable state securities statute or
regulation.
(a)
Indemnification of
Holders . In the event
that the Company registers any of the Registrable Shares under the
Securities Act, the Company will indemnify and hold harmless each
Holder and each underwriter of the Registrable Shares so registered
(including any broker or dealer through whom such shares may be
sold) and each person, if any, who controls such Holder within the
meaning of the Securities Act or any such underwriter within the
meaning of Section 15 of the Securities Act from and against any
and all losses, claims, damages, expenses or liabilities (or any
action in respect thereof), joint or several, to which they or any
of them become subject under the Securities Act or under any other
statute or at common law or otherwise, and, except as hereinafter
provided, will reimburse each such Holder, such Holder’s
directors and officers, each such underwriter and each such
controlling person, if any, for any legal or other expenses
reasonably incurred by them or any of them, as such expenses are
incurred, in connection with investigating, defending, or settling
any actions whether or not resulting in any liability, insofar as
such losses, claims, damages, expenses, liabilities or actions
arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or
in the prospectus (or the registration statement or prospectus as
from time to time amended or supplemented by the Company); (ii)
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
or (iii) any violation by the Company of the Securities Act, the
Exchange Act, a state securities law or any rule or regulation
under the Securities Act, the Exchange Act or any state securities
law; provided, however, that the indemnity contained in this
Section 2.3(a) will not apply where such untrue statement or
omission was made in such registration statement, preliminary or
amended, preliminary prospectus or prospectus in reliance upon and
in conformity with information furnished in writing to the Company
in connection therewith by such Holder of Registrable Shares, any
such underwriter or any such controlling person expressly for use
therein. Promptly after receipt by any Holder of Registrable
Shares, any underwriter or any controlling person of notice of the
commencement of any action in respect of which indemnity may be
sought against the Company, such Holder of Registrable Shares, or
such underwriter or such controlling person, as the case may be,
will notify the Company in writing of the commencement thereof,
and, subject to the provisions hereinafter stated, the Company
shall assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to such
Holder of Registrable Shares, such underwriter or such controlling
person, as the case may be), and the payment of expenses insofar as
such action shall relate to any alleged liability in respect of
which indemnity may be sought against the Company. Such Holder of
Registrable Shares, any such underwriter or any such controlling
person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof in the event the
representation of such Holder, underwriter or controlling person by
counsel retained by or on the behalf of the Company would be
inappropriate due to conflicts of interest between any such person
and any other party represented by such counsel in such proceeding
or action, in which case the Company shall pay, as incurred, the
fees and expenses of such separate counsel. The Company shall not
be liable to indemnify any person under this Section 2.3(a) for any
settlement of any such action effected without the Company’s
consent (which consent shall not be unreasonably withheld). The
Company shall not, except with the approval of each party being
indemnified under this Section 2.3(a) (which approval will not be
unreasonably withheld), consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the parties
being so indemnified of a release from all liability in respect to
such claim or litigation.
(b)
Indemnification of
Company . In the event
that the Company registers any of the Registrable Shares under the
Securities Act, each Holder of the Registrable Shares so registered
will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration
statement, each underwriter of the Registrable Shares so registered
(including any broker or dealer through whom any of such shares may
be sold) and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act from and against
any and all losses, claims, damages, expenses or liabilities (or
any action in respect thereof), joint or several, to which they or
any of them may become subject under the Securities Act or under
any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse the Company and each such
director, officer, underwriter or controlling person for any legal
or other expenses reasonably incurred by them or any of them, as
such expenses are incurred, in connection with investigating or
defending any actions whether or not resulting in any liability,
insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
regist
