Exhibit 10.07
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this “ Agreement
”), dated as of November 16, 2007, by and among
Motivnation, Inc., a Nevada corporation with its headquarters
located at 18101 Von Karman Avenue, Suite 330, Irvine, CA 92612
(the “ Company ”), and each of the
undersigned (together with their respective affiliates and any
assignee or transferee of all of their respective rights hereunder,
the “ Initial Investors
”).
WHEREAS:
In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms
and subject to the conditions contained therein, to issue and sell
to the Initial Investors (i)
secured convertible notes in the aggregate principal
amount of up to One Hundred Seventy Five Thousand Dollars
($175,000) (the “Notes”) that are convertible into
shares of the Company’s common stock (the “Common
Stock”), upon the terms and subject to the limitations and
conditions set forth in such Notes and
(ii) warrants (the
“Warrants”) to acquire an aggregate of 15,000,000
shares of Common Stock, upon the terms and conditions and subject
to the limitations and conditions set forth in the Warrants;
and
To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “
1933
Act
”), and applicable state securities
laws;
NOW,
THEREFORE,
in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each
of the Initial Investors hereby agree as
follows:
DEFINITIONS.
As
used in this Agreement, the following terms shall have the
following meanings:
“
Investors ”
means the Initial Investors and any transferee or assignee who
agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
“
register ,”
“
registered ,”
and “
registration ”
refer to a registration effected by preparing and filing a
Registration Statement or Statements in compliance with the 1933
Act and pursuant to Rule 415 under the 1933 Act or any successor
rule providing for offering securities on a continuous basis
(“
Rule 415 ”),
and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange
Commission (the “
SEC ”).
“
Registrable Securities ”
means the Conversion Shares issued or issuable upon conversion or
otherwise pursuant to the Notes and Additional Notes (as defined in
the Securities Purchase Agreement) including, without limitation,
Damages Shares (as defined in the Notes) issued or issuable
pursuant to the Notes, shares of Common Stock issued or issuable in
payment of the Standard Liquidated Damages Amount (as defined in
the Securities Purchase Agreement), shares issued or issuable in
respect of interest or in redemption of the Notes in accordance
with the terms thereof) and Warrant Shares issuable, upon exercise
or otherwise pursuant to the Warrants and Additional Warrants (as
defined in the Securities Purchase Agreement), and any shares of
capital stock issued or issuable as a dividend on or in exchange
for or otherwise with respect to any of the foregoing.
“
Registration Statement ”
means a registration statement of the Company under the 1933
Act.
Capitalized
terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase
Agreement or the Convertible Note.
REGISTRATION.
Mandatory Registration .
The Company shall prepare, and, on or prior to thirty (30) days
from the date of Closing (as defined in the Securities Purchase
Agreement) (the “
Filing Date ”),
file with the SEC a Registration Statement on Form S-3 (or, if Form
S-3 is not then available, on such form of Registration Statement
as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Initial Investors, which
consent will not be unreasonably withheld) covering the resale of
the Registrable Securities underlying the Notes and Warrants issued
or issuable pursuant to the Securities Purchase Agreement, which
Registration Statement, to the extent allowable under the 1933 Act
and the rules and regulations promulgated thereunder (including
Rule 416), shall state that such Registration Statement also covers
such indeterminate number of additional shares of Common Stock as
may become issuable upon conversion of or otherwise pursuant to the
Notes and exercise of the Warrants to prevent dilution resulting
from stock splits, stock dividends or similar transactions. The
number of shares of Common Stock initially included in such
Registration Statement shall be no less than an amount equal to two
(2) times the sum of the number of Conversion Shares that are then
issuable upon conversion of the Notes and Additional Notes (based
on the Variable Conversion Price as would then be in effect and
assuming the Variable Conversion Price is the Conversion Price at
such time), and the number of Warrant Shares that are then issuable
upon exercise of the Warrants, without regard to any limitation on
the Investor’s ability to convert the Notes or exercise the
Warrants. The Company acknowledges that the number of shares
initially included in the Registration Statement represents a good
faith estimate of the maximum number of shares issuable upon
conversion of the Notes and upon exercise of the
Warrants.
Underwritten Offering .
If any offering pursuant to a Registration Statement pursuant to
Section 2(a) hereof involves an underwritten offering, the
Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent
of a majority-in-interest of the Initial Investors, shall have the
right to select one legal counsel and an investment banker or
bankers and manager or managers to administer the offering, which
investment banker or bankers or manager or managers shall be
reasonably satisfactory to the Company.
Payments by the Company .
The Company shall use its best efforts to obtain effectiveness of
the Registration Statement as soon as practicable. If
(i)
the
Registration Statement(s) covering the Registrable Securities
required to be filed by the Company pursuant to Section 2(a) hereof
is not filed by the Filing Date or declared effective by the SEC on
or prior to one hundred and twenty (120) days from the date of
Closing (as defined in the Securities Purchase Agreement),
or (ii)
after
the Registration Statement has been declared effective by the SEC,
sales of all of the Registrable Securities cannot be made pursuant
to the Registration Statement, or (iii)
the
Common Stock is not listed or included for quotation on the Nasdaq
National Market (“
Nasdaq ”),
the Nasdaq SmallCap Market (“
Nasdaq SmallCap ”),
the New York Stock Exchange (the “
NYSE ”)
or the American Stock Exchange (the “
AMEX ”)
after being so listed or included for quotation after the date
hereof, or (iv)
the
Common Stock ceases to be traded on the Over-the-Counter Bulletin
Board (the
“OTCBB” )
or any equivalent replacement exchange prior to being listed or
included for quotation on one of the aforementioned markets, then
the Company will make payments to the Investors in such amounts and
at such times as shall be determined pursuant to this Section 2(c)
as partial relief for the damages to the Investors by reason of any
such delay in or reduction of their ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity). The Company shall pay to
each holder of the Notes or Registrable Securities an amount equal
to the then outstanding principal amount of the Notes (and, in the
case of holders of Registrable Securities, the principal amount of
Notes from which such Registrable Securities were converted)
(“
Outstanding Principal Amount ”),
multiplied by the Applicable Percentage (as defined below) times
the sum of: (i) the number of months (prorated for partial months)
after the Filing Date or the end of the aforementioned one hundred
and twenty (120) day period and prior to the date the Registration
Statement is declared effective by the SEC, provided, however, that
there shall be excluded from such period any delays which are
solely attributable to changes required by the Investors in the
Registration Statement with respect to information relating to the
Investors, including, without limitation, changes to the plan of
distribution, or to the failure of the Investors to conduct their
review of the Registration Statement pursuant to Section 3(h) below
in a reasonably prompt manner; (ii) the number of months (prorated
for partial months) that sales of all of the Registrable Securities
cannot be made pursuant to the Registration Statement after the
Registration Statement has been declared effective (including,
without limitation, when sales cannot be made by reason of the
Company’s failure to properly supplement or amend the
prospectus included therein in accordance with the terms of this
Agreement, but excluding any days during an Allowed Delay (as
defined in Section 3(f)); and (iii) the number of months (prorated
for partial months) that the Common Stock is not listed or included
for quotation on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX
or that trading thereon is halted after the Registration Statement
has been declared effective. The term “
Applicable Percentage ”
means two hundredths (.02). (For example, if the Registration
Statement becomes effective one (1) month after the end of such one
hundred and twenty (120) day period, the Company would pay $5,000
for each $250,000 of Outstanding Principal Amount. If thereafter,
sales could not be made pursuant to the Registration Statement for
an additional period of one (1) month, the Company would pay an
additional $5,000 for each $250,000 of Outstanding Principal
Amount.) Such amounts shall be paid in cash or, at the
Company’s option, in shares of Common Stock priced at the
Conversion Price (as defined in the Notes) on such payment
date.
Piggy-Back Registrations .
Subject to the last sentence of this Section 2(d), if at any time
prior to the expiration of the Registration Period (as hereinafter
defined) the Company shall determine to file with the SEC a
Registration Statement relating to an offering for its own account
or the account of others under the 1933 Act of any of its equity
securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other
bona
fide ,
employee benefit plans), the Company shall send to each Investor
who is entitled to registration rights under this Section 2(d)
written notice of such determination and, if within fifteen (15)
days after the effective date of such notice, such Investor shall
so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that if,
in connection with any underwritten public offering for the account
of the Company the managing underwriter(s) thereof shall impose a
limitation on the number of shares of Common Stock which may be
included in the Registration Statement because, in such
underwriter(s)’ judgment, marketing or other factors dictate
such limitation is necessary to facilitate public distribution,
then the Company shall be obligated to include in such Registration
Statement only such limited portion of the Registrable Securities
with respect to which such Investor has requested inclusion
hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities in proportion to the
number of Registrable Securities sought to be included by such
Investors;
provided ,
however ,
that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities,
the holders of which are not entitled to inclusion of such
securities in such Registration Statement or are not entitled to
pro rata inclusion with the Registrable Securities; and
provided ,
further ,
however ,
that, after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such
securities in the Registration Statement other than holders of
securities entitled to inclusion of their securities in such
Registration Statement by reason of demand registration rights. No
right to registration of Registrable Securities under this Section
2(d) shall be construed to limit any registration required under
Section 2(a) hereof. If an offering in connection with which an
Investor is entitled to registration under this Section 2(d) is an
underwritten offering, then each Investor whose Registrable
Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this
Agreement, on the same terms and conditions as other shares of
Common Stock included in such underwritten offering.
Notwithstanding anything to the contrary set forth herein, the
registration rights of the Investors pursuant to this Section 2(d)
shall only be available in the event the Company fails to timely
file, obtain effectiveness or maintain effectiveness of any
Registration Statement to be filed pursuant to Section 2(a) in
accordance with the terms of this Agreement.
Eligibility for Form S-3, SB-2 or S-1; Conversion to Form
S-3 .
The Company represents and warrants that it meets the requirements
for the use of Form S-3, SB-2 or S-1 for registration of the sale
by the Initial Investors and any other Investors of the Registrable
Securities. The Company agrees to file all reports required to be
filed by the Company with the SEC in a timely manner so as to
remain eligible or become eligible, as the case may be, and
thereafter to maintain its eligibility, for the use of Form S-3. If
the Company is not currently eligible to use Form S-3, not later
than five (5) business days after the Company first meets the
registration eligibility and transaction requirements for the use
of Form S-3 (or any successor form) for registration of the offer
and sale by the Initial Investors and any other Investors of
Registrable Securities, the Company shall file a Registration
Statement on Form S-3 (or such successor form) with respect to the
Registrable Securities covered by the Registration Statement on
Form SB-2 or Form S-1, whichever is applicable, filed pursuant to
Section 2(a) (and include in such Registration Statement on Form
S-3 the information required by Rule 429 under the 1933 Act) or
convert the Registration Statement on Form SB-2 or Form S-1,
whichever is applicable, filed pursuant to Section 2(a) to a Form
S-3 pursuant to Rule 429 under the 1933 Act and cause such
Registration Statement (or such amendment) to be declared effective
no later than thirty (30) days after filing. In the event of a
breach by the Company of the provisions of this Section 2(e), the
Company will be required to make payments pursuant to Section 2(c)
hereof.
OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities,
the Company shall have the following
obligations:
The
Company shall prepare promptly, and file with the SEC not
later than the Filing Date, a Registration Statement with
respect to the number of Registrable Securities provided in
Section 2(a), and thereafter use its best efforts to cause
such Registration Statement relating to Registrable Securities
to become effective as soon as possible after such filing but
in no event later than one hundred and twenty (120) days from
the date of Closing), and keep the Registration Statement
effective pursuant to Rule 415 at all times until such date as
is the earlier of (i) the date on which all of the Registrable
Securities have been sold and (ii) the date on which the
Registrable Securities (in the opinion of counsel to the
Initial Investors) may be immediately sold to the public
without registration or restriction (including, without
limitation, as to volume by each holder thereof) under the
1933 Act (the “
Registration Period ”),
which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain 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.
The
Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the
Registration Statements and the prospectus used in connection
with the Registration Statements as may be necessary to keep
the Registration Statements effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by the
Registration Statements until such time as all of such
Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or
sellers thereof as set forth in the Registration Statements.
In the event the number of shares available under a
Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities issued
or issuable upon conversion of the Notes and exercise of the
Warrants, the Company shall amend the Registration Statement,
or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover
all of the Registrable Securities, in each case, as soon as
practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of
the Common Stock and other relevant factors on which the
Company reasonably elects to rely). The Company shall use its
best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following
the filing thereof, but in any event within thirty (30) days
after the date on which the Company reasonably first
determines (or reasonably should have determined) the need
therefor. The provisions of Section 2(c) above shall be
applicable with respect to such obligation, with the one
hundred and twenty (120) days running from the day the Company
reasonably first determines (or reasonably should have
determined) the need therefor.
The
Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and its
legal counsel (i)
promptly
(but in no event more than two (2) business days) after the
same is prepared and publicly distributed, filed with the SEC,
or received by the Company, one copy of each Registration
Statement and any amendment thereto, each preliminary
prospectus and prospectus and each amendment or supplement
thereto, and, in the case of the Registration Statement
referred to in Section 2(a), each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the
SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains
information for which the Company has sought confidential
treatment), and (ii)
promptly
(but in no event more than two (2) business days) after the
Registration Statement is declared effective by the SEC, such
number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and
such other documents as such Investor may reasonably request
in order to facilitate the disposition of the Registrable
Securities owned by such Investor. The Company will
immediately notify each Investor by facsimile of the
effectiveness of each Registration Statement or any
post-effective amendment. The Company will promptly respond to
any and all comments received from the SEC (which comments
shall promptly be made available to the Investors upon
request), with a view towards causing each Registration
Statement or any amendment thereto to be declared effective by
the SEC as soon as practicable, shall promptly file an
acceleration request as soon as practicable (but in no event
more than two (2) business days) following the resolution or
clearance of all SEC comments or, if applicable, following
notification by the SEC that any such Registration Statement
or any amendment thereto will not be subject to review and
shall, if required by SEC Rules, promptly file with the SEC a
final prospectus as soon as practicable (but in no event more
than two (2) business days) following receipt by the Company
from the SEC of an order declaring the Registration Statement
effective. In the event of a breach by the Company of the
provisions of this Section 3(c), the Company will be required
to make payments pursuant to Section 2(c) hereof.
The
Company shall use reasonable efforts to (i)
register
and qualify the Registrable Securities covered by the
Registration Statements under such other securities or
“blue sky” laws of such jurisdictions in the
United States as the Investors who hold a majority in interest
of the Registrable Securities being offered reasonably
request, (ii)
prepare
and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration
Period, (iii)
take
such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during
the Registration Period, and (iv)
take
all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such
jurisdictions;
provided ,
however ,
that the Company shall not be required in connection therewith or
as a condition thereto to (a)
qualify
to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (b)
subject
itself to general taxation in any such jurisdiction,
(c)
file
a general consent to service of process in any such
jurisdiction, (d)
provide
any undertakings that cause the Company undue expense or burden,
or (e)
make
any change in its charter or bylaws, which in each case the Board
of Directors of the Company determines to be contrary to the best
interests of the Company and its shareholders.
In
the event Investors who hold a majority-in-interest of the
Registrable Securities being offered in the offering (with the
approval of a majority-in-interest of the Initial Investors)
select underwriters for the offering, the Company shall enter
into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution
obligations, with the underwriters of such
offering.
As
promptly as practicable after becoming aware of such event,
the Company shall notify each Investor of the happening of any
event, of which the Company has knowledge, as a result of
which the prospectus included in any Registration Statement,
as then in effect, includes an untrue statement of a material
fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and use its best efforts promptly to prepare a
supplement or amendment to any Registration Statement to
correct such untrue statement or omission, and deliver such
number of copies of such supplement or amendment
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