EXHIBIT 10.4
REGISTRATION RIGHTS
AGREEMENT
REGISTRATION RIGHTS
AGREEMENT (this “
Agreement ”), dated as of July 22, 2005, by and
between SPHERIX INCORPORATED, a Delaware corporation (the
“ Company ”), and CORNELL CAPITAL PARTNERS,
LP , a Delaware limited partnership (the “
Investor ”).
WHEREAS:
A.
In connection with the Standby
Equity Distribution Agreement by and between the parties hereto of
even date herewith (the “ Standby Equity Distribution
Agreement ”), the Company has agreed, upon the terms and
subject to the conditions of the Standby Equity Distribution
Agreement, to issue and sell to the Investor that number of shares
of the Company’s common stock, par value $0.005 per share
(the “ Common Stock ”), which can be purchased
pursuant to the terms of the Standby Equity Distribution Agreement
for an aggregate purchase price of up to Four Million
Dollars ($4,000,000). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Standby
Equity Distribution Agreement.
B.
To induce the Investor to execute
and deliver the Standby Equity Distribution 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 “ Securities 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 the Investor hereby agree as
follows:
1.
DEFINITIONS
.
As used in this Agreement, the
following terms shall have the following meanings:
a.
“
Person ” means a corporation, a limited liability
company, an association, a partnership, an organization, a
business, an individual, a governmental or political subdivision
thereof or a governmental agency.
b.
“
Register ,” “ registered ,” and
“ registration ” refer to a registration
effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the Securities Act
and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a
continuous or delayed basis (“ Rule 415 ”),
and the declaration or ordering of effectiveness of such
Registration Statement(s) by the United States Securities and
Exchange Commission (the “ SEC ”).
c.
“
Registrable Securities ” means the Investor’s
Shares, as defined in the Standby Equity Distribution Agreement and
shares of Common Stock issuable to Investors pursuant to the
Standby Equity Distribution Agreement.
d.
“
Registration Statement ” means a registration
statement under the Securities Act which covers the Registrable
Securities.
2.
REGISTRATION
.
a.
Mandatory
Registration . The Company shall
prepare and file with the SEC a Registration Statement on
Form S-2 or on such other form as is available. The
Company shall cause such Registration Statement to be declared
effective by the SEC prior to the first sale to the Investor of the
Company’s Common Stock pursuant to the Standby Equity
Distribution Agreement.
b.
Sufficient
Number of Shares Registered . In the event the
number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of
the Registrable Securities which the Investor has purchased
pursuant to the Standby Equity Distribution Agreement, the Company
shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefore, if applicable),
or both, so as to cover all of such Registrable Securities which
the Investor has purchased pursuant to the Standby Equity
Distribution Agreement as soon as practicable, but in any event not
later than fifteen (15) days after the necessity therefore
arises. The Company shall use it best efforts to cause such
amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. For
purposes of the foregoing provision, the number of shares available
under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time
the number of Registrable Securities issuable on an Advance Notice
Date is greater than the number of shares available for resale
under such Registration Statement.
3.
RELATED
OBLIGATIONS .
a.
The Company shall
keep the Registration Statement effective pursuant to Rule 415
at all times until the date on which the Investor shall have sold
all the Registrable Securities covered by such Registration
Statement or all such shares are eligible for resale pursuant to
Rule 144(k) (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, in light of the circumstances in which they
were made, not misleading.
b.
The Company shall
prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to
Rule 424 promulgated under the Securities Act, as may be
necessary to keep such Registration Statement effective at all
times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company
covered by such Registration Statement until such time as all of
such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to
this Agreement (including pursuant to this Section 3(b)) by
reason of the Company’s filing a report on Form 10-K,
Form 10-Q or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “
Exchange Act ”), the Company shall have incorporated
such report by reference into the Registration Statement, if
applicable, or shall file such amendments or supplements with the
SEC on the same day on
2
which the
Exchange Act report is filed which created the requirement for the
Company to amend or supplement the Registration
Statement.
c.
The Company shall
furnish to the Investor without charge, (i) at least one copy
of such Registration Statement as declared effective by the SEC and
any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, all
exhibits and each preliminary prospectus, (ii) ten
(10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto
(or such other number of copies as such Investor may reasonably
request) and (iii) such other documents as such Investor may
reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such
Investor.
d.
The Company shall
use its best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under
such other securities or “blue sky” laws of such
jurisdictions in the United States as the Investor reasonably
requests, (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 (w) make any change to its certificate of
incorporation or by-laws, (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company
shall promptly notify the Investor of the receipt by the Company of
any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice
of the initiation or threat of any proceeding for such
purpose.
e.
As promptly as
practicable after becoming aware of such event or development, the
Company shall notify the Investor in writing of the happening of
any event as a result of which the prospectus included in a
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, in light of the circumstances under which they were made,
not misleading (provided that in no event shall such notice contain
any material, nonpublic information), and promptly prepare a
supplement or amendment to such Registration Statement to correct
such untrue statement or omission, and deliver ten (10) copies
of such supplement or amendment to each Investor. The Company
shall also promptly notify the Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment
has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by facsimile on
the same day of such effectiveness), (ii) of any request by
the SEC for amendments or supplements to a Registration Statement
or related prospectus or related information, and (iii) of the
Company’s reasonable determination that a post-effective
amendment to a Registration Statement would be
appropriate.
3
f.
The Company shall
use its best efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction within the United States of
America and, if such an order or suspension is issued, to obtain
the withdrawal of such order or suspension at the earliest possible
moment and to notify the Investor of the issuance of such order and
the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such
purpose.
g.
The Company shall
make available for inspection by (i) the Investor and
(ii) one firm of accountants or other agents retained by the
Investor (collectively, the “ Inspectors ”) all
pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the “
Records ”), as shall be reasonably deemed necessary by
each Inspector, and cause the Company’s officers, directors
and employees to supply all information which any Inspector may
reasonably request; provided, however, that each Inspector shall
agree, and the Investor hereby agrees, to hold in strict confidence
and shall not make any disclosure (except to an Investor) or use of
any Record or other information which the Company determines in
good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission
in any Registration Statement or is otherwise required under the
Securities Act, (b) the release of such Records is ordered
pursuant to a final, non-appealable subpoena or order from a court
or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to
the public other than by disclosure in violation of this or any
other agreement of which the Inspector and the Investor has
knowledge. The Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of,
or to obtain a protective order for, the Records deemed
confidential.
h.
The Company shall
hold in confidence and not make any disclosure of information
concerning the Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of
this Agreement or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information
concerning the Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
written notice to the Investor and allow the Investor, at the
Investor’s expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
i.
The Company shall
use its best efforts either to cause all the Registrable Securities
covered by a Registration Statement (i) to be listed on each
securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the
rules of such exchange or to secure the inclusion for
quotation on the National Association of Securities
4
Dealers, Inc. OTC
Bulletin Board for such Registrable Securities. The Company
shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(j).
j.
The Company shall
cooperate with the Investor to the extent applicable, to facilitate
the timely preparation and delivery of certificates (not bearing
any restrictive legend) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case
may be, as the Investor may reasonably request and registered in
such names as the Investor may request.
k.
The Company shall
use its best efforts to cause the Registrable Securities covered by
the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may
be necessary to consummate the disposition of such Registrable
Securities.
l.
The Company shall
make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of
the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 under the Securities
Act) covering a twelve-month period beginning not later than the
first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement.
m.
The Company shall
otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC in connection with any
registration hereunder.
n.
Within two
(2) business days after a Registration Statement which covers
Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the
|
