REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of this 1st day of April by and between NETGURU, INC., a
Delaware corporation, with offices at 00000 Xxxx Xxxxx Xxxxxxx, Xxxxx Xxxxx, XX
00000 (the "Company"), and GRAL, INC., a Nevada corporation, with offices at
00000 Xxxx Xxxxxxx, Xxxxxx, XX 00000 (the "Holder").
WHEREAS, upon the terms and subject to the conditions of the Stock
Purchase Agreement dated as of March 27, 2000, between the Company and Holder
(the "Stock Purchase Agreement"), the Company shall issue to Holder 5,000 shares
(the "Shares") of the Company's Common Stock, $.01 par value per share (the
"Common Stock"); and
WHEREAS, to induce the Holder to execute and deliver the Stock Purchase
Agreement, the Company has agreed to provide with respect to the Common Stock
issued thereunder certain registration rights under the Securities Act.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1 DEFINITIONS.
1.1 "COMMISSION" means the Securities and Exchange Commission.
1.2 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
thereunder, or any similar successor statute.
1.3 "REGISTRABLE SECURITIES" means the Shares; provided, however,
that a share of Common Stock shall cease to be a Registrable
Security for purposes of this Agreement when it no longer is a
Restricted Security.
1.4 "REGISTRATION EXPENSES" shall have the meaning set forth in
Section 3.3.
1.5 "SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, or
any similar successor statute.
1.6 "SHARES" shall have the meaning set forth in the recitals to
this Agreement.
2 REGISTRATION.
2.1 REGISTRATION OBLIGATION. The Company shall file with the
Commission, on or before July 31, 2000, a registration
statement with respect to the Registrable Securities in the
manner described in Section 4 hereof and use its best efforts
to cause such registration statement to become effective as
soon as possible thereafter.
2.2 REGISTRATION EXPENSES. As used in this Agreement,
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with this
Agreement, including, without limitation, all Commission,
stock exchange, National Association of Securities Dealers,
Inc. or Nasdaq registration and filing fees and expenses, fees
and expenses of compliance with securities or blue sky laws
(including, without limitation, reasonable fees and
disbursements of counsel for the Company in connection with
blue sky qualification of the Registrable Securities), rating
agency fees, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company
and all independent certified public accountants (including
the expenses of any annual audit, special audit or "cold
comfort" letters required by or incident to such performance
and compliance), securities acts liabilities insurance (if the
Company so desires), the reasonable fees and expenses of any
special experts retained by the Company in connection with
such registration, and fees and expenses of other persons
retained by the Company. The Company will pay all Registration
Expenses in connection with a registration effected pursuant
to this Section 2, whether or not such registration becomes
effective under the Securities Act.
2.3 EFFECTIVE REGISTRATION STATEMENT. A registration pursuant to
this Section 2 will not be deemed to have been effected unless
the registration statement relating thereto has become
effective under the Securities Act; provided however, that if,
after such registration statement has become effective, the
offering of Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other
governmental agency or court, such registration will be deemed
not to have been effected.
2.4 PRIORITY IN REGISTRATION. If a registration pursuant to this
Agreement involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its
opinion, the number of securities which the Company, Holder
and any other persons intend to include in such offering,
including the price at which such securities can be sold, the
Company will include in such registration (i) first, all the
securities the Company proposes to sell for its own account,
(ii) second, a number of such securities equal to the number,
in the opinion of such underwriters, which can be sold without
having an adverse effect referred to above, such amount to be
allocated pro rata among the Holder and other persons having
similar registration rights on the basis of the relative
number of securities Holder and other persons have requested
or are required to be included in such registration.
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3 REGISTRATION PROCEDURE. In effecting the registration of the
Registrable Securities as provided in this Agreement, the Company
shall, at its sole expense:
(a) Prepare and file with the Commission a registration statement
with respect to the Registrable Securities and use its best
efforts to cause such registration statement to become
effective; provided, however, that before filing with the
Commission a registration statement or prospectus or any
amendments or supplements thereto, the Company will (i)
furnish to Holder copies of all such documents proposed to be
filed, and (ii) notify Holder of any stop order issued or
threatened to be issued by the Commission and take all
reasonable actions required to prevent the entry of such stop
order or to remove it if entered;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to keep such registration statement effective for a
period of nine (9) months thereafter or until all Registrable
Securities covered by such registration statement have been
sold, and comply with the provisions of the Securities Act
with respect to the disposition of all the Registrable
Securities covered by such registration statement during such
period;
(c) Furnish to the Holder copies of the registration statement,
each amendment and supplement thereto (in each case including
all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus)
in conformity with the requirements of the Securities Act and
such other documents as Holder may reasonably request in order
to facilitate the disposition of the Registrable Securities
owned by Holder;
(d) Use its best efforts to register or qualify the Registrable
Securities under such other securities or blue sky laws of
such jurisdictions as shall be reasonably requested by Holder
and do any and all other acts and things which may be
reasonably necessary or advisable to enable Holder to
consummate the disposition in such jurisdictions of the
Registrable Securities owned by Holder; provided, that the
Company shall not be required to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to
qualify but for this subsection (d); (ii) subject itself to
taxation in any such jurisdiction; or (iii) file a general
consent to service of process in any such jurisdiction;
(e) Use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations
of the Company to enable Holder to consummate the disposition
of such Registrable Securities;
(f) Immediately notify Holder 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
contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading and
the Company will promptly prepare and furnish to Holder a
supplement or amendment to such prospectus so that, as
thereafter delivered to purchasers of such Registrable
Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading;
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(g) Enter into such customary agreements and take all such other
customary actions as Holder may reasonably request in order to
expedite or facilitate the disposition of such Registrable
Securities;
(h) Make available for inspection by Holder all financial and
other records, pertinent corporate documents and properties of
the Company as shall be reasonably necessary to enable Holder
to exercise its due diligence responsibilities; and
(i) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and all applicable
laws and regulations, including, but not limited to, the
Securities Act and the Exchange Act.
The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities
as the Company may reasonably request in writing. Holder agrees that,
upon receipt of any notice from the company of the happening of any
event of the kind described in subsection 4(f),Holder will discontinue
disposition of Registrable Securities until Holder's receipt of the
copies of the amended or supplemented prospectus contemplated in
subsection 4(f), and, if so directed by the Company, Holder will
deliver to the Company, at the Company's expense, all copies of the
prospectus covering such Registrable Securities current at the time of
the receipt of such notice. In the event of such notice, the period
mentioned in subsection 4(b) shall be extended by the number of days
during the period from and including the date of the giving of such
notice pursuant of subsection 4(f) to and including the date when
Holder shall have received the copies of the amended or supplemented
prospectus.
4. INDEMNIFICATION.
4.1 INDEMNIFICATION BY COMPANY. The Company shall indemnify and
hold harmless Holder and Holder's officers and directors and
each person who controls Holder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as
an "Indemnified Person") from and against any losses, claims,
damages or liabilities, joint or several, to which such
Indemnified Person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in the registration statement or
prospectus covering the Registrable Securities or an omission
or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein, not misleading; and the Company hereby agrees to
reimburse such Indemnified Person for all reasonable legal and
other expenses incurred by them in connection with
investigating or defending any such action or claim as and
when such expenses are incurred; PROVIDED, HOWEVER, that the
Company shall not be liable to any such Indemnified Person in
any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon (i) an untrue
statement or alleged untrue statement made in, or an omission
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or alleged omission from, such registration statement or
prospectus in reliance upon and in conformity with written
information furnished to the Company by such Indemnified
Person expressly for use therein or (ii) the use by the
Indemnified Person of an outdated or defective prospectus
after the Company has provided to such Indemnified Person an
updated prospectus correcting the untrue statement or alleged
untrue statement or omission or alleged omission giving rise
to such loss, claim, damage or liability.
4.2 INDEMNIFICATION BY THE HOLDER. Holder agrees, as a consequence
of the inclusion of any of its Registrable Securities in a
registration statement, to (i) indemnify and hold harmless the
Company, its directors, its officers who sign any Registration
Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which the Company or such other
persons may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in such registration statement or
prospectus or 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 to make the statements therein
(in light of the circumstances under which they were made, in
the case of the prospectus), not misleading, in each case to
the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly
for use therein; and (ii) reimburse the Company for any legal
or other expenses incurred by the Company in connection with
investigating or defending any such action or claim as such
expenses are incurred.
4.3 NOTICE OF CLAIMS, ETC. Promptly after receipt by a party
seeking indemnification pursuant to this Section 4 (an
"Indemnified Party") of written notice of any investigation,
claim, proceeding or other action in respect of which
indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom
indemnification pursuant to this Section 4 is being sought
(the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not
relieve it from any liability that it otherwise may have to
the Indemnified Party, except to the extent that the
Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying
Party and the Indemnified Party are parties, the Indemnifying
Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by
the Indemnifying Party, the Indemnified Party shall have the
right to employ separate legal counsel and to participate in
the defense of such Claim, and the Indemnifying Party shall
bear the reasonable fees, out-of-pocket costs and expenses of
such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay
such fees, costs and expenses, (y) the Indemnified Party and
the Indemnifying Party shall reasonably have concluded that
representation of the Indemnified Party by the Indemnifying
Party by the same legal counsel would not be appropriate due
to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between
such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified
Party that are in addition to or disparate from those
available to the Indemnifying Party, or (z) the Indemnifying
Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified Party within a reasonable
period of time after notice of the commencement of such Claim.
If the Indemnified Party employs separate legal counsel in
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circumstances other than as described in clauses (x), (y) or
(z) above, the fees, costs and expenses of such legal counsel
shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in
connection with any Claim in the same jurisdiction, be liable
for the fees and expenses of more than one firm of counsel for
the Indemnified Party (together with appropriate local
counsel). The Indemnified Party shall not, without the prior
written consent of the Indemnifying Party (which consent shall
not unreasonably be withheld), settle or compromise any Claim
or consent to the entry of any judgment that does not include
an unconditional release of the Indemnifying Party from all
liabilities with respect to such Claim or judgment.
5. RULE 144. With a view to making available to the Holder the benefits of
Rule 144 under the Securities Act or any other similar rule or
regulation of the Commission that may at any time permit the Holder to
sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its best efforts to comply with
the provisions of paragraph (c)(1) of Rule 144 and file with the
Commission in a timely manner all reports and other documents required
to be filed by the Company pursuant to Section 13 or 15(d) under the
Exchange Act. If, at any time, the Company is not required to file such
reports but in the past had been required to or did file such reports,
it will, upon the request of any Holder, make available other
information as required by, and so long as necessary to permit sales
of, its Registrable Securities pursuant to Rule 144.
6. NO INCONSISTENT AGREEMENTS. The Company shall not hereafter enter into
any agreement with respect to any of its securities which is
inconsistent with the rights granted to Holder in this Agreement.
7. REMEDIES. All remedies hereunder shall be cumulative and shall not be
exclusive of any remedies provided at law. The prevailing party in any
proceeding arising in connection with this Agreement shall be entitled
to reimbursement for its own reasonable costs incurred in connection
therewith, including attorneys' fees.
8. SALE WITHOUT REGISTRATION. At the time of any transfer of any
Registrable Securities which shall not be registered under the
Securities Act, the Company may require, as a condition of allowing
such transfer, that the Holder or the transferee furnish to the
Company: (i) such information as is reasonably necessary in order to
establish that such transfer may be made without registration under the
Securities Act; and (ii) at the expense of the Holder or the
transferee, an opinion of counsel, satisfactory in form and substance
to the Company, to the effect that such transfer may be made without
registration under the Securities Act; provided that nothing contained
in this Section 8 shall relieve the Company from complying with any
request for registration, qualification or compliance made pursuant to
these registration rights provisions.
9. GENERAL PROVISIONS.
9.1 NOTICES. Except as may be otherwise provided herein, any
notice or other communication or delivery required or
permitted hereunder shall be in writing and shall be delivered
personally or sent by certified mail, postage prepaid, or by a
nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight
courier service, or, if mailed, three days after the date of
deposit in the United States mails, as follows:
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If to the Company, to:
netGuru, Inc.
00000 Xxxx Xxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: President
(000) 000-0000
If to the Holder, to:
GRAl., Inc.
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
(000) 000-0000
Attention: President
The Company or the Holder may change the above address by notice given
pursuant to this Section 9.1.
9.2 ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement
constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof, and supercedes any and
all prior and contemporary agreements, understandings,
representations and warranties, oral or written, concerning
the subject matter hereof. This Agreement may not be amended
except in a writing signed by both parties hereto. No action
taken with respect to this Agreement, including any
investigation by or on behalf of any party hereto, shall be
deemed to constitute a waiver by such party or compliance with
any representation, warranty, covenant or agreement contained
herein. The waiver by a party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver
of any other or subsequent breach. The waiver by any party of
any of the conditions precedent to its respective obligations
under this Agreement shall not preclude it from seeking
redress for breach of this Agreement.
9.3 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and shall be binding upon and enforceable by the
parties hereto and their respective heirs, legal
representatives, successors and assigns. Except as set forth
in the preceding sentence, nothing in this Agreement,
expressed or implied, is intended to or shall confer on any
person other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
9.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed an
original and all of which together shall be deemed to be one
and the same instrument.
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9.5 RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular include the plural,
and in the plural include the singular, and words in the
masculine gender include the feminine and the neuter, and,
when the sense so indicates, words of the neuter gender may
refer to any gender.
9.6 ASSIGNMENT. For purposes of this /agreement, the term "Holder"
shall include any heir, successor or assign who obtains any
Registrable Securities from the Holder.
9.7 GOVERNING LAW; VENUE. The validity, performance and
enforcement of this Agreement shall be governed by the laws of
the State of California. Any action commenced hereunder shall
be conducted before a court of appropriate jurisdiction in
Orange County, California.
9.8 COOPERATION. The parties agree to execute such further
documents and take such further actions as necessary to carry
out the provisions of this Agreement and to fully accomplish
its purpose and intent.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
NETGURU, INC.
By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
GRAL, INC.
By: /s/ Xxxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxxx Xxxxx
Title: President
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