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EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("AGREEMENT") is entered into as of
September 8, 2000 between Blue Zone, Inc., a Nevada corporation with offices at
000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X, Xxxxxx (the "COMPANY") and
each of the entities listed under "INVESTORS" on the signature page hereto (each
an "INVESTOR" and collectively the "INVESTORS"), each with offices at the
address listed beside such Investor's name on Schedule 1 to the Purchase
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Common Stock Investment Agreement,
dated the date hereof, among the Company and the Investors (the "PURCHASE
AGREEMENT"), the Company has agreed to sell and issue to the Investors, and the
Investors have agreed to purchase from the Company, inter alia, the number of
shares (the "INITIAL Shares") of the Company's common stock, $.001 par value
("COMMON STOCK") set forth on Schedule 1 to the Purchase Agreement, and certain
options and warrants, all as more fully specified and subject to the terms and
conditions set forth in the Purchase Agreement;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to issue the Initial Warrants and Adjustment Warrants described therein
(collectively, the "WARRANTS") exercisable for shares of Common Stock (the
"WARRANT SHARES" and "ADJUSTMENT SHARES", respectively);
WHEREAS, pursuant to the Purchase Agreement one of the Investors is
also being issued Options to purchase Option Shares and Option Warrants, with
such Option Warrants being exercisable for "OPTION WARRANT SHARES";
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Investors with certain registration rights with respect to
the Initial Shares, Option Shares, Warrant Shares, Adjustment Shares, Option
Warrant Shares, as well as certain other rights and remedies as set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Investors agree as follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Purchase
Agreement and/or the Warrants. As used in this Agreement, the following terms
shall have the following respective meanings:
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such
terms in the Purchase Agreement.
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"COMMISSION" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"EFFECTIVENESS DEADLINE" has the meaning specified in Section 2(a).
"FAIR MARKET VALUE" shall have the meaning ascribed to such term in the
Warrants.
"HOLDER" and "HOLDERS" shall mean the Investor or the Investors,
respectively, and any transferee of any of the Securities which have not been
sold to the public to whom the registration rights conferred by this Agreement
have been transferred in compliance with this Agreement.
"INTERFERING EVENTS" shall have the meaning set forth in Section 2(b).
"MONTHLY DELAY PAYMENT" shall have the meaning specified in Section
2(b)(i)(C).
"PREMIUM REDEMPTION PRICE" shall mean the following:
(a) as to the Initial Shares and Option Shares, 120% of the Share
Purchase Price for the Initial Shares and 120% of the Exercise Price (as defined
in the Options) for the Option Shares, respectively;
(b) as to the Warrant Shares, Adjustment Shares, and Option
Warrant Shares, 120% of the dollar amount which is the product of (i) the number
of shares to be redeemed, and (ii) the Fair Market Value for shares of Common
Stock in existence at the time (x) of the closing of a redemption of any such
shares referred to in (i) immediately above or (y) of the event triggering the
right to redemption, whichever results in a greater Premium Redemption Price.
(c) as to the Initial Warrants, Adjustment Warrants or Option
Warrants, 120% of the dollar amount which is the product of (i) the number of
Warrant Shares, Adjustment Shares or Option Warrant Shares to be issued to the
Holder upon exercise thereof multiplied by (ii) the Fair Market Value for shares
of Common Stock in existence at the time (x) of the closing of the redemption or
(y) of the event triggering the right to redemption, whichever results in a
greater Premium Redemption Price.
"PUT NOTICE" shall have the meaning set forth in Section 2(b)(i)(B).
"REGISTRABLE SECURITIES" shall mean: (i) the Initial Shares; (ii) the
Warrant Shares; (iii) the Adjustment Shares; (iv) the Option Warrant Shares; (v)
the Option Shares; (vi) securities issued or issuable upon any stock split,
stock dividend, recapitalization or similar event with respect to the foregoing;
and (vii) any other security issued as a dividend or other distribution with
respect to, in exchange for or in replacement of the securities referred to in
the preceding clauses.
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The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRATION EXPENSES" shall mean all expenses to be incurred by the
Company (not including Selling Expenses) in connection with each Holder's
registration rights under this Agreement, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company reasonable "BLUE SKY" fees and expenses, reasonable fees
and disbursements of counsel to Holders (using a single counsel selected by a
majority in interest of the Holders) for a "due diligence" examination of the
Company and review of the Registration Statement and related documents, 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).
"REGISTRATION STATEMENT" shall have the meaning set forth in Section
2(a) herein.
"REGULATION D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"SECURITIES" means the Initial Shares, Options, the Initial Warrants,
the Adjustment Warrants, the Warrant Shares, the Adjustment Shares, the Option
Shares, the Option Warrants and the Option Warrant Shares.
"SECURITIES ACT" or "ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for Holders not included within "Registration Expenses"
and if the Holders engage a third party as an underwriter for the purpose of
distributing Registrable Securities on an underwritten basis, the fees and
expenses of such underwriting and any additional expenses of an accountant
incurred in order to obtain a "Comfort Letter."
"TRADING DAY" shall mean (x) if the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (y) if the Common Stock is not listed on
either of such stock exchanges but sale prices of the Common Stock are reported
on an automated quotation system, a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the foregoing provisions are inapplicable, a day on which
quotations are reported by National Quotation Bureau Incorporated.
2. Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including
without limitation the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable "Blue Sky" or other state
securities laws and appropriate compliance
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with applicable regulations issued under the Securities Act) as would permit or
facilitate the sale or distribution of all the Registrable Securities in the
manner (including manner of sale) reasonably requested by the Holder and in all
U.S. jurisdictions; 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 or subject itself to material
taxation in any such states or jurisdictions. Such best efforts by the Company
shall include the following:
(a) The Company shall, as expeditiously as reasonably
possible after the Closing Date:
(i) But in any event within 45 days thereafter,
prepare and file a registration statement with the Commission
on Form S-1 under the Securities Act (or in the event that the
Company is ineligible to use such form, such other form as the
Company is eligible to use under the Securities Act) covering
the Registrable Securities (such registration statement,
including any amendments or supplements thereto and
prospectuses contained therein, is referred to herein as the
"REGISTRATION STATEMENT"), which Registration Statement, to
the extent allowable under the Securities Act and the rules
promulgated thereunder (including Rule 416), shall state that
such Registration Statement also covers such number of
additional shares of Common Stock as may become issuable to
prevent dilution resulting from stock splits, stock dividends
or similar events. The number of shares of Common Stock
initially included in such Registration Statement shall be no
less than the sum of (w) 200% of the number of the Initial
Shares, plus (x) 150% of the number of the Warrant Shares
issuable upon exercise in full of the Initial Warrants, plus
(y) 150% of the number of Adjustment Shares issuable upon
exercise of the Adjustment Warrant immediately prior to the
effective date of the Registration Statement, plus (z) 300% of
the number of Option Shares issuable upon exercise of the
Options in full immediately prior to the effective date of the
Registration Statement. Thereafter, the Company shall use its
best efforts to cause such Registration Statement to be
declared effective as soon as practicable, and in any event
prior to the earlier of (i) 100 days following the Closing
Date or (ii) five days after SEC clearance to request
acceleration (the "EFFECTIVENESS DEADLINE"). The Company shall
provide Holders and their legal counsel reasonable opportunity
to review any such Registration Statement or amendment or
supplement thereto prior to filing. Without limiting the
foregoing, the Company will promptly respond to all SEC
comments, inquiries and requests, and shall request
acceleration of effectiveness at the earliest possible date.
(ii) Prepare and file additional Registration
Statements if the number of Registrable Securities at any time
exceeds 85% of the number of shares of Common Stock then
registered in all then effective Registration Statements
hereunder.
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(iii) Prepare and file with the SEC such
amendments and supplements to such Registration Statement and
the prospectus used in connection with such Registration
Statement, or prepare and file such additional registration
statements, as may be necessary to comply with the provisions
of the Act with respect to the disposition of all securities
covered by such Registration Statement in accordance with the
intended methods of disposition by the seller thereof as set
forth in the Registration Statement and notify the Holders of
the filing and effectiveness of such Registration Statement
and any amendments or supplements.
(iv) After the registration, furnish to each
Holder such numbers of copies of a current prospectus
conforming with the requirements of the Act, copies of the
Registration Statement, any amendment or supplement thereto
and any documents incorporated by reference therein and such
other documents as such Holder may reasonably require in order
to facilitate the disposition of Registrable Securities owned
by such Holder.
(v) Use its best efforts to register and qualify
the securities covered by such Registration Statement under
such other securities or "Blue Sky" laws of all U.S.
jurisdictions; 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 or subject itself to material taxation in any such
states or jurisdictions.
(vi) Notify each Holder immediately of the
happening of any event (but not the substance or details of
any such event unless specifically requested by a Holder)
as a result of which the prospectus (including any supplements
thereto or thereof and any information incorporated or deemed
to be incorporated by reference therein) included in such
Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and, pursuant to Section 2(f),
use its best efforts to promptly update and/or correct such
prospectus.
(vii) Notify each Holder immediately of the
issuance by the Commission or any state securities commission
or agency of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any
proceedings for that purpose. The Company shall use its best
efforts to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(viii) Permit a single firm of counsel, designated
as Holders' counsel by the Holders of a majority of the
Registrable Securities included in the Registration Statement,
to review the Registration Statement and all amendments and
supplements thereto within a reasonable period of time
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prior to each filing, and shall not file any document in a
form to which such counsel reasonably objects.
(ix) Use its best efforts to list the Registrable
Securities covered by such Registration Statement with all
securities exchange(s) and/or markets on which the Common
Stock is then listed and prepare and file any required filings
with the National Association of Securities Dealers, Inc. or
any exchange or market where the Common Stock is then traded.
(x) If applicable, take all steps necessary to
enable Holders to avail themselves of the prospectus delivery
mechanism set forth in Rule 153 (or successor thereto) under
the Act.
(b) Set forth below in this Section 2(b) are (I) events that
may arise that the Investors consider will interfere with the full
enjoyment of their rights under the Purchase Agreement and this
Agreement (the "INTERFERING EVENTS"), and (II) certain remedies
applicable in each of these events.
Paragraphs (i) through (v) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an
Interfering Event occurs and provide that the Investors may
require that the Company redeem outstanding Securities at a
specified price if certain Interfering Events are not timely
cured.
Paragraph (v) provides, inter alia, that if payments required
as the remedy in the case of certain of the Interfering Events
are not paid when due, the Company may be required by the
Investors to redeem outstanding Securities at a specified
price.
The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement.
(A) In the event that the Registration Statement
has not been declared effective by the Effectiveness Deadline,
then the Company shall pay in cash or common stock, as
provided in Section 2(b)(v), to each Holder a Monthly Delay
Payment (as defined below) for each 30 day period (or portion
thereof) thereafter during which the Registration Statement
has not been declared effective, which Monthly Delay Payments
shall not in the aggregate exceed the maximum percentage
permitted by law; provided, however, that there shall be
excluded from such period the number of days by which Holders
fail to conduct their review of the Registration Statement
following a reasonable time frame pursuant to Section
2(a)(viii) above (provided such delay in effectiveness is
solely attributable to such Holders' delay).
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(B) If the Registration Statement has not been
declared effective within 120 calendar days after the
Effectiveness Deadline, then each Holder shall have the right
but not the obligation to require the Company to redeem the
Securities, in whole or in part, at the Premium Redemption
Price. Each Holder shall exercise such right by providing the
Company with written notice thereof (the "PUT NOTICE"), which
such Put Notice shall include the type and amount of each
security that the Holder seeks to redeem and a date at least
five (5) business days from the date thereof on which the
Holder seeks the redemption to occur (the "REDEMPTION DATE").
(C) As used in this Agreement, a "MONTHLY DELAY
PAYMENT" shall be a payment in immediately available funds
equal to 2% of the Aggregate Purchase Price of the Common
Stock, warrants and Options held by a Holder and/or 2% of the
aggregate purchase price for Option Shares and Option Warrants
held by a Holder, as the case may be, for each 30 day period
(or portion thereof) that the specified condition in this
Section 2(b) has not been fulfilled or the specified
deficiency has not been remedied, (prorated in each case as
appropriate). Payment of the Monthly Delay Payments and
Premium Redemption Price shall be due and payable from the
Company to such Holder within five (5) business days of demand
therefor. Without limiting the foregoing, if payment in
immediately available funds of the Premium Redemption Price is
not made within such 5 business day period, the Holder may
revoke and withdraw in whole or in part its election to cause
the Company to make such mandatory purchase at any time prior
to its receipt of such cash, without prejudice to its ability
to elect to receive that particular or other Premium
Redemption Price payments in the future.
(ii) No Listing; Premium Price Redemption for Delisting of
Class of Shares.
(A) In the event that the Company fails, refuses
or is unable to cause the Registrable Securities covered by
the Registration Statement to be listed with the Approved
Market and each other securities exchange and market on which
the Common Stock is then traded at all times during the period
("LISTING PERIOD") commencing the earlier of the effective
date of the Registration Statement or the Effectiveness
Deadline and continuing thereafter for so long as any
Warrants, Options or Option Warrants are outstanding, then the
Company shall pay in cash or Common Stock, as provided in
Section 2(b)(v), to each Holder a Monthly Delay Payment for
each 30-day period (or portion thereof) during the Listing
Period from and after such failure, refusal or inability to so
list the Registrable Securities until the Registrable
Securities are so listed.
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(B) In the event that shares of Common Stock of
the Company are delisted from the Approved Market at any time
following the Closing Date and remain delisted for 5
consecutive business days, then at the option of each Holder
and to the extent such Holder so elects, the Company shall on
2 business days notice either (1) pay in cash or Common Stock
(as provided in Section 2(b)(v)) to such Holder a Monthly
Delay Payment for each 30-day period that the shares are
delisted or (2) redeem the Securities held by such Holder, in
whole or in part, at a redemption price equal to the Premium
Redemption Price (as defined above); provided, however, that
such Holder may revoke such request at any time prior to
receipt of payment of such Monthly Delay Payments or Premium
Redemption Price, as the case may be.
(iii) Blackout Periods. In the event any Holder is
unable to sell Registrable Securities under the Registration
Statement after the Effectiveness Deadline for more than (A)
ten (10) consecutive days or (B) an aggregate of thirty (30)
days in any 12 month period ("SUSPENSION GRACE Period"),
including without limitation by reason of a suspension of
trading of the Common Stock on the Approved Market, any
suspension or stop order with respect to the Registration
Statement or the fact that an event has occurred as a result
of which the prospectus (including any supplements thereto)
included in such Registration Statement then in effect
includes an untrue statement of material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing, or the number of
shares of Common Stock covered by the Registration Statement
is insufficient at such time to make such sales (each, a
"BLACKOUT"), then the Company shall pay in cash to each Holder
a Monthly Delay Payment for each 30-day period (or portion
thereof) in which a Blackout exists from and after the
expiration of the Suspension Grace Period. In addition to
receiving the Monthly Delay Payment as provided above, if any
Blackout (other than a Blackout of thirty (30) consecutive
calendar days or less due to the Company filing a
post-effective amendment to the Registration Statement to
incorporate its 2000 fiscal year audited financial statements)
continues for 15 or more days following the commencement of
such Blackout, then a Holder shall have the right but not the
obligation to elect to have the Company redeem its Securities,
in whole or in part, at the price equal to the Premium
Redemption Price.
(iv) Redemption for Exercise Deficiency. In the
event that the Company does not have a sufficient number of
shares of Common Stock available to satisfy the Company's
obligations to any Holder upon receipt of a notice of exercise
of a Warrant or Option or Option Warrant from an Investor, or
is otherwise unable or unwilling for any reason to issue
Common Stock as required by, and in accordance with the
provisions of,
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the Warrants, Options, Option Warrants or the Purchase
Agreement, (each, an "EXERCISE DEFICIENCY"), then:
(A) The Company shall provide to each Holder a
Monthly Delay Payment for each 30 day period or portion
thereof (appropriately prorated) following the Exercise
Deficiency, on the terms set forth in Section 2(b)(i)(B)
above.
(B) At any time ten (10) days after the
commencement of the running of the first 30-day period
described above in clause (A) of this paragraph (iv), at the
request of any Holder, the Company promptly shall purchase
from such Holder, and on the terms set forth in Section
2(b)(i)(B) above, the Securities in each case as a result of
the Exercise Deficiency at the Premium Redemption Price, on
the terms set forth in Section 2(b)(i)(B) above.
(v) Premium Redemption Price for Defaults.
(A) The Company acknowledges that any failure,
refusal or inability by the Company to perform the obligations
described in the foregoing paragraphs (i) through (iv) will
cause the Holders to suffer damages in an amount that will be
difficult to ascertain, including without limitation damages
resulting from the loss of liquidity in the Registrable
Securities and the additional investment risk in holding the
Registrable Securities. Accordingly, the parties agree that it
is appropriate to include in this Agreement the foregoing
provisions for Monthly Delay Payments and mandatory
redemptions in order to compensate the Holders for such
damages. The parties acknowledge and agree that the Monthly
Delay Payments and mandatory redemptions set forth above
represent the parties' good faith effort to quantify such
damages and, as such, agree that the form and amount of such
payments and mandatory redemptions are reasonable and will not
constitute a penalty.
(B) In the event that the Company fails to pay
any Monthly Delay Payment within 10 business days of demand
therefor, each Holder shall have the right to sell to the
Company any or all of its Securities at the Premium Redemption
Price on the terms set forth in Section 2(b)(i)(B) above.
(vi) Cumulative Remedies. Each Monthly Delay Payment
triggered by an Interfering Event provided for in the
foregoing paragraphs (i) through (v) shall be in addition to
each other Monthly Delay Payment triggered by another
Interfering Event; provided, however, that in no event shall
the Company be obligated to pay to any Holder Monthly Delay
Payments in an aggregate amount greater than the Default Rate
for any 30-day period (or portion thereof). The Monthly Delay
Payments and
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mandatory redemptions provided for above are in addition to
and not in lieu or limitation of any other rights the Holders
may have at law, in equity or under the terms of the
Transaction Documents including without limitation the right
to specific performance. Each Holder shall be entitled to
specific performance of any and all obligations of the Company
in connection with the registration rights of the Holders
hereunder.
(vii) Certain Acknowledgments. The Company acknowledges
that any failure, refusal or inability by the Company
described in the foregoing paragraphs (i) through (v) will
cause the Holders to suffer damages in an amount that will be
difficult to ascertain, including without limitation damages
resulting from the loss of liquidity in the Registrable
Securities and the additional investment risk in holding the
Registrable Securities. Accordingly, the parties agree that it
is appropriate to include in this Agreement the foregoing
provisions for Monthly Delay Payments and mandatory
redemptions in order to compensate the Holders for such
damages. The parties acknowledge and agree that the Monthly
Delay Payments and mandatory redemptions set forth above
represent the parties' good faith effort to quantify such
damages and, as such, agree that the form and amount of such
Monthly Delay Payments and mandatory redemptions are
reasonable and will not constitute a penalty. The parties
agree that the provisions of this clause (vii) consist of
certain acknowledgments and agreements concerning the remedies
of the Holders set forth in clauses (i) through (v) and
paragraph (vi) of this paragraph; nothing in this clause (vii)
imposes any additional default payments and mandatory
redemptions for violations under this Agreement.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise
the Company. Any such underwriting may only be administered by
investment bankers reasonably satisfactory to the Company. To the
extent that the lead managing underwriter will not permit the
registration of all of the Registrable Securities sought to be
registered pursuant to this Agreement, the Registrable Securities to be
included shall be apportioned among the Holders on a pro rata basis
(based on the number of shares of Common Stock proposed to be
registered by each). Those Registrable Securities that are excluded
from the underwriting by reason of the managing underwriter's marketing
limitation and all other Registrable Securities not originally
requested to be so included shall not be included in such registration
and shall be withheld from the market by the Holders thereof for a
period, not to exceed 90 days, which the managing underwriter
reasonably determines necessary to effect the underwritten public
offering. No Holder of Registrable Securities shall be entitled to
participate in an underwritten offering unless such Holder enters into,
and performs its obligations under, one or more underwriting agreements
and any related agreements and documents (including an escrow agreement
and/or a power of attorney with respect to the disposition of the
Registrable Securities), in the form that such Holder shall agree to
with the lead managing underwriter of the transaction. If any Holder
disapproves of the terms of any underwriting, it may elect, prior to
the execution of any
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underwriting agreement, to withdraw therefrom by written notice to the
Company and the lead managing underwriter. Any Registrable Securities
so withdrawn from an underwriting by such Holder shall be withdrawn
from such registration and shall not be transferred in a public
distribution prior to 180 days following the effective date of the
Registration Statement relating thereto. Nothing contained herein shall
(i) obligate any Holder to participate in any such underwritten
offering or (ii) affect any Holder's registration rights hereunder with
respect to non-underwritten offerings.
(d) The Company shall enter into such customary
agreements for secondary offerings (including a customary underwriting
agreement with the underwriter or underwriters, if any) and take all
such other reasonable actions reasonably requested by the Holders in
connection therewith in order to expedite or facilitate the disposition
of such Registrable Securities. In the event that the offering in which
the Registrable Securities are to be sold is deemed to be an
underwritten offering or an Investor selling Registrable Securities is
deemed to be an underwriter, the Company shall deliver or cause to be
delivered to the Investors such representations and warranties, legal
opinions, "comfort letters", certificates and undertakings, in form,
substance and scope as are customarily made by issuers to underwriters
in secondary offerings.
(e) The Company shall make available for
inspection by the Holders, representative(s) of all the Holders
together, any underwriter participating in any disposition pursuant to
a Registration Statement, and any attorney or accountant retained by
any Holder or underwriter, all financial and other records customary
for purposes of the Holders' due diligence examination of the Company
and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney
or accountant in connection with such Registration Statement, provided
that such parties agree to keep such information confidential.
(f) The Company shall file a Registration
Statement with respect to any newly authorized and/or reserved shares
within ten (10) business days of any shareholders meeting authorizing
or reserving same and shall use its best efforts to cause such
Registration Statement to become effective within ninety (90) days of
such shareholders meeting. If the Holders become entitled, pursuant to
an event described in clauses (iii), (vi) or (vii) of the definition of
Registrable Securities, to receive any securities in respect of
Registrable Securities subsequent to the date a Registration Statement
is declared effective, and the Company is unable under the securities
laws to add such securities to the then effective Registration
Statement, the Company shall promptly file, in accordance with the
procedures set forth herein, an additional Registration Statement with
respect to such newly Registrable Securities. The Company shall use its
best efforts to (i) cause any such additional Registration Statement,
when filed, to become effective under the Securities Act, and (ii) keep
such additional Registration Statement effective during the period
described in Section 5 below. All of the registration rights and
remedies under this Agreement shall apply to the registration
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of such newly reserved shares and such new Registrable Securities, including
without limitation the provisions providing for Monthly Delay Payments and
mandatory redemption contained herein.
3. Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance with
registration pursuant to this Agreement shall be borne by the Company, and all
Selling Expenses of a Holder shall be borne by such Holder.
4. Registration on Form S-3; Other Forms. The Company
shall use its best efforts to qualify for registration on Form S-3 or any
comparable or successor form or forms, or in the event that the Company is
ineligible to use such form, such form as the Company is eligible to use under
the Securities Act, provided that the Company shall convert any non-Form S-3
Registration Statement to Form S-3 promptly following the Company's eligibility
to do so.
5. Registration Period. In the case of the registration
effected by the Company pursuant to this Agreement, the Company will use its
best efforts to keep such registration effective until the later to occur of
(i) sales are permitted of all Registrable Securities without registration
under Rule 144(k) or (ii) such time as there are no longer any Warrants,
Options or Option Warrants outstanding or issuable.
6. Indemnification.
(a) The Company Indemnity. The Company will
indemnify each Holder, each of its officers, directors and partners, and each
person controlling each Holder, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within
the meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any 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 any violation by
the Company of the Securities Act or any state securities law or in either
case, any rule or regulation thereunder applicable to the Company and relating
to action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each Holder, each
of its officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to a Holder to the extent that any such claim, loss, damage, liability or
expense arises solely out of or is based solely on (i)
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any untrue statement or omission based upon written information furnished to the
Company by or on behalf of such Holder or the underwriter (if any) therefor and
stated to be specifically for use therein or (ii) the failure of such Holder to
deliver or cause to be delivered the prospectus made available by the Company to
the Holder under Section 2(a)(iv) hereof in accordance with the requirements of
the Securities Act. The indemnity agreement contained in this Section 6(a) 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
Company (which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly,
if Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and partners, and
each person controlling such other Holder(s), against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, and will reimburse the Company and such other Holder(s)
and their directors, officers and partners, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this
Section 6 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall
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not relieve the Indemnifying Party of its obligations under this Article except
to the extent that the Indemnifying Party is materially and adversely affected
by such failure to provide notice. 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. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying each of such Indemnified Parties, shall contribute to the amount
paid or payable by each such Indemnified Party as a result of such losses,
claims, damages or liabilities as between the Company on the one hand and any
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of any Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by such
Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required
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to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Survival. The indemnity and contribution agreements contained
in Sections 6 and 7 and the representations and warranties of the Company
referred to in Section 2(d) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall reasonably promptly
furnish to the Company such information regarding such Holder and the
distribution and/or sale proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement. The
intended method or methods of disposition and/or sale (Plan of Distribution) of
such securities as so provided by such Investor shall be included without
alteration in the Registration Statement covering the Registrable Securities and
shall not be changed without written consent of such Holder, except that such
Holder may not require an intended method of disposition which violates
applicable securities law.
Each Holder shall notify the Company, at any time when a prospectus is
required to be delivered under applicable law, of the happening of any event as
a result of which the prospectus included in the applicable Registration
Statement, as then in effect, in each case only with respect to information
provided by such Holder and included in the Registration Statement, 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 light of the circumstances then existing. Such Holder shall immediately upon
the happening of any such event cease using such prospectus. Any other Holders
shall cease using such prospectus immediately upon receipt of notice from the
Company to that effect. If so requested by the Company, each Holder promptly
shall return to the Company any copies of any prospectus in its possession
(other than permanent file copies) that contains 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 light of the
circumstances then existing.
10. Transfer of Shares; Suspension.
(a) The Holder agrees that it will not effect any disposition of
the Registrable Securities that would constitute a sale within the meaning of
the Securities Act except as contemplated in the Registration Statement referred
to herein and as described below or otherwise in accordance with the Securities
Act, and that it will
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promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding the Holder or its plan of distribution.
(b) In the event (i) of any request by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to a Registration
Statement or related prospectus or for additional information; (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) of any event or circumstance which necessitates the making of
any changes in the Registration Statement or related prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the prospectus, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; then the Company shall
deliver a certificate in writing to the Holder (the "Suspension Notice") to the
effect of the foregoing and, upon receipt of such Suspension Notice, the Holder
will refrain from selling any Registrable Securities pursuant to the
Registration Statement (a "Suspension") until the Investor's receipt of copies
of a supplemented or amended prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current prospectus may be
used. In the event of any Suspension, the Company will use its best efforts to
cause the use of the prospectus so suspended to be resumed as soon as possible
after the delivery of a Suspension Notice to the Holder. Nothing contained in
this Section 10 shall affect in any way the Holders' right to Monthly Delay
Payments and mandatory redemption set forth in Section 2(b) hereof.
(c) Provided that a Suspension is not then in effect, the
Investor may sell Registrable Securities under the Registration Statement,
provided that it arranges for delivery of a current prospectus to the transferee
of such shares to the extent required by the Securities Act. Upon receipt of a
request therefor, the Company has agreed to provide, at its own expense, an
adequate number of current prospectuses (including documents incorporated by
reference therein) to the Holder and to supply copies to any other parties
requiring such prospectuses.
11. Replacement Certificates. The certificate(s) representing the
Registrable Securities held by the Investor (or then Holder) may be exchanged by
the Investor (or such Holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number of
Registrable Securities, as reasonably requested by the Investor (or such Holder)
upon surrendering the same. No service charge will be made for such registration
or transfer or exchange.
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12. Transfer or Assignment. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Registrable Securities, Warrants or Optional Warrants, and all
other rights granted to the Investors by the Company hereunder may be
transferred or assigned to any transferee or assignee of any Registrable
Securities, Warrants or Optional Warrants; provided in each case that the
Company must be given written notice by the such Investor at the time of or
within a reasonable time after said transfer or assignment, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned;
provided that the transferee or assignee of such rights (i) agrees in writing to
be bound by the provisions of this Agreement, (ii) is an "accredited investor,"
as that term is defined in Rule 501(a) of Regulation D under the Securities Act
and (iii) is a transferee of at least 20,000 Registrable Securities as permitted
under the securities laws of the United States.
13. No Piggy-Back Restrictions. Neither the Company nor any of its
security holders (other than a Holder in such capacity pursuant hereto) may
include securities of the Company in the Registration Statement, and the Company
shall not after the date hereof enter into any agreement providing any such
right to any of its security holders.
14. Miscellaneous.
(a) Remedies. The Company and the Investors acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.
(b) Jurisdiction. THE COMPANY AND EACH OF THE INVESTORS
(I) HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED
STATES SITTING IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND EACH OF THE
INVESTORS CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR
NOTICES TO IT
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UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH
SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.
(c) Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the Company:
Blue Zone, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: CEO
with copies to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
to the Investors:
To each Investor at the address and/or fax number set
forth on Schedule 1 of the Purchase Agreement
with copies to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Any party hereto may from time to time change its address for notices
by giving at least 10 days' written notice of such changed address to the other
parties hereto.
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(d) Indemnity. Each party shall indemnify each other party against
any loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.
(e) Waivers. No waiver by any party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Investor contained herein shall survive the
Closing.
(f) Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
(g) Publicity. Except as otherwise provided in the Purchase
Agreement, the Company agrees that it will not disclose, and will not include in
any public announcement, the name of any Investor without its express written
approval, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement. Except as otherwise
provided in the Purchase Agreement, the Company agrees to deliver a copy of any
public announcement regarding the matters covered by this Agreement or any
agreement or document executed herewith to each Investor and any public
announcement including the name of an Investor to such Investor, prior to the
publication of such announcements.
(h) Entire Agreement. This Agreement, together with the Purchase
Agreement, the Warrants and the agreements and documents contemplated hereby and
thereby, contains the entire understanding and agreement of the parties, and may
not be modified or terminated except by a written agreement signed by both
parties.
(i) Governing Law. THIS AGREEMENT AND THE VALIDITY AND PERFORMANCE
OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
(j) Severability. The parties acknowledge and agree that the
Investors are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint, that no Investor shall have any responsibility or
liability for the representations, warrants, agreements, acts or omissions of
any other Investor, and that any rights granted to "INVESTORS" hereunder shall
be enforceable by each Investor hereunder.
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(k) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Each party hereto hereby further warrants and represents that such party has
reviewed this waiver with its legal counsel, and that such party knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. This waiver is irrevocable, meaning that it may not be modified either
orally or in writing, and this waiver shall apply to any subsequent amendments,
supplements or modifications to (or assignments of) this agreement. In the event
of litigation, this agreement may be filed as a written consent to a trial
(without a jury) by the court.
(l) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
[Signature page follows]
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SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
BLUE ZONE, INC.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
INVESTORS:
MILLENNIUM PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Administrative Officer
ELLIOT ASSOCIATES, L.P
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
WESTGATE INTERNATIONAL, L.P.
By: Xxxxxxx International Capital Advisors, Inc.,
as Attorney-in-Fact
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President
