REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this Agreement ) is made and
entered into as of February 9, 2000, among Xxxxxxxx.Xxx, Inc., a Nevada
corporation (the Company ), and the parties who have executed this Agreement
and whose names appear as the purchasers on Schedule I hereto (each such
purchaser listed on Schedule I hereto is sometimes individually referred to
herein as a Purchaser , and all such purchasers are sometimes collectively
referred to herein as the Purchasers ).
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers
(the Purchase Agreement ).
The Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
Advice has the meaning set forth in Section 3(o) hereof.
Affiliate means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, control ,
when used with respect to any Person, means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities,
by contract or otherwise; and the terms affiliated , controlling and
controlled have meanings correlative to the foregoing.
AMEX means the American Stock Exchange.
Business Day means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York generally are authorized or required by law or other
government action to close.
Certificate of Designation means the Certificate of Designation of
the Company with respect to the Securities.
Closing Date shall mean the Closing Date as defined in the
Purchase Agreement.
Commission means the Securities and Exchange Commission.
Common Stock means the Company s Common Stock, par value $0.01 per
share.
Effectiveness Date means the earlier of (i) the 5th Business Day
after the Company has received notice (written or oral) from the Commission
that the Commission staff will not be reviewing the Registration Statement or
has no further comments on the Registration Statement or (ii) the date that
the Commission declares the Registration Statement Effective.
Effectiveness Period has the meaning set forth in Section 2(a)
hereof.
Event has the meaning set forth in Section 2(d) hereof.
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Filing Date means as soon as practicable after the Closing Date
but in no event later than the 30th day following the Closing Date.
Holder or Holders means the holder or holders, as the case may be,
from time to time of Registrable Securities.
Indemnified Party has the meaning set forth in Section 5(c)
hereof.
Indemnifying Party has the meaning set forth in Section 5(c)
hereof.
Initial Registration Statement has the meaning set forth in
Section 2(a) hereof.
Losses has the meaning set forth in Section 5(a) hereof.
Majority Holders means the Holders of at least sixty (60%) percent
of the Registrable Securities.
Person means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
Proceeding means an action, claim, suit, arbitration,
investigation or proceeding (including, without limitation, an investigation
or partial proceeding, such as a deposition), whether commenced or threatened.
Prospectus means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
Registrable Securities means the shares of Common Stock issued or
issuable (i) upon conversion of or with respect to the Securities, (ii) upon
exercise of the Warrants and (iii) otherwise received by the Purchasers in
connection with the transactions contemplated by the Purchase Agreement, and
shall include any shares of the Company s capital stock issued with respect to
(i), (ii) or (iii) as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise.
Registration Delay Payment has the meaning set forth in Section
2(d) hereof.
Registration Statement means the Initial Registration Statement
and any additional registration statements contemplated by Sections 2(a), 2(b)
and 6(d), including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
Rule 144 means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
Rule 158 means Rule 158 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
Rule 415 means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
Securities means the Company s Series B Convertible Preferred
Stock issuable pursuant to the Purchase Agreement.
Securities Act means the Securities Act of 1933, as amended.
Special Counsel means one special counsel to the Holders.
Trading Day means a day on which AMEX (or in the event the Common
Stock is not traded on AMEX, such other securities market on which the Common
Stock is listed) is open for trading.
Underlying Shares means the shares of Common Stock issuable upon
conversion of the Securities and exercise of the Warrants.
Underwritten Registration or Underwritten Offering means a
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement, whether on a firm commitment or best efforts basis.
Warrants means the warrants issuable pursuant to the Purchase
Agreement.
2. Registration Requirements.
(a) Filing and Effectiveness Obligations. On or prior to the
Filing Date, the Company shall prepare and file with the Commission a
Registration Statement (the Initial Registration Statement ) which shall
cover all Registrable Securities for an offering to be made on a continuous
basis pursuant to a Shelf registration statement under Rule 415. The
Initial Registration Statement shall be on Form S-3 or any successor form
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be
on another appropriate form in accordance herewith, subject to the reasonable
consent of the Majority Holders). The Company shall (i) not permit any
securities other than the Registrable Securities to be included in the Initial
Registration Statement and (ii) use its best efforts to cause the Initial
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, and to keep such Initial
Registration Statement continuously effective under the Securities Act
(subject to Section 3(r)) from the Effectiveness Date until the date which is
five (5) years after the date that such Initial Registration Statement is
declared effective by the Commission or such earlier date when all Registrable
Securities covered by such Initial Registration Statement have been sold or
may be sold without volume restrictions pursuant to Rule 144 as determined by
counsel to the Company pursuant to a written opinion letter, addressed to the
Holders and the Company s transfer agent to such effect (the Effectiveness
Period ). The number of shares of Common Stock initially included in the
Initial Registration Statement shall be no less than 100% of the sum of the
number of shares of Common Stock that are then issuable upon conversion of the
Securities (based on the Conversion Price (as defined in the Certificate of
Designation) as would then be in effect at such time) and the exercise of the
Warrants, without regard to any limitation on the Holder s ability to convert
the Securities or exercise the Warrants.
(b) Underwritten Offering. In addition to the Initial
Registration Statement, at any time when a Registration Statement covering
the Registrable Securities is not effective (during any period in which a
Registration Statement is required to be effective pursuant to the terms
hereof) if the Holders of a majority of the Registrable Securities so elect on
or after August 9, 2000, an offering of Registrable Securities pursuant to
such Registration Statement may be effected on no more than one (1) occasion
in the form of an Underwritten Offering. In such event, and if the managing
underwriters advise the Company and such Holders in writing that in their
opinion the amount of Registrable Securities proposed to be sold in such
Underwritten Offering exceeds the amount of Registrable Securities which can
be sold in such Underwritten Offering, there shall be included in such
Underwritten Offering the amount of such Registrable Securities which in the
opinion of such managing underwriters can be sold, and such amount shall be
allocated pro rata among the Holders proposing to sell Registrable Securities
in such Underwritten Offering.
(c) Underwriter. If any of the Registrable Securities are to
be sold in an Underwritten Offering, the investment banker in interest that
will administer the offering will be selected by the Holders of a majority of
the Registrable Securities included in such offering. No Holder may
participate in any Underwritten Offering hereunder unless such Holder (i)
agrees to sell its Registrable Securities on the basis provided in any
underwriting agreements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents required
under the terms of such arrangements.
(d) Penalties. If (i) the Initial Registration Statement
covering all the applicable Registrable Securities and required to be filed by
the Company pursuant to this Agreement is not (A) filed with the Commission on
or before the Filing Date, (ii) if the Company fails to respond, in a
commercially reasonable manner, to any comments made by the Commission with
respect to the Initial Registration Statement within ten (10) Business Days
following the receipt thereof, (iii) if, on any day after the Registration
Statement has been declared effective by the Commission and no Permitted Delay
pursuant to Section 3(b) is in effect, sales of all the Registrable Securities
required to be included on a Registration Statement cannot be made pursuant to
the Registration Statement (including, without limitation, because of a
failure to keep the Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to the Registration
Statement, or to register sufficient shares of Common Stock) or (iv) the
Company shall otherwise fail to file a Registration Statement required by
Section 2(a) hereof, (each such event specified in (i), (ii), (iii) and (iv)
above, an Event ), then, as partial relief for the damages to any Holder by
reason of any such delay in or reduction of its ability to sell the
Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each Holder,
upon the occurrence of each such violation, an amount (a Registration Delay
Payment) equal to the product of (a) the purchase price of such Holder s
Securities (as set forth in Schedule I to the Purchase Agreement), (b) two
one-hundredths (.020) and (c) the number of months (rounded up to the nearest
whole month in the event of partial months) that such Event has occurred and
is continuing. The Company shall pay such Registration Delay Payments to each
Holder in cash on the last Business Day of each month during which an Event
has occurred and is continuing. In the event the Company fails to make a
Registration Delay Payment within ten (10) Business Days of the date such
Registration Delay Payment is due, such Registration Delay Payment shall bear
interest at the rate of 2.0% per month (rounded up to the nearest whole month
in the event of partial months) until paid in full.
3. Registration Procedures.
In connection with the Company s registration obligations
hereunder, the Company shall:
(a) Preparation of Registration Statement. Prepare and file
with the Commission on or prior to the Filing Date a Registration Statement on
Form S-3 or its successor form (or if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3 such registration
shall be on another appropriate form in accordance herewith (which shall
include a Plan of Distribution substantially in the form of Exhibit A annexed
hereto, unless in connection with an Underwritten Offering) or in connection
with an Underwritten Offering hereunder, such other form agreed to by the
Company and by a majority-in-interest of Holders of Registrable Securities to
be covered by such Registration Statement) (except if otherwise directed by
the Majority Holders), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated therein by reference), the
Company shall, if reasonably practicable (i) furnish to the Holders, their
Special Counsel and any managing underwriters, copies of all such documents
proposed to be filed (including documents incorporated by reference), which
documents will be subject to the review of such Holders, their Special Counsel
and such managing underwriters, and (ii) cause its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of respective
counsel to such Holders and such underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Majority Holders, their Special Counsel or
any managing underwriters shall reasonably object, and will not request
acceleration of such Registration Statement without prior notice to such
counsel. The sections of such Registration Statement covering information
with respect to the Holders, the Holders beneficial ownership of securities
of the Company or the Holders intended method of disposition of Registrable
Securities shall conform to the information provided to the Company by each of
the Holders.
(b) Amendments. (i) Prepare and file with the Commission, in
accordance with the requirements and in the time periods set forth in the
Securities Act, such amendments, including post-effective amendments, to the
Registration Statement as may be necessary to keep the Registration Statement
continuously effective for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements as are required to be
filed hereunder in order to register for resale under the Securities Act all
of the Registrable Securities (a Permitted Xxxxx ), (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities
Act, (iii) respond as promptly as possible to any comments received from the
Commission with respect to the Registration Statement or any amendment thereto
and as promptly as practicable, but in no event later than ten (10) Business
Days, and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement, and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by
the Holders thereof set forth in the Registration Statement as so amended or
in such Prospectus as so supplemented. In the event the number of shares
available under a Registration Statement filed pursuant to this Agreement is
insufficient to cover 100% of the Registrable Securities issued or issuable
upon conversion of the Securities and exercise of the Warrants, the Company
shall amend the Registration Statement, or file a new Registration Statement
(on the short form available therefor, if applicable), or both, so as to cover
100% of the Registrable Securities, in each case as soon as practicable, but
in any event within twenty (20) Business Days after the necessity therefor
arises (based on the Conversion Price of the Securities and other relevant
factors on which the Company reasonably elects to rely). The Company shall
use its best efforts to cause such amendment and/or new Registration Statement
to become effective as soon as practicable following the filing thereof, but
in no event later than ninety (90) days after the date on which the Company
reasonably first determines (or reasonably should have determined) the need
therefor.
(c) Notifications. Notify the Holders of Registrable
Securities to be sold, their Special Counsel, and any managing underwriters,
as promptly as possible (and, in the case of (i)(A) below, not less than five
(5) days prior to such filing and, in the case of (i)(C) below, not later than
the first Business Day after effectiveness) and (if requested by any such
Person) confirm such notice in writing no later than one (1) Business Day
following the day (i) (A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be
filed, (B) when the Commission notifies the Company whether there will be a
review of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission or any other federal
or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose, (iv) any of
the representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated hereby ceases to be true
and correct in all material respects, (v) 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, (vi) of the occurrence of any event that makes any statement made in
the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or that requires any revisions to the Registration Statement, Prospectus or
other documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any 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, in light of the circumstances
under which they were made, not misleading and (vii) the beginning and end of
a black-out period pursuant to Section 3(r).
(d) Suspensions. Use its best efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) Supplements and Post-Effective Amendments. If requested
by any managing underwriter or the Holders of a majority in interest of the
Registrable Securities to be sold in connection with an Underwritten Offering,
(i) promptly incorporate in a Prospectus supplement or post-effective
amendment to the Registration Statement such information as the Company
reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to
be incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company shall not be required to take any action
pursuant to this Section 3(e) that would, in the written opinion of counsel
for the Company (addressed to counsel to the Holder), violate applicable law.
(f) Copies of Registration Statement. Furnish to each Holder,
their Special Counsel, and any managing underwriters, without charge, at least
one conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.
(g) Copies of Prospectus. Promptly deliver to each Holder,
their Special Counsel, and any underwriters, without charge, as many copies of
the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
the Company hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders and any underwriters in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(h) Blue Sky. Prior to any public offering of Registrable
Securities, use its best efforts to register or qualify or cooperate with the
selling Holders, their Special Counsel and any underwriters in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter requests in writing, to keep each such registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where
it is not then so qualified or to take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company to any material tax in any such jurisdiction
where it is not then so subject.
(i) Certificates. Cooperate with the Holders and any managing
underwriters to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
applicable law and the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered
in such names as any such managing underwriters or Holders may request at
least two (2) Business Days prior to any sale of Registrable Securities.
(j) Supplements and Amendments. Upon the occurrence of any
event contemplated by Section 3(c)(vi), as promptly as possible, prepare a
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an 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
under which they were made, not misleading.
(k) Listing. Cause all Registrable Securities relating to
such Registration Statement to be listed on AMEX and any other securities
exchange, quotation system, market or over-the-counter bulletin board, if any,
on which similar securities issued by the Company are then listed or quoted as
and when required pursuant to the Purchase Agreement.
(l) Underwriting Agreement. Enter into such agreements
(including an underwriting agreement in form, scope and substance as is
customary in Underwritten Offerings) and take all such other actions in
connection therewith (including those reasonably requested by any managing
underwriters and the Holders of a majority of the Registrable Securities being
sold) in order to expedite or facilitate the disposition of such Registrable
Securities, and whether or not an underwriting agreement is entered into, (i)
make such representations and warranties to such Holders and such underwriters
as are customarily made by issuers to underwriters in underwritten public
offerings, and confirm the same if and when requested, (ii) in the case of an
Underwritten Offering obtain and deliver copies thereof to the managing
underwriters, if any, or in the case of non-Underwritten Offerings, if
reasonably requested by the selling Holders, obtain and deliver copies thereof
to such selling Holders, of opinions of counsel to the Company and updates
thereof addressed to each such underwriter, in form, scope and substance
reasonably satisfactory to any such managing underwriters and Special Counsel
to the selling Holders covering the matters customarily covered in opinions
requested in Underwritten Offerings and such other matters as may be
reasonably requested by such Special Counsel and underwriters, (iii)
immediately prior to the effectiveness of the Registration Statement, and, in
the case of an Underwritten Offering, at the time of delivery of any
Registrable Securities sold pursuant thereto, and, in the case of
non-Underwritten Offerings, at such time as the selling Holders may reasonably
request, obtain and deliver copies to the Holders and the managing
underwriters, if any, of cold comfort letters and updates thereof from the
independent certified public accountants of the Company (and, if required, any
other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data is, or is required to be, included in the
Registration Statement), addressed to each of the underwriters, if any, in
form and substance as are customary in connection with Underwritten Offerings,
(iv) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the selling
Holders and the underwriters, if any, than those set forth in Section 5 (or
such other provisions and procedures acceptable to the managing underwriters,
if any, and Holders of a majority of Registrable Securities participating in
such Underwritten Offering, and (v) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority of the Registrable
Securities being sold, their Special Counsel and any managing underwriters to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) of this Section 3(1) and to evidence compliance with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
(m) Due Diligence. Make available for inspection by the
selling Holders, any representative of such Holders, any underwriter
participating in any disposition of Registrable Securities, and any attorney
or accountant retained by such selling Holders or underwriters, at the offices
where normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors, agents and employees of the
Company and its subsidiaries to supply all information in each case reasonably
requested by any such Holder, representative, underwriter, attorney or
accountant in connection with the Registration Statement; provided, however,
that if any information is determined in good faith by the Company (in
writing) to be of a confidential nature at the time of delivery of such
information, then prior to delivery of such information, the Company and the
Holders shall enter into a confidentiality agreement reasonably acceptable to
the Company and the Holders providing that such information shall be kept
confidential, unless (i) disclosure of such information is required by court
or administrative order or is necessary to respond to inquiries of regulatory
authorities (provided, however, that the Company shall be given notice of any
such pending disclosure so that the Company may seek a protective order), (ii)
disclosure of such information, in the opinion of counsel to such Person, is
required by law, (iii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard by such
Person, or (iv) such information becomes available to such Person from a
source other than the Company and such source is not known by such Person to
be bound by a confidentiality agreement with the Company.
(n) Earnings Statement. Comply in all material respects with
all applicable rules and regulations of the Commission and make generally
available to its securityholders earning statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 not later than 45 days
after the end of any 3-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts Underwritten Offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of the Registration
Statement, which statement shall conform to the requirements of Rule 158.
(o) Information. The Company may require each selling Holder
to furnish to the Company information regarding such Holder and the
distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, and the Company may exclude from such
registration the Registrable Securities of any such Holder who unreasonably
fails to furnish such information within a reasonable time after receiving
such request.
The Company shall hold in confidence and not make any disclosure
of information concerning a Holder 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 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 a Holder is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Holder prior to making such disclosure, and allow the Holder, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (if such reference to such Holder by name or
otherwise is not required by the Securities Act or any similar federal statute
then in force) the deletion of the reference to such Holder in any amendment
or supplement to the Registration Statement filed or prepared subsequent to
the time that such reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any,
will comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v), 3(c)(vi) or 3(c)(vii), such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement
until such Holder s receipt of the copies of the supplemented Prospectus
and/or amended Registration Statement contemplated by Section 3(j), or until
it is advised in writing (the Advice ) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to
be incorporated by reference in such Prospectus or Registration Statement.
Notwithstanding anything to the contrary contained herein, the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of a Holder in accordance with the terms of the Purchase Agreement
in connection with any sale of Registrable Securities with respect to which a
Holder has entered into a contract for sale prior to the Holder s receipt of a
notice from the Company of the happening of any event of the kind described in
Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(c)(vii) and for
which the Holder has not yet settled.
(p) Responses to the Commission. The Company agrees to
respond fully and completely to any and all comments on a Registration
Statement received from the Commission staff as promptly as possible but, for
non-Underwritten Offerings, in no event later than ten (10) Business Days of
the receipt of such comments, regardless of whether such comments are in oral
or written form.
(q) Confirmation of Effectiveness. Within two (2) Business
Days after a Registration Statement which covers applicable Registrable
Securities is ordered effective by the Commission, the Company shall deliver,
and shall cause legal counsel for the Company to deliver, to the transfer
agent for such Registrable Securities (with copies to the Holders whose
Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by
the Commission in the form attached hereto as Exhibit B.
(r) Black-out Periods. Subject to the last sentence of this
Section 3(r), the Company may by written notice require that the Holders
immediately cease sales of Registrable Securities (for a period not to exceed
twenty (20) consecutive days in any one instance and for a period not to
exceed forty (40) calendar days in any twelve-month period) pursuant to a
Registration Statement at any time that (i) the Company becomes engaged in a
business activity or negotiation which is not disclosed in a Registration
Statement (or the prospectus included therein) which the Company reasonably
believes must be disclosed therein under applicable law and which the Company
desires to keep confidential for business purposes, (ii) the Company
determines that a particular disclosure so determined to be required to be
disclosed therein would be premature or would adversely affect the Company or
its business or prospects or (iii) the Registration Statement can no longer be
used under the existing rules and regulations promulgated under the Securities
Act (each of (i), (ii) or (iii), a Material Condition ). The Company shall
not be required to disclose to the Holders which of the reasons specified in
(i), (ii) or (iii) above is the basis for requiring a suspension of sales due
to the occurrence of a Material Condition. The Company will use its
commercially reasonable best efforts to ensure that the use of the
Registration Statement (and the prospectus included therein) may be resumed as
soon as it is practicable. The Company may not suspend sales of Registrable
Securities under a Registration Statement pursuant to this Section 3(r) more
than two times during any twelve-month period. 4. Registration
Expenses.
All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company, whether or
not pursuant to an Underwritten Offering and whether or not the Registration
Statement is filed or becomes effective and whether or not any Registrable
Securities are sold pursuant to the Registration Statement. The fees and
expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with AMEX and each other securities exchange or market on which Registrable
Securities are required hereunder to be listed or quoted and (B) in compliance
with state securities or Blue Sky laws (including, without limitation, fees
and disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as the managing underwriters, if any, or the Holders of a
majority of Registrable Securities may designate)), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any, or by the
Holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company, (v) Securities Act
liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with
the consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange, system or
market as required hereunder. The Holders shall pay the fees and expenses of
the Special Counsel retained by them, any underwriting discounts or
commissions and any transfer or similar taxes in connection with the sale of
Registrable Securities.
5. Indemnification.
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform
under a margin call of Common Stock), investment advisors and employees of
each such Holder, each Person who controls any such Holder (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
joint or several losses, claims, damages, liabilities, costs (including,
without limitation, costs of preparation and attorneys fees) and expenses
(collectively, together with Proceedings by any regulatory or self-regulatory
organization, whether commenced or threatened, Losses ), as incurred, arising
out of or relating to (i) any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
Prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
amendment or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon and in
conformity with information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to such Holder or such Holder s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement,
such Prospectus or such form of prospectus or in any amendment or supplement
thereto (provided that the Company amended any disclosure with respect to the
method of distribution upon written notice from the Holders that such section
of the Prospectus should be revised in any way) or (ii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of Registrable
Securities. The Company shall not, however, be liable to any Holder for any
Losses with respect to any untrue or alleged untrue statement of material fact
or omission or alleged omission of material fact if such statement or omission
was made in a preliminary Prospectus and such Holder did not receive a copy of
the final Prospectus (or any amendment or supplement thereto) at or prior to
the confirmation of the sale of the Registrable Securities in any case where
such delivery is required by the Securities Act and the untrue or alleged
untrue statement of material fact or omission or alleged omission of material
fact contained in such preliminary Prospectus was corrected in the final
Prospectus (or any amendment or supplement thereto), unless the failure to
deliver such final Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 3(g) of this Agreement. The Company
shall notify the Holders promptly of the institution, threat or assertion of
any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its officers,
directors, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the officers, directors, agents and employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all Losses, as incurred, arising solely out of or based solely upon any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or arising solely out of or based
solely upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in the Registration Statement or such Prospectus and that such
information was reasonably relied upon by the Company for use in the
Registration Statement, such Prospectus or such form of prospectus or to the
extent that such information relates to such Holder or such Holder s proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of prospectus; provided,
however, that the indemnity agreement contained in this Section 5(b) shall not
apply to amounts paid in settlement of any Losses if such settlement is
effected without the prior written consent of such Holder. In no event shall
the liability of any selling Holder hereunder be greater in amount than the
dollar amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity
hereunder (an Indemnified Party ), such Indemnified Party promptly shall
notify the Person from whom indemnity is sought (the Indemnifying Party ) in
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, however, that the failure of any Indemnified Party
to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to
the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced
the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Indemnified Parties unless: (i) the Indemnifying Party
has agreed in writing to pay such fees and expenses; (ii) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably satisfactory to such Indemnified Party in any
such Proceeding; or (iii) the named parties to any such Proceeding (including
any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the reasonable expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party, which notice shall be delivered no more frequently than on
a monthly basis (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party because of a
failure or refusal of a court of competent jurisdiction to enforce such
indemnification in accordance with its terms (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties relative intent, knowledge,
access to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a result of
any Losses shall be deemed to include, subject to the limitations set forth in
Section 5(c), any reasonable attorneys or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. In no event shall any selling Holder be required
to contribute an amount under this Section 5(d) in excess of the net proceeds
received by such Holder upon sale of the Registrable Securities pursuant to
the Registration Statement giving rise to such contribution obligation.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. 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.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by
a Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any
of its subsidiaries has, as of the date hereof, nor shall the Company or any
of its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as disclosed in Schedule 2.1(r) of the Purchase
Agreement, neither the Company nor any of its subsidiaries has previously
entered into any agreement granting any registration rights with respect to
any of its securities to any Person. Without limiting the generality of the
foregoing, without the written consent of the Majority Holders, the Company
shall not grant to any Person the right to request the Company to register any
securities of the Company under the Securities Act unless the rights so
granted are subordinated in all respects to the rights in full of the Holders
set forth in Section 2 herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement. This Agreement, together
with the Purchase Agreement, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements
and understandings, oral or written, with respect to such matters.
(c) No Piggyback on Registrations. Except as disclosed on
Schedule 2.1(r) of the Purchase Agreement, neither the Company nor any of its
securityholders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in the Registration Statements and the
Company shall not after the date hereof enter into any agreement providing
such right to any of its securityholders, unless the right so granted is
subordinated in all respects to the rights in full of the Holders set forth
herein, and is not otherwise in conflict or inconsistent with the provisions
of this Agreement.
(d) Piggy-Back Registrations. Except as provided herein if,
at any time when there is not an effective Registration Statement covering the
Registrable Securities, the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Holder of Registrable Securities
written notice of such determination and, if within ten (10) days after
receipt of such notice, any such Holder shall so request in writing, (which
request shall specify the Registrable Securities intended to be disposed of by
the Holders), the Company will use reasonable efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Holder, to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered; provided, that if at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of
such securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
its obligation to pay expenses in accordance with Section 4 hereof), and (ii)
in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities being registered pursuant to this
Section 6(d) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or
any part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 6(d) that are eligible for
sale pursuant to Rule 144(k) of the Securities Act. In the case of an
Underwritten Offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the
underwriter s representative should reasonably determine that the inclusion of
such Registrable Securities would materially adversely affect the offering
contemplated in such registration statement, and based on such determination
recommends inclusion in such registration statement of fewer Registrable
Securities than proposed to be sold by the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration) or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement if the Company, after consultation with the
underwriter(s), recommends the inclusion of none of such Registrable
Securities; provided, however, that if securities are being offered for the
account of other Persons as well as the Company, such reduction shall not
represent a greater fraction of the number of Registrable Securities intended
to be offered by the Holders than the fraction of similar reductions imposed
on such other Persons (other than the Company).
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the
Company and the Majority Holders; provided, however, that for the purposes of
this sentence, Registrable Securities that are owned, directly or indirectly,
by the Company, or an Affiliate of the Company are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of a Holder and that does not directly or indirectly affect the rights
of any other Holders may be given by the Holders to which such waiver or
consent relates; provided, however, that the provisions of this sentence may
not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence. Any amendment or waiver
effected in accordance with this Section shall be binding upon each Holder,
each future Holder, and the Company. Upon effectiveness of each such
amendment or waiver, the Company shall promptly give written notice thereof to
the Holders who have not previously consented thereto in writing.
(f) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i)
upon receipt, when delivered personally, (ii) upon receipt, when sent by
facsimile, provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party (if received by
or before 5:30 p.m. Eastern Time where such notice is received) or the first
(1st) Business Day following such delivery (if received after 5:30 p.m.
Eastern Time where such notice is received) or (iii) one (1) Business Day
after deposit with a nationally recognized overnight courier. The addresses
for such communications are (A) if to the Company, to the address set forth on
Schedule I hereto, with copies to Greenberg, Glusker, Fields, Claman &
Machtinger LLP, 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx X. Xxxxxx, Esq, facsimile no. (000) 000-0000 and (B)
if to any Purchaser, to its address set forth on Schedule I hereto, with
copies to those specified on the signature pages hereto and to Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx X. Xxxx, Esq., facsimile no. (000) 000-0000, or to such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may
not assign its rights or obligations hereunder without the prior written
consent of the Majority Holders. Each Holder may assign its rights hereunder
in the manner and to the Persons as permitted under the Purchase Agreement.
In addition, the rights of each Holder hereunder, including the right to have
the Company register for resale Registrable Securities in accordance with the
terms of this Agreement, shall be automatically assignable by each Holder if:
(i) the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (A) the name and address of such transferee or assignee and (B) the
securities with respect to which such registration rights are being
transferred or assigned; (iii) following such transfer or assignment the
further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws; (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement; and (v)
such transfer shall have been made in accordance with the applicable
requirements of the Purchase Agreement.
(h) Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the
original thereof.
(i) Governing Law. The corporate laws of the State of Nevada
shall govern all issues concerning the relative rights of the Company and the
Holders as its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any Proceeding any claim that it is not personally
subject to the jurisdiction of any such court, that such Proceeding is
improper. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
(j) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
(l) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(m) Shares Held by The Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company
or its Affiliates (other than any Holder or transferees or successors or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason
of its holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(n) Revision of SEC Position on Warrants. In the event the
rules and regulations of the Commission or the policies of the staff of the
Commission are modified and as a result thereof the Company and the Company s
counsel determines in good faith that it may be practicable and in the
interests of the Company and the Holders to register the exercise of the
Warrants so that the Warrant Shares may be freely resold without maintaining
an effective registration statement under the Securities Act for resales, the
Company and the Holders agree to cooperate in good faith to effect such
amendments to this Agreement as may be appropriate to provide that the Company
may fulfill its obligations hereunder with respect to the Warrants and the
Warrant Shares by maintaining an effective registration statement under the
Securities Act covering the exercise of the Warrants rather than the resale of
the Warrant Shares.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
XXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx XxXxxx
Name: Xxxxxxx XxXxxx
Title: CEO
XXXXX XXXXXXX STRATEGIC GROWTH FUND, LTD.
By: Xxxxx Xxxxxxx Asset Management, LLC
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Principal
XXXXX XXXXXXX STRATEGIC GROWTH FUND, L.P.
By: Xxxxx Xxxxxxx Capital, LLC
its general partner
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Principal
SCHEDULE I
Company
-------
Xxxxxxxx.Xxx, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx XxXxxx
Chairman and Chief Executive Officer
Facsimile: (000) 000-0000
Purchasers:
----------
Xxxxx Xxxxxxx Strategic Growth Fund, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Xxxxx Xxxxxxx Strategic Growth Fund, Ltd.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
EXHIBIT A
PLAN OF DISTRIBUTION
Our company is registering the shares of common stock on behalf of
the selling stockholders. All costs, expenses and fees in connection with the
registration of the shares offered by this prospectus will be borne by our
company, other than brokerage commissions and similar selling expenses, if
any, attributable to the sale of shares which will be borne by the selling
stockholders. Sales of shares may be effected by selling stockholders from
time to time in one or more types of transactions (which may include block
transactions) on AMEX, in the over-the-counter market, in negotiated
transactions, through put or call options transactions relating to the shares,
through short sales of shares, or a combination of such methods of sale, at
market prices prevailing at the time of sale, or at negotiated prices. Such
transactions may or may not involve brokers or dealers. The selling
stockholders have advised our company that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinated broker acting in connection with the proposed sale
of shares by the selling stockholders.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable
for the shares in the course of hedging positions they assume with selling
stockholders. The selling stockholders may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery to such broker-dealers or other financial institutions of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as amended or supplemented
to reflect such transaction).
The selling stockholders may make these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act
as agents or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from selling stockholders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in
connection with the sale of shares are underwriters within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act. The selling stockholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the shares against certain liabilities, including
liabilities arising under the Securities Act.
Because selling stockholders are underwriters within the meaning
of Section 2(11) of the Securities Act, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act. Our
company has informed the selling stockholders that the anti-manipulative
provisions of Regulation M promulgated under the Exchange Act may apply to
their sales in the market.
Selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities
Act, provided they meet the criteria and conform to the requirements of Rule
144.
Upon our company being notified by a selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale
of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
the name of each such selling stockholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the initial price at which such shares were sold;
- the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by reference
in this prospectus; and
- other facts material to the transactions.
In addition, upon our company being notified by a selling stockholder that a
donee or pledgee intends to sell more than 500 shares, a supplement to this
prospectus will be filed.
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attention:
Re: Xxxxxxxx.Xxx, Inc.
Ladies and Gentlemen:
We are counsel to Xxxxxxxx.Xxx, Inc., a Nevada corporation (the Company),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the Purchase Agreement) entered into by and among the
Company and the purchasers named therein (collectively, the Holders) pursuant
to which the Company issued to the Holders its Series B Convertible Preferred
Stock (the Securities ) convertible into shares of the Company s common stock,
par value $0.01 per share (the Common Stock), and Warrants (the Warrants) to
acquire shares of Common Stock. Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the Registration Rights Agreement ) pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Securities and exercise of the Warrants, under the
Securities Act of 1933, as amended (the 1933 Act). In connection with the
Company s obligations under the Registration Rights Agreement, on
_______________, 2000, the Company filed a Registration Statement on Form S-3
(File No. 333-_____________) (the Registration Statement) with the Securities
and Exchange Commission (the SEC) relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC
s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER
TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC s staff, that any
stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC and
the Registrable Securities are available for resale under the 1933 Act
pursuant to the Registration Statement.
Very truly yours,
[ISSUER S COUNSEL]
cc: [LIST NAMES OF HOLDERS]
