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EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of October 26, 1999, by and between I.T. TECHNOLOGY, INC., a
Delaware corporation (the "Company"), and INSTANZ NOMINEES PTY. LTD., an
Australian corporation ("Instanz"), with reference to the following facts:
W I T N E S S E T H:
WHEREAS, on the date hereof, Instanz purchased 3,700,000 shares of
Common Stock of the Company (the "Shares"), 2,500,000 shares pursuant to the
Subscription Agreement with respect to the Company's Confidential Private
Placement Memorandum dated August 30, 1999 and 1,200,000 shares pursuant to
[the Stock Purchase and Transfer Agreement, dated today's date, by and among
Instanz and existing shareholders (the "Purchase Agreement")];
WHEREAS, the Company has agreed with Instanz to grant certain
registration rights to Instanz with respect to a portion of the Shares.
NOW, THEREFORE, in consideration of the mutual representations,
covenants and agreements contained herein, the parties hereto agree as follows:
1. Securities Subject to this Agreement.
(a) Registrable Securities: The term "Registrable Securities"
means an amount of Shares (and any other securities resulting from any stock
split or reverse split, stock dividend, reclassification of the capital stock
of the Company, consolidation or reorganization of the Company, and any shares
or other securities of the Company or of any successor company which may be
received by Instanz or its successors or assigns by virtue of its or their
ownership of Registrable Securities or by virtue of the terms of any
reorganization agreement) which when multiplied by their sales price (net of
the underwriter's discount if any) is in the equal to the remainder of
$2,500,000 less the proceeds from any prior sale of such shares by Instanz or
any affiliate thereof (the "Unrecouped Investment"); provided, however, that
such securities shall be treated as Registrable Securities only if and so long
as they have not been (i) previously sold or disposed of pursuant to a
registration statement covering such Registrable Securities which has been
declared effective pursuant to the Securities Act of 1933, as amended (the
"Act"), or (ii) sold or disposed of to the public pursuant to Rule 144 (or any
similar provision then in force) promulgated under the Act; or (ii) sold or
disposed of to the public pursuant to Rule 144 (or any similar provision then
in force) promulgated under the Act; or (iii) sold or disposed of to any entity
other than a wholly-owned subsidiary of Instanz.
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(b) Holders of Registrable Securities. A person is deemed to be
a holder of Registrable Securities whenever such person (i) is the record holder
of Registrable Securities or (ii) is any other person permitted under Section
1(a) which the record holder has advised the Company has become the holder of
such securities.
2. Demand Registration.
(a) Right to Demand.
(i) Subject to the terms and conditions contained
herein, and except as otherwise provided in Section 4(a), Instanz may make one
written request (the "Demand Request") to the Company to effect a registration
or qualification to permit the public transfer of all or part of the Registrable
Securities; provided, in no event shall the number of Registrable Securities
included in such request be fewer than the greater of (i) 50% of the Registrable
Securities outstanding at the time of the Demand Request or (ii) 250,000 shares
(a "Demand Registration").
(ii) The Demand Request shall specify the aggregate
amount or number of the Registrable Securities to be registered and shall also
specify the intended methods of disposition thereof.
(iii) Notwithstanding the foregoing, the Company shall
not be obligated to effect a Demand Registration if Jeffer, Mangels, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, the Company's outside legal counsel or other any firm or counsel
representing the Company (reasonably acceptable to Instanz), render an opinion
in writing to the Company and Instanz stating Instanz may sell or transfer the
Registrable Securities for which registration is requested to the public without
registration under the Act in a single transaction in which such shares, after
sale, shall be freely tradeable and non-restricted.
(iv) The Company shall not be deemed to have effected
a Demand Registration unless and until such Demand Registration is declared
effective.
(v) Instanz shall not be deemed to have exhausted
its Demand Request if such request does not result in an effective Demand
Registration.
(b) Demand Period. The registration rights granted by the
Company under this section shall be exercisable only during the period in which
there remains at least 250,000 Shares (or such amount of Registrable Securities
which such Shares have been converted into) which are Registrable Securities
eligible for sale pursuant hereto, commencing upon the later to occur of both:
(i) 180 days after the date the registration statement filed by the Company in
connection with its initial public offering ("IPO") has been declared effective
(the "Effective Date") and (ii) 90 days after the termination of the IPO and
terminating on the first to occur of either of the following events: (x) three
years from the Effective Date or (y) the date upon which Instanz may sell to
the public any remaining Registrable Securities without volume or nature of
sale restrictions under Rule 144 promulgated under the Securities Act.
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(c) Priority on Demand Underwritten Registrations. If the managing
underwriter or underwriters of a Demand Registration shall advise the Company
and Instanz in writing that in its or their opinion the number of securities
proposed to be sold in such Demand Registration exceeds the number of
securities which can be sold in such offering without an Adverse Distribution
Effect (as defined below), the Company shall include in such registration only
the number of securities which, in the opinion of such underwriter or
underwriters can be sold without any such Adverse Distribution Effect, selected
first from Instanz and then to the extent that additional shares may be
included in the registration statement from such other parties as have requested
registration, allocated between such other parties in such manner as the
Company shall deem appropriate. "Adverse Distribution Effect" in respect of a
sale of securities means an adverse effect on the timing or manner of such sale
or the price expected to be realized therefrom.
(d) Selection of Underwriters and Counsel. If any Demand
Registration is an underwritten offering, Instanz shall be entitled to select
the investment banker or bankers and manager or managers to administer the
offering and to act as underwriters and one counsel to Instanz in such
offering; provided that such investment bankers and managers are of nationally
recognized standing (in the United States) and reasonably satisfactory to the
Company.
3. Piggyback Registration.
(a) Notice of Registration. In the event that, at any time or from
time to time after the IPO, the Company proposes to file a registration
statement to register under the Act, other than pursuant to Section 2 above, the
sale or other transfer of any class of securities of which the Registrable
Securities are a part or into which the Registrable Securities are convertible
(the "Registration Securities") by the Company (the "Company Registration
Securities") or by any present or future holder of Registration Securities (the
"Holder Registration Securities") the Company shall mail or deliver to Instanz,
at least twenty (20) days prior to the filing with the Commission of the
Registration Statement covering such Registration Securities (the "Piggyback
Registration Statement") a written notice (a "Registration Notice") of its
intention to so register such offering of Registration Securities and the manner
in which such Registration Securities are proposed to be sold.
(b) Supplemental Notice. In the event that a Registration Notice
shall have been delivered, Instanz may elect to include all or a portion of the
Registrable Securities in the offering covered by the Piggyback Registration
Statement by delivering notice to the Company (a "Supplemental Notice") on or
before the fifteenth day after delivery of the Registration Notice (i)
specifying the number of shares of Registrable Securities (collectively, the
"Supplemental Registration Securities") proposed to be sold or otherwise
transferred by Instanz, and (ii) describing the proposed manner of sale or
other transfer thereof (which if the Registration Notice indicates that the
registration statement referred to in such Registration Notice covers
Registration Securities to be sold to the public for cash on a firm commitment
basis by underwriter(s) shall be to such underwriter(s) on terms no less
favorable to Instanz than those on which the Company or the holders of
Registration Securities shall sell Registration Securities).
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(c) Registration Supplemental Registration Securities. Subject to the
provisions of Section 3(d) hereof, from and after receipt of a Supplemental
Notice, the Company shall, subject to the sale or other transfer of some or all
of the Supplemental Registration Securities prior to the effectiveness of the
Piggyback Registration Statement, use its best commercially reasonable efforts
to cause the Supplemental Registration Securities to be registered under the Act
pursuant to the Piggyback Registration Statement and to effect and to comply
with all such qualifications, compliances and requirements as may be necessary
to permit the sale or other transfer of the Supplemental Registration Securities
in the manner described in the Supplemental Notice, including, without
limitation, qualifications under the applicable blue sky or other state
securities laws subject to the limitations set forth in Sections
5(a)(iv)(A)-(D)).
Notwithstanding the foregoing, the Company shall have the option, in lieu
of registering the Supplemental Registration Securities in an underwritten
offering, to purchase the Supplemental Registration Securities from Instanz at
a price per share (the "Public Offering Price") equal to the price per share at
which the Registration Securities are sold in the public offering to which the
Supplemental Notice relates (the "Piggyback Offering"). The closing of the
purchase of the Supplemental Registration Securities shall take place
simultaneously with the closing of the Piggyback Offering. If the Piggyback
Offering is not an underwritten offering, the Company shall not have the right
to purchase the Supplemental Registration Securities.
If the Company decides to exercise this options it shall deposit with an
escrow agent (the "Escrow Agent"), reasonably acceptable to Instanz, no later
than the close of business on the twelfth Business Day (as used herein, the term
"Business Day" shall mean days other than Saturday, Sunday and any other day on
which banks are required or permitted to be closed in the City of Melbourne,
Australia) following the date on which the Registration Notice was sent (the
"Escrow Date"), in immediately available funds (the "Escrow Funds"), the average
of the high and low sales prices per share of Common Stock on each of the five
(5) trading days immediately preceding the Escrow Date (the "Average Price")
multiplied by the number of Supplemental Registration Securities. Upon delivery
of the Escrow Funds to the Escrow Agent, the Company shall deliver to Instanz a
notice (the "Purchase Notice") stating that the Company has exercised its option
and stating the Average Price used to determine the deposit required. The
Purchase Notice shall be accompanied by a certificate, executed by the Company
and the Escrow Agent, certifying the amount of the Escrow Funds and its receipt
by the Escrow Agent and a copy of the escrow agreement between the Company and
the Escrow Agent. If a Purchase Notice is not received by Instanz at the time
set forth above, the Company shall include the Supplemental Registration
Securities in the Piggyback Offering.
The Company shall deliver to the Escrow Agent and to Instanz, no later
than two (2) Business Days prior to the closing of the Piggyback Offering, a
certificate, on which the Escrow Agent and Instanz may rely, certifying the
Public Offering Price. If the Public Offering Price is greater than the Average
Price, the Company shall deposit with the Escrow Agent in immediately available
funds as additional Escrow Funds an amount equal to the difference per share
between the Public Offering Price and the Average Price multiplied by the
number of Supplemental Registration Securities being purchased (the "Additional
Escrow Funds").
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The Escrow Funds shall be deposited pursuant to an escrow agreement, in
form reasonably acceptable to Instanz, executed by the Company and the Escrow
Agent. The Escrow Agreement shall provide that the Escrow Agent shall pay to
Instanz, in immediately available funds, simultaneously with the closing of the
sale of the Registration Securities in the Piggyback Offering, the Public
Offering Price multiplied by the number of shares of Supplemental Registration
Securities to be sold to the Company by Instanz. If the Public Offering Price is
less than the Average Price, the Escrow Agent shall deliver to the Company,
after payment is made to Instanz, the excess of the Escrow Funds (plus any
income thereon) over the aggregate Public Offering Price for all of the
Supplemental Registration Securities.
(d) Piggyback Period. The registration rights granted by the Company
under this section shall only be exercisable during the period in which the
demand rights granted by the Company under this Agreement would have been
exercisable.
(e) Priorities.
(i) Underwritten Offerings by the Company. If, in the case of an
underwritten public offering of securities proposed to be made by the Company,
the managing underwriter shall advise the Company and Instanz that inclusion of
some or all of the Supplemental Registration Securities together with Holder
Registration Securities, if any, would, in such managing underwriter's
reasonable opinion, have an Adverse Distribution Effect on the proposed minimum
distribution of the Company Registration Securities in such public offering,
then the Company shall, upon written notice to Instanz and to all other holders
of securities which otherwise were to have been included in such registration,
include in such registration only the number of securities, other than Company
Registration Securities, which in the reasonable opinion of the managing
underwriter can be sold without any such Adverse Distribution Effect. The
Company shall select the securities to be registered in connection with such
public offering first from Instanz up to the full amount and second, if any,
from Holder Registration Securities on a pro rata basis in proportion to the
number of securities sought by each of such parties to be registered.
(ii) Underwritten Offerings by Holders. In the event that the
Company shall have delivered a Supplemental Notice with respect to an
underwritten offering of Holder Registration Securities, and the managing
underwriter shall advise the Company, Instanz and holders of Holder Registration
Securities to be included in the offering in writing that inclusion of some or
all of the Supplemental Registration Securities would, in such managing
underwriter's reasonable opinion, have an Adverse Distribution Effect on the
proposed sale of Holder Registration Securities, then the Company shall, upon
written notice to Instanz and to all other holders of securities which otherwise
were to have been included in such registration, include in such registration
only the number of securities which can be sold without an Adverse Distribution
Effect on the proposed sale of the Holder Registration Securities, selected
first from the holder of the Registration Securities who initiated the
registration and then from Instanz and other holders of Registration Securities
requested to be included in such registration on a pro rata basis in proportion
to the number of securities sought to be registered.
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(iii) Non-Underwritten Offerings. Instanz shall have the right to
piggy-back onto registrations of non-underwritten offerings of securities of the
Company without limitation as to number of securities to be sold.
(f) Underwriters. In the case of piggyback registrations, the
underwriter designated by the initiating party shall serve as the managing
underwriter for the entire offering. Instanz shall be entitled to utilize any
other underwriter in connection with the sale of its securities unless the
managing underwriter reasonably determines that participation by such
underwriter in the offering would delay or otherwise be adverse to the
transaction.
(g) Exceptions. The provisions of this Section 3 shall not apply to
any registration statement relating to (i) a registration statement on Form S-8
or Form S-4, or any successor form, or (ii) any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation.
4. Holdback Agreements.
(a) Restrictions on Public Sale by Holders of Registrable Securities.
To the extent not inconsistent with applicable law, if Instanz has been notified
in writing of the filing of a registration statement for an underwritten public
offering of securities of the Company, for so long as the Registrable Securities
constitute more than two percent (2%), on a fully diluted basis, of the class of
securities of which the Registrable Securities are a part, Instanz agrees not to
effect any public sale or distribution of the issue being registered or a
similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the fifteen (15) days
prior to, and during the 90-day period beginning on, the effective date of such
registration statement, except as otherwise permitted by this Agreement or for a
sale pursuant to such registration, if permitted with respect to an underwritten
public offering, or from the date the Company delivers a Registration Notice to
Instanz, until the earlier of (i) 90 days following the effective date of the
registration statement to which such demand request or Registration Notice, as
the case may be, relates or (ii) the termination or abandonment of such
registration statement.
(b) Restrictions on Public Sale by the Company. To the extent not
inconsistent with applicable law, (i) if Instanz is participating in a Piggyback
Offering, the Company shall not effect any public sale or distribution of any
securities similar to those being registered, or any securities convertible into
or exchangeable or exercisable for such securities, during the fifteen (15) days
prior to, and during the 90-day period beginning on, the effective date of the
registration statement relating to the Piggyback Offering (except for a
registration of securities (A) on Form S-4 or Form S-8, or any form substituting
therefor, (B) in respect of the exercise of any option or conversion of any
convertible security issued prior to the receipt by the Company of the demand
request to initiate the Piggyback Offering, (C) pursuant to a registration right
granted in a Prior Agreement or (D) consented to be holders of a majority of the
shares subject to the Piggyback Offering (excluding shares subject to any
overallotment option), and (ii) if the Company receives a Demand Request with
respect to an underwritten public offering (which has not been terminated or
abandoned), the Company shall not file a Registration Statement to register
Company Registration Securities until the earlier of (A) 90 days following
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the effective date of the registration statement to which the Demand Request
relates or the (B) termination or abandonment of such registration.
(c) Restrictions on Public Sale by Others. The Company agrees that
any agreement entered into after the date of this Agreement pursuant to which
the Company issues or agrees to issue any privately placed securities similar
to any issue of the Registrable Securities shall contain a provision pursuant
to which holders of such securities agree (i) for so long as the securities of
the Company held by such holders constitute more than two percent (2%) of such
class (on a fully diluted basis), not to effect any public sale or distribution
of any such securities during the fifteen (15) days prior to, and during the
90-day period beginning on, the effective date of any registration statement in
respect of an underwritten public offering in which the holders of Registrable
Securities are participating pursuant to Section 2 hereof or (ii) not to
require the Company to file a registration statement with respect to securities
of the Company from the date the Company receives a Demand Request with respect
to an underwritten public offering until the earlier of (A) 90 days following
the effective date of the registration statement to which such Demand Request
relates or (B) the termination or abandonment of such registration (except as
part of any such registration, if permitted or when prevented by applicable law
from entering into such an agreement).
5. Registration Procedures.
(a) Whenever Istanz has made a Demand Request, the Company shall use
its best reasonable efforts to effect the registration and the sale of the
Registrable Securities subject to such Demand Request (the "Covered Registrable
Securities") in accordance with the intended method of disposition thereof as
quickly as practicable and, in connection with any such request, the Company
shall, as expeditiously as possible:
(i) prepare and file with the Commission a registration
statement relating to the registration on any appropriate form under the Act,
which form shall be available for sale of the Covered Registrable Securities in
accordance with the intended method of distribution thereof, and use its best
reasonable efforts to cause such registration statement to become effective;
provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the registration statement, the Company shall
furnish to Instanz, counsel for the selling stockholders and the underwriters,
if any, draft copies of all such documents proposed to be filed at least five
(5) Business Days prior thereto (or such shorter period as Instanz shall
approve), which documents will be subject to the reasonable review of Instanz
and underwriters, and, unless in the reasonable judgment of the Company required
by law, the Company shall not file any registration statement or amendment
thereto or any prospectus or any supplement thereto (including such documents
incorporated by reference) or (for a period of not more than ten (10) Business
Days) any request for effectiveness, withdrawal or termination to which sellers
holding a majority amount of the securities covered by such registration
statement (a "Majority Amount") or the underwriters, if any, shall reasonably
object;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the registration statements as may be necessary to
keep the
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registration statement effective following the effective date for such period
as may be required to meet the prospectus delivery and all other requirements
under the Act, but not longer than one hundred eighty (180) days; cause the
prospectus to be supplemented by any required prospectus supplement, and, as so
supplemented, to be filed pursuant to Rule 424 under the Act; and comply
with the provisions of the Act applicable to it with respect to the disposition
of all securities covered by such registration statement during the applicable
period in accordance with the intended methods of disposition by sellers
thereof set forth in such registration statement or supplement to the
prospectus.
(iii) furnish to Instanz and the underwriter or underwriters, if
any, without charge, at least one signed copy of the registration statement and
all post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference) as soon as such documents become
available to the Company, and such number of conformed copies thereof and such
number of copies of the Prospectus (including each preliminary Prospectus) and
any amendment or supplements thereto, and any documents incorporated by
reference therein, as such seller or underwriter may request as soon as such
documents become available to the Company in order to facilitate the disposition
of the Covered Registrable Securities (it being understood that the Company
consents to the use of the prospectus and any amendment or supplement thereto by
Instanz and the underwriter or underwriters, if any, in connection with the
offering and sale of the Covered Registrable Securities);
(iv) on or prior to the date on which the registration statement is
declared effective, use its best reasonable efforts to register or qualify the
Covered Registrable Securities under such other securities or blue sky laws of
such jurisdictions as the managing underwriter, if any, or Instanz, if there is
no underwriter, reasonably requests, keep each such registration or
qualification effective during the period such registration statement is
required to be kept effective and do any and all other acts and things which may
be reasonably necessary or advisable to consummate the disposition in such
jurisdictions of the Covered Registrable Securities; provided that the Company
shall not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
clause (iv), (B) subject itself to general taxation in any such jurisdiction;
(C) consent to general service of process in any such jurisdiction; or (D)
undertake compliance with substantive requirements of the blue sky laws or
regulations of a jurisdiction which are unreasonably burdensome or onerous,
including escrow requirements. Notwithstanding the provisions of clause (D)
above, and except as set forth in clauses (A), (B) and (C) above, the Company
shall use its reasonable best efforts to comply with the requirements of all
states designated by the managing underwriter in an underwritten offering as
necessary or desirable for completing the sale of the Covered Registrable
Securities;
(v) use its best reasonable efforts to cause the Covered Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to consummate the disposition of the Covered
Registrable Securities;
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(vi) (A) promptly notify the managing underwriters, if
any, or Instanz, if there is no underwriter (and if requested by any such
person, confirm such advice in writing) when a prospectus relating to the sale
of the Covered Registrable Securities required to be delivered under the Act and
(B) promptly notify the managing underwriters, if any, or Instanz, if there is
no underwriter, of the happening of any event as a result of which the
prospectus included in the registration statement relating to the sale of
Covered Registrable Securities contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of the Covered Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading:
(vii) enter into customary agreements (including, in the
case of an underwritten offering, an underwriting agreement in customary form
with customary indemnity provisions) and make such representations and
warranties to the underwriters or Instanz, if there is no underwriter, as in
form and substance and scope are customarily made by issuers to underwriters in
secondary underwritten offerings and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Covered
Registrable Securities;
(viii) otherwise use its best reasonable efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its security holders as soon as reasonably practicable, earnings
statements which need not be audited, covering a period of twelve (12) months,
beginning within three (3) months after the effective date of the registration
statement, which earnings statements shall satisfy the provisions of Section
11(a) of the Act;
(ix) notify the managing underwriter, if any, or
Instanz, if there is no underwriter, of any stop order or other suspension of
effectiveness of the registration statement;
(x) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement at the earliest possible moment;
(xi) cooperate with the managing underwriter, if any,
and counsel for the underwriters, or Instanz, if there is no underwriter, and
its counsel, in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD");
(xii) if requested by the managing underwriter if any,
or Instanz, if there is no underwriter, promptly incorporate in a prospectus
supplement or post-effective amendment such information relating to the
distribution of securities and the timing thereof as the managing underwriter or
underwriters, if any, or Instanz, if there is no underwriter, reasonably
requests to be included therein, including, without limitation, the number of
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Registrable Securities being sold by Instanz to the underwriter or
underwriters, and purchase price being paid therefor by such underwriter or
underwriters and any other terms of the underwritten offering of the Covered
Registrable Securities; and make all required filings of such prospectus
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(xiii) as promptly as practicable after filing with the
Commission of any document which is incorporated by reference into a
registration statement, deliver a copy of such document to Instanz;
(xiv) cooperate with the managing underwriter or
underwriters, if any, or Instanz, if there is no underwriter, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing securities to be sold under the registration statement and
enable such securities to be in such denominations or amounts, as the case may
be, and registered in such names as the managing underwriter or underwriters, if
any, may reasonably request;
(xv) notify the managing underwriters, if any, or
Instanz, if there is no underwriter, promptly (and if requested by any such
person, confirm such advice in writing) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Covered
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(xvi) cause the subsidiaries of the Company, if any, to
take all action necessary to effect the registration of the Covered Registrable
Securities contemplated hereby, including filing any required financial
information; and
(xvii) cause the Covered Registrable Securities to be
listed on each securities exchange or quoted on the NASDAQ National Market on
which similar securities issued by the Company are then listed or quoted and
provide that the applicable listing or quotation requirements are satisfied; and
(b) Instanz shall furnish to the Company such information
regarding the distribution of the Covered Registrable Securities and such other
information relating to Instanz and its ownership of securities of the Company
as the Company may from time to time reasonably request in writing.
(c) Notwithstanding anything contained herein to the contrary,
the Company, by written notice to all holders of securities to be covered by a
registration statement, given within ten (10) days following receipt by the
Company of a request for a Demand Registration, may defer the filing of a
registration statement pursuant to such request for up to six (6) months
following the date of such request if the Company shall certify to such holders
that the effect of a filing without such delay would materially adversely
affect the Company, its business or its stockholders. In the event that the
Company delays the filing of a registration statement pursuant to such a
determination, the period during which Instanz may exercise its
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registration rights under this Agreement shall be extended by the same number of
days that the Company defers the filing of the registration statement.
(d) Instanz agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5(a)(vi)
hereof, it will forthwith discontinue disposition of the Covered Registrable
Securities until Instanz receives the copies of the supplemented or amended
prospectus contemplated by Section 5(a)(vi) hereof and, if so directed by the
Company, Instanz will deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then in Instanz's possession, of the
prospectus relating to the sale of the Covered Registrable Securities current at
the time of receipt of such notice. In the event the Company shall give any such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice pursuant to Section 5(a)(vi) hereof to and including the date when
Instanz shall have received the copies of the supplemented or amended prospectus
contemplated by Section 5(a)(vi) hereof. In the event that the Company shall not
have delivered to Instanz copies of the supplemented or amended prospectus
within ten (10) Business Days following the date of the notice referred to in
the first sentence of this paragraph, Instanz shall have the option to
discontinue the registration and sale of the Covered Registrable Securities and,
if such registration is a Demand Registration, Instanz shall be entitled to an
additional Demand Registration hereunder (with all Registration Expenses (as
hereinafter defined) relating to such additional Demand Registration to be borne
by the Company) on the same terms and conditions as would have applied to
Instanz had such earlier Demand Registration not been made.
6. Registration Expenses
All expenses incident to the Company's performance of or
compliance with this Agreement including, without limitation (i) all
registration and filing fees, all fees and expenses associated with filings
required to be made with the NASD, as may be required by rules and regulations
of the NASD (other than fees required in excess of fees which would otherwise
pertain in the event that Instanz is a member of the NASD), fees and expenses of
compliance with securities or blue sky laws (including fees and disbursements of
counsel in connection with blue sky qualifications for the Registrable
Securities), rating agency fees, printing expenses (including expenses of
printing certificates for the Registrable Securities in a form eligible for
deposit with the Depository Trust Company and of printing prospectuses,
messenger and delivery expenses, (ii) internal expenses (including, without
limitation, all salaries and expenses of their officers and employees performing
legal or accounting duties), securities acts liability insurance (if the Company
elects to obtain such insurance), (iii) fees and expenses of counsel for the
Company and its independent certified public accountants (including the expenses
of any special audit or "cold comfort" letters required by or incident to such
performance), (iv) the fees and expenses of any special experts retained by the
Company in connection with such registration, (v) fees and expenses of other
persons retained by the Company, and (vi) fees (up to $10,000) and expenses of
counsel for the Seller (all such expenses being herein called "Registration
Expenses") will be borne by the Company, provided that in no event shall
Registration Expenses include any underwriting discounts or commissions
attributable to the sale of the Registrable Securities or any direct
out-of-pocket expenses of Instanz. Registration Expenses shall also
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include all fees and expenses related to the purchase of Supplemental
Registration Securities pursuant to a Purchase Notice, including but not
limited to the escrow arrangements related thereto.
In the event that following effectiveness of a registration statement
pursuant to which Instanz is a selling stockholder, it becomes necessary for
the Company to prepare and file a supplemental prospectus or amended
prospectus in order to maintain the effectiveness of such registration
statement during the period referred to in Section 5(a)(ii) hereof, the Company
shall pay all printing costs associated with the printing of such supplemental
or amended prospectus to be distributed in connection with sales of their
securities pursuant thereto.
7. Indemnification; Contribution
(a) Indemnification by the Company. The Company agrees to indemnify,
to the full extent permitted by law, Instanz and any investment advisor thereof
or agent therefor against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal fees and expenses whether
or not a lawsuit is filed, and if filed, at all trial and appellate levels)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement, prospectus or
preliminary prospectus, or any amendment thereof or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus or preliminary prospectus, in light of the circumstances under which
they are made) not misleading, except insofar as such losses, claims, damages
arise out of or are based upon an untrue statement or omission contained in
information with respect to Instanz furnished in writing to the Company by
Instanz or its representative expressly for use therein. The Company also agrees
to reimburse Instanz and each such investment advisor and agent for any legal or
other expenses reasonably incurred by such holder or such officer, director,
partner or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action to the extent that the same are
not incurred in connection with the provision of the preceding sentence. The
indemnity provided in this Section 7(a) will be in addition to any liability
which the Company may otherwise have.
(b) Indemnification by Instanz. In connection with any registration
statement in which Instanz is a selling stockholder, Instanz agrees to
indemnify, to the extent permitted by law, the Company, its directors,
officers, employees and agents and each person who controls the Company (within
the meaning of the Act), and any investment advisor thereof or agent therefor
against any losses, claims, damages, liabilities and expenses resulting from
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in or
failed to be contained in any information with respect to Instanz furnished in
writing by Instanz or its representative specifically for inclusion therein. In
no event shall the liability of Instanz hereunder be greater in
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amount than the dollar amount of the proceeds received by Instanz upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of the
commencement of any action, suit or proceeding against such person or
investigation thereof made in writing or for which such person will claim
indemnification or contribution pursuant to this Agreement and, permit the
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to such indemnified party. If the indemnifying party is not
entitled to, or does not, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with respect to
such claim. No indemnified party will be required to 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. The
indemnifying party will not be subject to any liability for any settlement made
without its consent, which shall not be unreasonably withheld.
(d) Contribution. If the indemnification provided for in this Section
7 from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
therein other than by reason of the exception in the first sentence of Section
7(a) hereof, then the 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, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions or
inactions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties 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 to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relevant intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, shall be deemed to include, subject to the limitations set forth in
Section 7(c), any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(d), an indemnified holder shall
not be required to contribute any amounts in excess of the amount by which the
total price at which the Registrable Securities were sold by such indemnified
holder and distributed to the public exceeds the amount of any damages which
such indemnified holder has otherwise been required to pay be reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the
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meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
In indemnification is available under this Section 7, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 7(a) and (b) without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration provided for in
this Section 7(d).
In the event that any provision of any indemnification clause in the
underwriting agreement to which the Company and Instanz are parties in
connection with the registration statement or prospectus in question differs
from a provision in this Section 7, such provision in the underwriting agreement
shall determine Instanz's rights in respect thereof.
8. Participation in Underwritten Registrations.
Instanz may not participate in any underwritten registration hereunder
unless it (a) agrees to sell the Registrable Securities on the basis provided in
any underwriting arrangements approved by it, (b) completes and executes all
questionnaires, powers of attorneys, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay all underwriting discounts and commissions on
the Registrable Securities sold under such underwriting arrangements on the same
basis as the Company or other selling stockholders participating in such
underwritten offering.
9. Covenants; Rule 144.
(a) The Company covenants that it will file all reports required to
be filed by it under the Act and the Securities Exchange Act of 1934 and the
rules and regulations adopted by the Commission thereunder (and, if it is not
required to file such reports, it will deliver, no later than 30 days after the
end of each fiscal quarter of the Company and 60 days after the end of each
fiscal year, to the representative of the holders of Registrable Securities
financial statements of the Company including balance sheets, income statements
and the footnotes related thereto, which shall be audited for the end of each
fiscal year); and it will take such further action as Instanz may reasonably
request, all to the extent required from time to time to enable Instanz to sell
Registrable Securities without registration under the Act within the limitation
of the exemptions provided by (a) Rule 144 under the Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission.
(b) As promptly as applicable after filing with the Commission of any
document, the Company will deliver to Instanz a copy of such document.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter enter
into an agreement granting registration rights with respect to its securities
unless (i) the
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registration rights are not otherwise in conflict or inconsistent with the
rights of Instanz in this Agreement, and (ii) the rights of Instanz under this
Agreement to register all of the Registrable Securities shall be prior to the
rights of the holders under such agreement. Instanz acknowledges the Company has
entered into a Prior Agreement under which certain individuals may have
registration rights prior to those granted under this Agreement.
(b) Remedies. Instanz, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action of specific performance that a remedy at law
would be adequate.
(c) Waiver. Any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto or
(ii) waive compliance with any of the agreements of any other party or with any
conditions to its own obligations. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party making the
waiver or granting the extension. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
(d) Assignment and Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, transferees, assigns, representatives, and agents and no other
person shall have any right, benefit or obligation hereunder.
(e) Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(f) Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
California, without regard to the conflicts of law principles thereof.
(g) Entire Agreement. This Agreement constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supercedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties.
(h) Severability. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
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(i) Titles. The titles, captions or headings of the Articles and
Sections herein are for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
(j) Attorney's Fees. Should any party institute any action to
enforce any provision of this Agreement, including, without limitation, an
action for declaratory relief, damages by reason of an alleged breach of any
provision of this Agreement, equitable relief or otherwise in connection with
this Agreement, or any provision hereof, the court or the arbitrator, as the
case may be, shall allocate all of the attorneys' fees and costs for services
rendered in such action between the parties based on their view of the merits
of the parties' respective positions in the action.
(k) Arbitration.
(i) Any dispute, controversy or claim arising out of,
relating to, or in connection with, this Agreement, or the breach, termination
or validity thereof, except for claims for equitable, including injunctive,
relief, shall be finally settled by arbitration conducted in accordance with
this Section. The arbitration shall be conducted in accordance with the rules of
the American Arbitration Association (the "AAA") in effect at the time of the
arbitration, except as they may be modified herein or by mutual agreement of
the parties. The seat of the arbitration shall be Los Angeles, California. Each
party hereby irrevocably submits to the jurisdiction of the arbitrator in Los
Angeles, California and waives any defense in an arbitration based upon any
claim that such party is not subject personally to the jurisdiction of such
arbitrator, that such arbitration is brought in an inconvenient forum or that
such venue is improper.
(ii) The arbitration shall be conducted by one arbitrator,
who shall be appointed by the AAA. The arbitrator shall have the authority only
to enforce the legal and contractual rights of the parties and shall not add
to, modify, disregard, or refuse to enforce any contractual provision. There
shall be no pre-arbitration discovery. The parties acknowledge and agree that
by entering into this Agreement they are agreeing to this arbitration provision
and are waiving all rights to a trial by Jury. The arbitral award shall be in
writing and shall be final and binding on the parties. The award shall include
and award of costs, including the fees and costs of the arbitrators and
reasonable attorneys' fees and disbursements in accordance with Section 10(j).
Except upon a finding of actual fraud, intentional or knowing misrepresentation,
willful and knowing omissions of material fact or willful misconduct, no such
award shall include punitive damages. Judgment upon the award may be entered by
any governmental authority having jurisdiction thereof or having jurisdiction
over the parties or their assets.
(l) Multiple Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(m) Notices. Unless applicable law requires different method of
giving notice, any and all notices, demands or other communications required or
desired to be given hereunder by any party shall be in writing. Assuming that
the contents of a notice meet the
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requirements of the specific Section of this Agreement which mandates the
giving of that notice, a notice shall be validly given or made to another party
if served either personally or if deposited in the United States mail, certified
or registered, postage prepaid, or if transmitted by telegraph, telecopy or
other electronic written transmission device or if sent by overnight courier
service, and if addressed to the applicable party as set forth below. If such
notice, demand or other communication is served personally, service shall be
conclusively deemed made at the time of such personal service. If such notice,
demand or other communication is given by mail, service shall be conclusively
deemed given seventy-two (72) hours after the deposit thereof in the United
States mail. If such notice, demand or other communication is given by
overnight courier, or electronic transmission, service shall be conclusively
made at the time of confirmation of delivery. The addresses for the parties are
as follows:
If to the Company:
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: 011-613-9533-7900
with a copy to:
Jeffer, Mangels, ▇▇▇▇▇▇ & Marmaro LLP
2121 Avenue of the Stars, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Instanz:
▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: 011-613-9650-3550
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided, by a written notice given
in the aforesaid manner to the other parties hereto.
(n) Choice of Forum. In the event any claim, demand, action,
proceeding, litigation, hearing, motion or lawsuit arising herefrom or with
respect hereto may properly be commenced outside of arbitration as contemplated
by Section 10(k) hereof, such proceeding shall be commenced or prosecuted in
State or Federal court in the County of Los
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Angeles, State of California, and each party hereby irrevocable consents to the
jurisdiction of the state and federal courts in the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
I.T. TECHNOLOGY, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Title: Chief Executive Officer
------------------------------------
INSTANZ NOMINEE PTY, LTD., an Australian
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: Director
------------------------------------
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SCHEDULE A
None.
