EXHIBIT 10.2
EXHIBIT A
TO
COMMON STOCK PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of May 10, 2000
(this "AGREEMENT"), is made by and between CHEQUEMATE INTERNATIONAL, INC.,
D/B/A C-3D DIGITAL, INC., a Utah corporation, with headquarters located at
000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx xxx Xxx, Xxxxxxxxxx 00000 (the
"COMPANY"), and the entity named on the signature page hereto (each, an
"Initial INVESTOR") (each agreement with an initial Investor being deemed a
separate and independent agreement between the Company and such Initial
Investor, except that each Initial Investor acknowledges and consents to the
rights granted to each other Initial Investor under such agreement)
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Common Stock Purchase Agreement, dated as of May 10, 2000, between Investor
and the Company (the "COMMON STOCK PURCHASE AGREEMENT;" terms not otherwise
defined herein shall have the meanings ascribed to them in the Common Stock
Purchase Agreement), the Company has agreed to issue and sell to Investor the
Initial Shares, together with the Repriced Shares (collectively, the "SHARES");
WHEREAS, the Company has agreed to issue the Warrant to Investor
in connection with the issuance of the Shares; and
WHEREAS, to induce Investor to execute and deliver the Common
Stock Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "SECURITIES ACT"), with respect to the Shares and the
Warrant Shares (as defined below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Investor hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
(a) "POTENTIAL MATERIAL EVENT" means any of the
following: (i) the possession by the Company of material information not ripe
for disclosure in a Registration Statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the Registration Statement would be
detrimental to the business and affairs of
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the Company; or (ii) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the
Company, be adversely affected by disclosure in a Registration Statement at
such time, which determination shall be accompanied by a good faith
determination by the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information;
(b) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
Registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering
securities on a continuous basis, and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC");
(c) "REGISTRABLE SECURITIES" mean the Shares and the Warrant
Shares; and
(d) "REGISTRATION STATEMENT" means a registration statement
of the Company under the Securities Act, or an amendment to an existing
registration statement.
2. REGISTRATION.
(a) MANDATORY REGISTRATION.
(i) The Company shall prepare and file with the SEC, as soon
as possible after the Initial Closing and no later than July 10, 2000 (the
"REQUIRED FILING DATE"), a Registration Statement on Form S-3, if the Company
is eligible to use Form S-3, otherwise on an appropriate form, Registering for
resale by Investor a sufficient number of shares of Common Stock for Investor
to sell the Registrable Securities (or such lesser number as may be required
by the SEC, but in no event less than (i) two hundred percent (200%) of the
aggregate number of Initial Shares, and (ii) the number of shares of Common
Stock that would be issued upon exercise of the Warrant (the "WARRANT SHARES")
at the time of filing of the Registration Statement (assuming for such
purposes that the Warrant had been eligible to be exercised and had been
exercised in accordance with its terms, whether or not such eligibility or
exercise had in fact occurred as of such date). The Registration Statement
(W) shall include the Registrable Securities, and (X) shall state that, in
accordance with Rule 416 under the Securities Act, it covers such
indeterminate number of additional shares of Common Stock as may become
issuable pursuant to the anti-dilution provisions of the Warrant to prevent
dilution resulting from stock splits or stock dividends. The Company will use
its reasonable efforts to cause such Registration Statement to be declared
effective on a date (a "REQUIRED EFFECTIVE DATE"), which is no later than the
earlier of (y) five (5) Business Days after notice by the SEC that it may be
declared effective or (z) ninety (90) days after the date of the Initial
Closing.
(ii) If at any time (an "INCREASED REGISTERED SHARES DATE"),
Investor advised the Company that the number of shares of Common Stock
represented by the Registrable Securities, issued or to be issued as
contemplated by the Transaction Documents, exceeds the aggregate number of
shares of Common Stock then Registered and provides computation supporting
such advice, the Company shall, (A) if the Registration Statement has not been
declared effective, after notice from Investor, amend the Registration
Statement to include such additional shares such that the number of shares of
Common Stock registered is equal to two hundred percent (200%) of the total
Registrable Shares,
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computed as contemplated by the immediately preceding subparagraph (i); or (B)
if such Registration Statement has been declared effective by the SEC at that
time, within thirty (30) Business Days from the Company's receipt of such
notice, file with the SEC an additional Registration Statement (an "ADDITIONAL
REGISTRATION STATEMENT") to register two hundred percent (200%) of the
additional shares of Common Stock, computed as contemplated by the immediately
preceding subparagraph (i). The Company will use its reasonable efforts to
cause such Registration Statement to be declared effective on a date (a
"REQUIRED EFFECTIVE DATE") which is no later than (x) with respect to a
Registration Statement under clause (A) of this subparagraph (ii), the
Required Effective Date contemplated by the immediately preceding subparagraph
(i) and (y) with respect to an Additional Registration Statement, the earlier
of (i) five (5) Business Days after notice by the SEC that it may be declared
effective or (ii) forty (40) days after the Increased Registered Shares Date.
(b) PAYMENTS BY THE COMPANY.
(i) If the Registration Statement covering the
Registrable Securities is not filed in proper form with the SEC by the
Required Filing Date, the Company will make payment to Investor in such
amounts and at such times as shall be determined pursuant to this SECTION 2(b);
(ii) If the Registration Statement covering the
Registrable Securities is not effective by thirty (30) days after the relevant
Required Effective Date or if Investor is restricted from making sales of
Registrable Securities covered by a previously effective Registration
Statement at any time (the date such restriction commences, a "RESTRICTED SALE
DATE") after the Effective Date other than during a Suspension Period (as
defined below), then the Company will make payments to Investor in such
amounts and at such times as shall be determined pursuant to this SECTION 2(b);
(iii) The amount (each a "PERIODIC AMOUNT") to be paid
by the Company to Investor shall be determined as of each Computation Date (as
defined below) and the Periodic Amount shall be equal to the Periodic Amount
Percentage (as defined below) of the Purchase Price for all of the Initial
Shares not sold by Investor for the period from the date following the
relevant Required Filing Date, Required Effective Date or Restricted Sale
Date, as the case may be, to the first relevant Computation Date, and
thereafter to each subsequent Computation Date. The "PERIODIC AMOUNT
PERCENTAGE" means (A) one-fifteenth of one percent (.0666 2/3%) of the
Purchase Price for each day during the thirty (30) day period following the
first relevant Computation Date plus (B) one-tenth of one percent (.1%) for
each day following the expiration of such thirty (30) day period. If the
Company is required to file an Additional Registration Statement a separate
computation shall be made with respect to the shares registered in the
Additional Registration Statement.
(iv) Each Periodic Amount will be payable by the
Company in cash or other immediately available funds to Investor at the end of
each Computation Period, without requiring demand therefor by Investor;
(v) The parties acknowledge that the damages which may
be incurred by Investor if the Registration Statement is not filed by the
Required Filing Date or if the Registration Statement has not been declared
effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended, may be difficult to ascertain. The parties agree that the Periodic
Amount represents a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of such damages;
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(vi) Notwithstanding the foregoing, the amounts payable
by the Company pursuant to this SECTION 2(b) shall not be payable to the
extent any delay in the effectiveness of the Registration Statement occurs
because of an act of, or a failure to act or to act timely by Investor or its
counsel, or in the event all of the Registrable Securities may be sold
pursuant to Rule 144 or another available exemption under the Securities Act;
and
(vii) "COMPUTATION DATE" means (A) the date which is the
earlier of (1) the Required Filing Date, any relevant Required Effective Date
or a Restricted Sale Date, as the case may be, or (2) the date after the
Required Filing Date, such Required Effective Date or Restricted Sale Date on
which the Registration Statement is filed (with respect to payments due as
contemplated by SECTION 2(b)(i) hereof) or is declared effective or has its
restrictions removed (with respect to payments due as contemplated by SECTION
2(b)(ii) hereof), as the case may be, and (B) each date which is the earlier
of (1) thirty (30) days after the previous Computation Date or (2) the date
after the previous Computation Date on which the Registration Statement is
filed (with respect to payments due as contemplated by SECTION 2(b)(i) hereof)
or is declared effective or has its restrictions removed (with respect to
payments due as contemplated by SECTION 2(b)(ii) hereof), as the case may be.
(viii) The Purchase Price shall mean the consideration
paid by Investor for all of the Initial Shares plus any Repriced Shares, as
defined in the Agreement. The Purchase Price on a per share basis shall mean
the Purchase Price divided by the total number of shares issued pursuant to
the Agreement, including the Repriced Shares.
3. OBLIGATIONS OF THE COMPANY. In connection with the
Registration of the Registrable Securities, the Company shall do each of the
following:
(a) Prepare promptly, and file with the SEC by the Required
Filing Date, a Registration Statement with respect to not less than the number
of Registrable Securities provided in SECTION 2(a) above, and thereafter use
its reasonable efforts to cause such Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times during the period (the
"REGISTRATION PERIOD") continuing until the earliest of: (i) the date that is
two (2) years after the last day of the calendar month following the month in
which the Final Repricing Period ends; (ii) the date when Investor may sell
all Registrable Securities under Rule 144; or (iii) the date when Investor no
longer owns any of the Registrable Securities, which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
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(c) The Company shall permit a single firm of counsel
designated by Investor to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time (but not less than three
(3) Business Days) prior to their filing with the SEC, and not file any
document in a form to which such counsel reasonably objects;
(d) Notify Investor and Investor's legal counsel identified
to the Company (which, until further notice, shall be deemed to be Xxxxxxx &
Xxxxxx, LLP, ATTN: Xxxxxx Xxxxxxx, Esq.; "INVESTOR'S COUNSEL") (and, in the
case of (i)(A) below, not less than five (5) Business Days prior to such
filing) 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) whenever the SEC notifies
the Company whether there will be a "review" of such Registration Statement;
(C) whenever the Company receives (or a representative of the Company receives
on its behalf) any oral or written comments from the SEC respect of a
Registration Statement (copies or, in the case of oral comments, summaries of
such comments shall be promptly furnished by the Company to Investor); and (D)
with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the SEC 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 SEC 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) if at any time any
of the representations or 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; and (vi) of the occurrence of any event that to the best knowledge of
the Company 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. In addition, the Company shall furnish Investor with copies
of all intended written responses to the comments contemplated in clause (C)
of this SECTION 3(d) not later than one (1) Business Day in advance of the
filing of such responses with the SEC so that Investor shall have the
opportunity to comment thereon;
(e) Furnish to Investor and Investor's Counsel: (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, two (2) copies of the Registration Statement, each
preliminary prospectus and prospectus, and each amendment or supplement
thereto; and (ii) such number of copies of a prospectus, and all amendments
and supplements thereto and such other documents, as Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by Investor; provided, however, that if any filings are made by the
SEC's XXXXX system, the Company shall furnish such documents within five (5)
Business Days;
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(f) As promptly as practicable after becoming aware thereof,
notify Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement or other appropriate
filing with the SEC to correct such untrue statement or omission, and deliver
a number of copies of such supplement or amendment to Investor as Investor may
reasonably request;
(g) As promptly as reasonably practicable after becoming
aware thereof, notify Investor of the issuance by the SEC any notice of
effectiveness or any stop order or other suspension of the effectiveness of
the Registration Statement at the earliest possible time;
(h) Notwithstanding the foregoing, if at any time or from
time to time after the date of effectiveness of the Registration Statement,
the Company notifies Investor in writing of the existence of a Potential
Material Event, Investor shall not offer or sell any Registrable Securities,
or engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until Investor receives written notice from the Company that
such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event; PROVIDED, HOWEVER, that the
Company may not so suspend the right to such holders of Registrable Securities
for more than two twenty (20) day periods in the aggregate during any 12-month
period ("SUSPENSION PERIOD") with at least a ten (10) Business Day interval
between such periods, during the periods the Registration Statement is
required to be in effect;
(i) Use its reasonable efforts to secure and maintain the
designation of all the Registrable Securities covered by the Registration
Statement on the "OTC Bulletin Board" of the National Association of
Securities Dealers, and the quotation of the Registrable Securities on the OTC
Bulletin Board;
(j) Provide a transfer agent for the Registrable Securities
not later than the effective date of the Registration Statement;
(k) Cooperate with Investor to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates
for the Registrable Securities to be in such denominations or amounts as the
case may be, as Investor may reasonably request, and, within three (3)
Business Days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to Investor), an appropriate
instruction and opinion of such counsel; and
(l) Take all other reasonable actions necessary to expedite
and facilitate disposition by Investor of the Registrable Securities pursuant
to the Registration Statement.
4. OBLIGATIONS OF INVESTOR. In connection with the
Registration of the Registrable Securities, Investor shall have the following
obligations:
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(a) It shall be a condition precedent to the obligations of
the Company to complete the Registration pursuant to this Agreement with
respect to the Registrable Securities of Investor, that Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
Registration of such Registrable Securities and shall execute such documents
in connection with such Registration as the Company may reasonably request.
At least ten (10) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify Investor of the information
the Company requires from Investor (the "REQUESTED INFORMATION") if Investor
elects to have any of the Registrable Securities included in the Registration
Statement. If at least five (5) Business Days prior to the filing date the
Company has not received the Requested Information from Investor, then the
Company need not file the Registration Statement until receiving the response
of Investor;
(b) Investor, by accepting the Registrable Securities, agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless Investor has notified the Company in writing of its election
to exclude all of the Registrable Securities from the Registration Statement;
and
(c) Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in SECTION 3(f)
(OTHER THAN NOTICE OF EFFECTIVENESS) OR 3(g), above, Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until Investor receives the
copies of the supplemented or amended prospectus contemplated by SECTION 3(f)
OR 3(g).
5. EXPENSES OF REGISTRATION. (a) All reasonable expenses
incurred in connection with Registrations, filings or qualifications pursuant
to SECTION 3, including, without limitation, all Registration, listing, and
qualifications fees, printers and accounting fees, the fees and disbursements
of counsel for the Company and a fee for a single counsel for Investor, not
exceeding $4,500 for the Registration Statement covering the Registrable
Securities shall be borne by the Company; and
(b) Except as otherwise provided for in SCHEDULE 5(b)
attached hereto, the Company nor any of its subsidiaries has, as of the date
hereof, and the Company shall not 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 Investor in this Agreement or otherwise conflicts
with the provisions hereof. Except as otherwise provided for in SCHEDULE
5(b), the Company has not previously entered into any agreement granting any
registration rights with respect to any of its securities to any person.
Except as otherwise provided for in this SECTION 5, and without limiting the
generality of the foregoing, without the written consent of Investor, 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 subject in all respects to the prior rights in full of
Investor set forth herein, and are not otherwise in conflict or inconsistent
with the provisions of this Agreement and the other Transaction Documents.
6. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
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(a) To the extent permitted by law, the Company will
indemnify and hold harmless Investor, the directors, if any, of Investor, the
officers, if any, of Investor, each person, if any, who controls Investor
within the meaning of the Securities Act or the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") (each, an "INDEMNIFIED PARTY"), against
any losses, claims, damages, liabilities or expenses (joint or several)
incurred (collectively, "CLAIMS") to which any Investor may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any post-effective
amendment thereof, or any prospectus included therein: (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any material violation
or alleged material violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in
the foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS").
Subject to SECTION 6(b), the Company shall reimburse Investor, promptly as
such expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this SECTION 6(a) shall
not: (I) apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Indemnified Party expressly for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to SECTION 3(c) hereof; (II) be
available to the extent such Claim is based on a failure of Investor to
deliver or cause to be delivered the prospectus made available by the Company;
or (III) apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Investor will indemnify the Company and
its officers, directors and agents (each, an "INDEMNIFIED PARTY") against any
claims arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company, by or
on behalf of Investor, expressly for use in connection with the preparation of
the Registration Statement, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company to this SECTION 6.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Party.
(b) Promptly after receipt by an Indemnified Party under this
SECTION 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this SECTION 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Party, as
the case may be. In case
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any such action is brought against any Indemnified Party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, assume the defense thereof,
subject to the provisions herein stated and after notice from the indemnifying
party to such Indemnified Party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such Indemnified Party
under this SECTION 6 for any legal or other reasonable out-of-pocket expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation, unless the indemnifying
party shall not pursue the action of its final conclusion. The Indemnified
Party shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and reasonable
out-of-pocket expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the Indemnified Party. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Party under this
SECTION 6, except to the extent that the indemnifying party is prejudiced in
its ability to defend such action. The indemnification required by this
SECTION 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which
it would otherwise be liable under SECTION 6 to the fullest extent permitted
by law; PROVIDED, HOWEVER, that: (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in SECTION 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER SECURITIES ACT AND EXCHANGE ACT. With a
view to making available to Investor the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the SEC
that may at any time permit Investor to sell securities of the Company to the
public without Registration ("RULE 144"), the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to Investor so long as Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company and
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(iii) such other information as may be reasonably requested to permit Investor
to sell such securities pursuant to Rule 144 without Registration.
(d) The Company will, at the request of any Holder of
Registrable Securities, upon receipt from such Holder of a certificate
certifying (i) that such Holder has held such Registrable Securities for a
period of not less than two (2) years, (ii) that such Holder has not been an
affiliate (as defined in Rule 144) of the company for more than the ninety
(90) preceding days, and (iii) as to such other matters as may be appropriate
in accordance with such Rule, remove from the stock certificate representing
such Registrable Securities that portion of any restrictive legend which
relates to the registration provisions of the Securities Act, provided,
however, counsel to Investor may provide such instructions and opinion to the
transfer agent regarding the removal of the restrictive legend.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to
have the Company register Registrable Securities pursuant to this Agreement
shall be automatically assigned by the Investors to any permitted transferee
of the Registrable Securities pursuant to the Common Stock Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investor.
Any amendment or waiver effected in accordance with this SECTION 9 shall be
binding upon Investor and the Company.
11. MISCELLANEOUS.
(a) Notices required or permitted to be given hereunder shall
be given in the manner contemplated by the Common Stock Purchase Agreement, if
to the Company or to Investor, to their respective addresses contemplated by
this Agreement, or at such other address as each such party furnishes by
notice given in accordance with this SECTION 10(a).
(b) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
(c) This Agreement shall be governed by and interpreted in
accordance with the laws of California for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the County of Los Angeles
or the state courts of California sitting in the County of Los Angeles in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions. In the event of any dispute, the prevailing party shall be
entitled to recover its reasonable attorneys' fees.
(d) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement
or the validity or enforceability of this Agreement in any other jurisdiction.
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(e) This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto.
(f) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(g) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
(h) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(j) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
COMPANY:
CHEQUEMATE INTERNATIONAL, INC.
D/B/A C-3D DIGITAL, INC.
By:
------------------------------
Name:
Title:
INVESTOR:
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CROOKS HOLLOW ROAD, LLC
By:
------------------------------
Name:
Title:
50
SCHEDULE 5(b)
OTHER REGISTRABLE SECURITIES
SCHEDULE 4.4 (EXCEPTIONS TO SECTION 4.4 OF THE COMMON STOCK PURCHASE AGREEMENT)
AND
SCHEDULE 5(b) (EXCEPTIONS TO SECTION 5 OF THE REGISTRATION RIGHTS AGREEMENT)
1. Convertible line of credit promissory notes. $3,000,000 in debt is to be
converted into 1,300,000 shares of common stock at $1.00 per share, and the
other $1,700,000 to be converted to preferred stock, not convertible, after
shareholder approval of amendment to Articles to allow issuance of preferred
stock. The common stock has piggyback registration rights. The Company is
endeavoring to negotiate a waiver of these rights with respect to the Crooks
Hollow Road Registration.
2. Continuing Agreement to privately issue and sell $500,000 in restricted
common stock at a 50% discount from market on a monthly basis, and concurrent
issuance of monthly warrant to acquire 100,000 common shares at $1.00 per
share, with attached registration rights for the warrant. The
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Company has entered into negotiations to obtain a deferral of these
registration rights for a period ending 6 months from closing.
3. Coast Communications (hotel movie business)
Agreement to issue up to 230,500 shares, with registration rights, in
satisfaction of $461,000 in debt. The Company has entered into negotiations
to obtain a deferral of these registration rights for a period of 6 months.
4. Xxxxx North America bldg. Chequemate is negotiating to purchase a 100,000
sq. ft. bldg on 17 acres in Utah. Total purchase price $4,507,000, paid with
note for $2,450,000 plus $2,197,000 worth of stock, valued at the market, and
to be registered. This is a relatively complex deal, involving a middleman
with credit acceptable to a bank. A bank will lend $1,850,000 secured by a
deed of trust on the land, and $1.6M of that cash goes to the Seller (Xxxxx),
and the other $250K goes to closing costs and other expenses. $1.2M worth of
stock goes to Xxxxx, also, and Xxxxx will have the right to put the stock back
to us, half at the end of 6 months and the other half at the end of 12 months,
each opportunity being for $600K plus interest. At Xxxxx'x option, if our
stock has declined, Xxxxx may demand additional stock to bring its market
value back up to $1.2M. We are obligated to register all the stock. The
Company has entered into negotiations to obtain a deferral of these
registration rights for a period of 6 months.
5. Issuance to United Business Systems (for purchase of hotel pay-per-view
manufacturer & patents) of $940,000 worth of stock, at the market, to be
registered. The Company has entered into negotiations to obtain a deferral of
these registration rights for a period of 6 months.
6. Xxxxx Xxxxxxxxx/CapitalPlus and Cinemaworks
$119,000 worth of stock, at the market, to be registered, and $236,000 worth
of stock, at the market, to be registered, issued as part of a transaction to
acquire service rights over 2650 free-to-guest rooms in various hotels. The
Company will enter into negotiations to obtain a deferral of these
registration rights for a period of 6 months, but management is doubtful.
7. Trimark Pictures
100,000 shares, to be issued as registered shares, as part of a contract for
motion picture digitization and conversion from 2D to 3D. The Company has
entered into negotiations to obtain a deferral of these registration rights
for a period of 6 months.
8. Xxxxxxxx, Xxxxx
62,500 shares to be issued in settlement of claim for breach of contract, with
shares to be registered. The Company has entered into negotiations to obtain a
deferral of these registration rights for a period of 6 months
9. i-O Display Systems, LLC
41,667 shares (contract for $500,000 worth of viewing systems and 3D movies;
shares to be issued and registered on an S-3) This is the company that makes
the preferred wireless shutter glasses, and also owns rights to a few low
budget 3D movies. The Company has entered into negotiations to obtain a
deferral of these registration rights for a period of 6 months
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10. Full Moon Universe
80,000 worth of common stock to be issued at the market.
(balance owed under last Summer's license fee for "Creeps", a 3D movie.) The
Company has entered into negotiations to obtain a deferral of these
registration rights for a period of 6 months
11. Optimum Source
2,728 shares with registration rights.
(fee due from marketing/promotional services) The Company has entered into
negotiations to obtain a deferral of these registration rights for a period of
6 months
12. Duchess Capital Partners
83,333 shares to be registered, for brokerage services. They have agreed to
waive registration for 6 months.
13. Xxxxxx Consulting Group
25,000 shares with registration rights. (amended fee due for consulting
services) The Company has entered into negotiations to obtain a deferral of
these registration rights for a period of 6 months.
14. Academy Entertainment
$250,000 worth of restricted stock W/PIGGYBACK REGISTRATION RIGHTS.
(contract for provision of public domain motion pictures, for conversion to 3D)
The Company has entered into negotiations to obtain a deferral of these
registration rights for a period of 6 months.
15. Hotel Movie Express (King Farms)
31,250 (post-split) shares with registration rights. The Company has entered
into negotiations to obtain a deferral of these registration rights for a
period of 6 months.
16. Issuance of S-8 stock under the Company's current Consultant Stock
Compensation Plan, as per past issuances and future issuances under the plan.
17. Stock options outstanding to ten key employees, plus directors and former
employees, for 1,534,334 shares, of which options for 910,000 shares will
require shareholder approval, together with registration rights.
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