REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 2, 2006, by and between Essential Innovations
Technology Corp., a Nevada corporation (the "Company"), and Laurus Master Fund,
Ltd. (the "Purchaser").
This Agreement is made pursuant to the [Security and Purchase
Agreement], dated as of the date hereof, by and among the Purchaser, the Company
and various subsidiaries of the Company (as amended, modified or supplemented
from time to time, the "Security Agreement"), and pursuant to the Warrants
referred to therein.
The Company and the Purchaser hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Security Agreement shall have the meanings given such
terms in the Security Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Common Stock" means shares of the Company's common stock, par
value $0.001 per share.
"Effectiveness Date" means, (i) with respect to the
Registration Statement required to be filed in connection with the Warrant
issued on the date hereof, a date no later than one hundred eighty (180) days
following such date and (ii) with respect to each additional Registration
Statement required to be filed hereunder (if any), a date no later than thirty
(30) days following the applicable Filing Date.
"Effectiveness Period" has the meaning set forth in Section
2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"Filing Date" means, with respect to (1) the Registration
Statement required to be filed in connection with the shares of Common Stock
issuable to the Holder upon exercise of a Warrant, the date which is sixty (60)
days after the issuance of such Warrant, and (2) the Registration Statement
required to be filed in connection with the shares of Common Stock issuable to
the Holder as a result of adjustments to the Exercise Price made pursuant to
Section 4 of the Warrant or otherwise, thirty (30) days after the occurrence of
such event or the date of the adjustment of the Exercise Price.
"Holder" or "Holders" means the Purchaser or any of its
affiliates or transferees to the extent any of them hold Registrable Securities,
other then those purchasing Registrable Securities in a market transaction.
"Indemnified Party" has the meaning set forth in Section 5(c).
"Indemnifying Party" has the meaning set forth in Section
5(c).
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
Registration Rights Agreement
"Prospectus" means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Registrable Securities" means the shares of Common Stock
issuable upon exercise of the Warrants.
"Registration Statement" means each registration statement
required to be filed hereunder, including the Prospectus therein, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended,
and any successor statute.
"Security Agreement" has the meaning given to such term in the
Preamble hereto.
"Trading Market" means any of the NASD Over The Counter
Bulletin Board, NASDAQ Capital Market, the NASDAQ National Market, the American
Stock Exchange or the New York Stock Exchange
"Warrants" means the Common Stock purchase warrants issued in
connection with the Security Agreement, whether on the date thereof or
thereafter.
2. Registration.
(a) On or prior to each Filing Date, the Company shall prepare and file
with the Commission a Registration Statement covering the Registrable Securities
for a selling stockholder resale offering to be made on a continuous basis
pursuant to Rule 415. Each Registration Statement shall be on Form S-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith). The Company shall cause each
Registration Statement to become effective and remain effective as provided
herein. The Company shall use its commercially reasonable efforts to cause each
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event no later than
the Effectiveness Date. The Company shall use its reasonable commercial efforts
to keep each Registration Statement continuously effective under the Securities
Act until the date which is the earlier date of when (i) all Registrable
Securities covered by such Registration Statement have been sold or (ii) all
Registrable Securities covered by such Registration Statement may be sold
immediately without registration under the Securities Act and without volume
Registration Rights Agreement 2
restrictions pursuant to Rule 144(k), as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the affected Holders (each, an
"Effectiveness Period").
(b) Within three business days of the Effectiveness Date, the Company
shall cause its counsel to issue a blanket opinion in the form attached hereto
as Exhibit A, to the transfer agent stating that the shares are subject to an
effective registration statement and can be reissued free of restrictive legend
upon notice of a sale by the Purchaser and confirmation by the Purchaser that it
has complied with the prospectus delivery requirements, provided that the
Company has not advised the transfer agent orally or in writing that the opinion
has been withdrawn. Copies of the blanket opinion required by this Section 2(b)
shall be delivered to the Purchaser within the time frame set forth above.
3. Registration Procedures. If and whenever the Company is required by
the provisions hereof to effect the registration of any Registrable Securities
under the Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities, respond as promptly as possible to any
comments received from the Commission, and use its best efforts to cause such
Registration Statement to become and remain effective for the Effectiveness
Period with respect thereto, and promptly provide to the Purchaser copies of all
filings and Commission letters of comment relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such Registration Statement and to keep such Registration Statement effective
until the expiration of the Effectiveness Period applicable to such Registration
Statement;
(c) furnish to the Purchaser such number of copies of the Registration
Statement and the Prospectus included therein (including each preliminary
Prospectus) as the Purchaser reasonably may request to facilitate the public
sale or disposition of the Registrable Securities covered by such Registration
Statement;
(d) use its commercially reasonable efforts to register or qualify the
Purchaser's Registrable Securities covered by such Registration Statement under
the securities or "blue sky" laws of such jurisdictions within the United States
as the Purchaser may reasonably request, provided, however, that the Company
shall not for any such purpose be required to qualify generally to transact
business as a foreign corporation in any jurisdiction where it is not so
qualified or to consent to general service of process in any such jurisdiction;
(e) list the Registrable Securities covered by such Registration
Statement with any securities exchange on which the Common Stock of the Company
is then listed;
(f) immediately notify the Purchaser at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the Prospectus contained in such 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
not misleading in light of the circumstances then existing; and
Registration Rights Agreement 3
(g) make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, all publicly available,
non-confidential financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all publicly available, non-confidential information
reasonably requested by the attorney, accountant or agent of the Purchaser.
4. Registration Expenses. All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the Holders are called "Registration Expenses". All selling
commissions applicable to the sale of Registrable Securities, including any fees
and disbursements of any special counsel to the Holders beyond those included in
Registration Expenses, are called "Selling Expenses." The Company shall only be
responsible for all Registration Expenses.
5. Indemnification.
(a) In the event of a registration of any Registrable Securities under
the Securities Act pursuant to this Agreement, the Company will indemnify and
hold harmless each Holder, and its officers, directors and each other person, if
any, who controls such Holder within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Holder, or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities Act
pursuant to this Agreement, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse such Holder, and each such person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by or on
behalf of the Purchaser or any such person in writing specifically for use in
any such document.
(b) In the event of a registration of the Registrable Securities under
the Securities Act pursuant to this Agreement, the Purchaser will indemnify and
hold harmless the Company, and its officers, directors and each other person, if
any, who controls the Company within the meaning of the Securities Act, against
all losses, claims, damages or liabilities, joint or several, to which the
Company or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact which was furnished in writing by the
Purchaser to the Company expressly for use in (and such information is contained
in) the Registration Statement under which such Registrable Securities were
registered under the Securities Act pursuant to this Agreement, any preliminary
Prospectus or final Prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Purchaser will be liable in any
such case if and only to the extent that any such loss, claim, damage or
Registration Rights Agreement 4
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished in writing to the Company by or on behalf of the Purchaser
specifically for use in any such document. Notwithstanding the provisions of
this paragraph, the Purchaser shall not be required to indemnify any person or
entity in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any such
registration under the Securities Act.
(c) Promptly after receipt by a party entitled to claim indemnification
hereunder (an "Indemnified Party") of notice of the commencement of any action,
such Indemnified Party shall, if a claim for indemnification in respect thereof
is to be made against a party hereto obligated to indemnify such Indemnified
Party (an "Indemnifying Party"), notify the Indemnifying Party in writing
thereof, but the omission so to notify the Indemnifying Party shall not relieve
it from any liability which it may have to such Indemnified Party other than
under this Section 5(c) and shall only relieve it from any liability which it
may have to such Indemnified Party under this Section 5(c) if and to the extent
the Indemnifying Party is prejudiced by such omission. In case any such action
shall be brought against any Indemnified Party and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such Indemnified
Party, and, after notice from the Indemnifying Party to such Indemnified Party
of its election so to assume and undertake the defense thereof, the Indemnifying
Party shall not be liable to such Indemnified Party under this Section 5(c) for
any legal expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof; if the Indemnified Party retains its own counsel, then
the Indemnified Party shall pay all fees, costs and expenses of such counsel,
provided, however, that, if the defendants in any such action include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the Indemnifying
Party or if the interests of the Indemnified Party reasonably may be deemed to
conflict with the interests of the Indemnifying Party, the Indemnified Party
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the Indemnifying Party as incurred.
(d) In order to provide for just and equitable contribution in the
event of joint liability under the Securities Act in any case in which either
(i) the Purchaser, or any officer, director or controlling person of the
Purchaser, makes a claim for indemnification pursuant to this Section 5 but it
is judicially determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 5 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required on
the part of the Purchaser or such officer, director or controlling person of the
Purchaser in circumstances for which indemnification is provided under this
Section 5; then, and in each such case, the Company and the Purchaser will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that the
Purchaser is responsible only for the portion represented by the percentage that
the public offering price of its securities offered by the Registration
Statement bears to the public offering price of all securities offered by such
Registration Statement, provided, however, that, in any such case, (A) the
Purchaser will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
Registration Rights Agreement 5
6. Representations and Warranties.
(a) The Common Stock is registered pursuant to Section 12(b) or 12(g)
of the Exchange Act or the Company is required to file periodic reports pursuant
to Section 15(d) of the Exchange Act and, except with respect to certain matters
which the Company has disclosed to the Purchaser on Schedule 12(u) to the
Security Agreement, the Company has timely filed all proxy statements, reports,
schedules, forms, statements and other documents required to be filed by it
under the Exchange Act. The Company has filed (i) its Annual Report on Form
10-KSB for the fiscal year ended October 31, 2005 [please update on status] and
(ii) its Quarterly Report on Form 10-QSB for the fiscal quarters ended July 31,
2005, April 30, 2005, and January 31, 2005 (collectively, the "SEC Reports").
Each SEC Report was, at the time of its filing, in substantial compliance with
the requirements of its respective form and none of the SEC Reports, nor the
financial statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted 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. The financial statements of the Company included in
the SEC Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed) and fairly present in
all material respects the financial condition, the results of operations and the
cash flows of the Company and its subsidiaries, on a consolidated basis, as of,
and for, the periods presented in each such SEC Report.
(b) The Common Stock is quoted for trading on the NASDAQ Over The
Counter Bulletin Board and satisfies all requirements for the continuation of
such quotation, and the Company shall do all things necessary for the
continuation of such quotation. The Company has not received any notice that its
Common Stock will no longer be quoted on the NASDAQ Over The Counter Bulletin
Board (except for prior notices which have been fully remedied) or that the
Common Stock does not meet all requirements for the continuation of such
quotation. The Company shall at all times either maintain the registration of
the Common Stock pursuant to Section 12(b) or 12(g) of the Exchange Act or file
periodic reports pursuant to Section 15(d) of the Exchange Act.
(c) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Securities pursuant to the
Security Agreement to be integrated with prior offerings by the Company for
purposes of the Securities Act which would prevent the Company from selling the
Common Stock pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its affiliates or subsidiaries take any action or steps that would cause the
offering of the Common Stock to be integrated with other offerings (other than
such concurrent offering to the Purchaser).
Registration Rights Agreement 6
(d) The Warrants and the shares of Common Stock that the Purchaser may
acquire pursuant to the Warrants are all restricted securities under the
Securities Act as of the date of this Agreement. The Company will not issue any
stop transfer order or other order impeding the sale and delivery of any of the
Registrable Securities at such time as such Registrable Securities are
registered for public sale or an exemption from registration is available,
except as required by federal or state securities laws.
(e) The Company understands the nature of the Registrable Securities
issuable upon the exercise of each Warrant and recognizes that the issuance of
such Registrable Securities may have a potential dilutive effect. The Company
specifically acknowledges that its obligation to issue the Registrable
Securities is binding upon the Company and enforceable regardless of the
dilution such issuance may have on the ownership interests of other shareholders
of the Company.
(f) Except for agreements made in the ordinary course of business,
there is no agreement that has not been filed with the Commission as an exhibit
to a registration statement or to a form required to be filed by the Company
under the Exchange Act, the breach of which could reasonably be expected to have
a material and adverse effect on the Company and its subsidiaries, or would
prohibit or otherwise interfere with the ability of the Company to enter into
and perform any of its obligations under this Agreement in any material respect.
(g) The Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for the full exercise of the
Warrants.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder,
of any of their respective obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
(b) No Piggyback on Registrations. Except as and to the extent set
forth on Schedule 7(b) hereto, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right for inclusion of shares in the
Registration Statement to any of its security holders. Except as and to the
extent specified in Schedule 7(b) hereto, the Company has not previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that have not been fully satisfied.
(c) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to any
Registration Statement.
(d) Discontinued Disposition. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of a Discontinuation Event (as defined below), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph. For purposes of this Agreement, a "Discontinuation Event" shall mean
(i) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); (ii) any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to such Registration Statement or Prospectus or
Registration Rights Agreement 7
for additional information; (iii) the issuance by the Commission of any stop
order suspending the effectiveness of such Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) 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/or (v) the occurrence of any
event or passage of time that makes the financial statements included in such
Registration Statement ineligible for inclusion therein or any statement made in
such 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 such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or 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.
(e) Piggy-Back Registrations. If at any time [after the date hererof
there is not an effective Registration Statement covering all of the Registrable
Securities required to be covered hereunder and the Company shall determine to
prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then the Company shall send to each Holder
written notice of such determination and, if within fifteen (15) days after
receipt of such notice, any such Holder shall so request in writing, the Company
shall include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered, to the extent the Company may
do so without violating registration rights of others which exist as of the date
of this Agreement, subject to customary underwriter cutbacks applicable to all
holders of registration rights and subject to obtaining any required consent of
any selling stockholder(s) to such inclusion under such registration statement.
(f) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of the then outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of certain Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(g) Notices. Any notice or request hereunder may be given to the
Company or the Purchaser at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
Section 7(g). Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, hand delivery, overnight mail, Federal
Express or other national overnight next day carrier (collectively, "Courier")
or telecopy (confirmed by mail). Notices and requests shall be, in the case of
those by hand delivery, deemed to have been given when delivered to any party to
whom it is addressed, in the case of those by mail or overnight mail, deemed to
have been given three (3) business days after the date when deposited in the
mail or with the overnight mail carrier, in the case of a Courier, the next
business day following timely delivery of the package with the Courier, and, in
the case of a telecopy, when confirmed. The address for such notices and
communications shall be as follows:
Registration Rights Agreement 8
If to the Company: Essential Innovations Technology Corp.
Attention: Chief Financial Officer
Facsimile:
with a copy to:
Attention:
Facsimile:
If to a Purchaser: To the address set forth under such
Purchaser name on the signature pages
hereto.
If to any other Person who is To the address of such Holder as it
then the registered Holder: appears in the stock transfer books of
the Company
or such other address as may be designated in writing hereafter in accordance
with this Section 7(g) by such Person.
(h) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Security Agreement.
(i) Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(j) Governing Law, Jurisdiction and Waiver of Jury Trial. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company hereby
consents and agrees that the state or federal courts located in the County of
New York, State of New York shall have exclusion jurisdiction to hear and
determine any Proceeding between the Company, on the one hand, and the
Purchaser, on the other hand, pertaining to this Agreement or to any matter
arising out of or related to this Agreement; provided, that the Purchaser and
the Company acknowledge that any appeals from those courts may have to be heard
by a court located outside of the County of New York, State of New York, and
further provided, that nothing in this Agreement shall be deemed or operate to
preclude the Purchaser from bringing a Proceeding in any other jurisdiction to
collect the obligations, to realize on the Collateral or any other security for
the obligations, or to enforce a judgment or other court order in favor of the
Purchaser. The Company expressly submits and consents in advance to such
jurisdiction in any Proceeding commenced in any such court, and the Company
hereby waives any objection which it may have based upon lack of personal
jurisdiction, improper venue or forum non conveniens. The Company hereby waives
personal service of the summons, complaint and other process issued in any such
Proceeding and agrees that service of such summons, complaint and other process
may be made by registered or certified mail addressed to the Company at the
address set forth in Section 7(g) and that service so made shall be deemed
completed upon the earlier of the Company's actual receipt thereof or three (3)
days after deposit in the U.S. mails, proper postage prepaid. The parties hereto
desire that their disputes be resolved by a judge applying such applicable laws.
Therefore, to achieve the best combination of the benefits of the judicial
Registration Rights Agreement 9
system and of arbitration, the parties hereto waive all rights to trial by jury
in any Proceeding brought to resolve any dispute, whether arising in contract,
tort, or otherwise between the Purchaser and/or the Company arising out of,
connected with, related or incidental to the relationship established between
then in connection with this Agreement. If either party hereto shall commence a
Proceeding to enforce any provisions of this Agreement, the Security Agreement
or any other Ancillary Agreement, then the prevailing party in such Proceeding
shall be reimbursed by the other party for its reasonable attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
(k) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
(l) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
ESSENTIAL INNOVATIONS TECHNOLOGY CORP.
By: /s/ Xxxxx XxXxxxxxx
Name: Xxxxx XxXxxxxxx
Title: President
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
Name: Xxxxx Grin
Title: Director
Address for Notices:
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Grin
Facsimile: 000-000-0000
Registration Rights Agreement 10
EXHIBIT A
____________, 200___
[Continental Stock Transfer
& Trust Company
Two Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxxx]
Re: [Newco] Registration Statement on Form [S-3]
Ladies and Gentlemen:
As counsel to Essential Innovations Technology Corp., a _____________
(the "Company"), we have been requested to render our opinion to you in
connection with the resale by the individuals or entitles listed on Schedule A
attached hereto (the "Selling Stockholders"), of an aggregate of __________
shares (the "Shares") of the Company's Common Stock.
A Registration Statement on Form [S-3] under the Securities Act of
1933, as amended (the "Act"), with respect to the resale of the Shares was
declared effective by the Securities and Exchange Commission on [date]. Enclosed
is the Prospectus dated [date]. We understand that the Shares are to be offered
and sold in the manner described in the Prospectus.
Based upon the foregoing, upon request by the Selling Stockholders at
any time while the registration statement remains effective, it is our opinion
that the Shares have been registered for resale under the Act and new
certificates evidencing the Shares upon their transfer or re-registration by the
Selling Stockholders may be issued without restrictive legend. We will advise
you if the registration statement is not available or effective at any point in
the future.
Very truly yours,
[Company counsel]
Schedule A to Exhibit A
Selling Stockholder R/N/O Shares Being Offered
------------------- ----- --------------------
SCHEDULE 7(b)
Shares to Earth Source/Pac Geo 1,171,230
Shares to Geotech Drilling 3,475,385
Xxxxx Investments Ltd. 200,000 warrants @ $0.01/share
Pac Trading 489,167 shares and
272,500 options @ $0.40/share
216,667 options @ $0.30/share
Morpheus Financial Corporation 500,000 shares
250,000 options @ $0.75/share
Xxxxxx Xxxxx 250,000 options @ $0.75/share
Ecogenics Limited 186,349 shares and
200,000 options @ $0.50/share
125,000 options @ $0.40/share
Xxxx Xxxxxxxx 588,815 shares
Xxxx Xx 79,826 shares
Xxxxx XxXxxxxxx 250,000 options @ $0.75/share
Xxxxx Xxxxxxx 250,000 options @ $0.75/share
Xxxxxxx Xxxxxxx 250,000 options @ $0.75/share
Xxxxx Xxxx 125,000 options @ $0.75/share
125,000 options @ $1.00/share
Allegiant Capital Group 205,000 shares and
250,000 options @ $0.50/share
Dragonfly Capital 583,333 warrants @$0.72/share
Insight Financial 250,000 warrants @$0.72/share
Denon Capital 195,000 shares
Registration Rights Agreement
