Exhibit 10(46)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of March 31, 2000
(this "Agreement"), by and among Virtual Communities, Inc., a Delaware
corporation (the "Company"), and each of the Purchasers listed on Schedule A
attached hereto. Each of the Purchasers listed on Schedule A attached hereto is
referred to herein as a "Purchaser" and are collectively referred to herein as
the "Purchasers." This Agreement is being entered into pursuant to the Common
Stock and Warrants Purchase Agreement, dated as of the date hereof, by and among
the Company and the Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 3(m).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section 3(n).
"Board" shall have the meaning set forth in Section 3(n).
"Business Day" means any day except Saturday, Sunday and any day which shall be
a legal holiday or a day on which banking institutions in the state of New York
generally are authorized or required by law or other government actions to
close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $.01 per share.
"Effectiveness Date" means with respect to the Registration Statement the
earlier of the 90th day following the Closing Date and the date which is within
five (5) days of the date on which the Commission informs the Company that the
Commission (i) will not review the Registration Statement or (ii) that the
Company may request the acceleration of the effectiveness of the Registration
Statement.
"Effectiveness Period" shall have the meaning set forth in Section 2.
"Event" shall have the meaning set forth in Section 7(e).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the date the Registration Statement is filed which date
shall be the 45th day following the date the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case may be, from time
to time of Registrable Securities including, including without limitation, the
Purchasers and their assignees.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Liquidated Damages" shall have the meaning set forth in Section 7(e).
"Losses" shall have the meaning set forth in Section 5(a).
"Nasdaq" shall mean the Nasdaq SmallCap Market.
"Person" means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
"Registrable Securities" means (i) the shares of Common Stock (A) issued
pursuant to the Purchase Agreement (the "Common Shares") and (B) issuable upon
exercise of the Warrants (the "Warrant Shares") and upon any stock split, stock
dividend, recapitalization or similar event with respect to such Common Shares
or Warrant Shares, and (ii) any other dividend or other distribution with
respect to, conversion or exchange of, or in replacement of, Registrable
Securities; provided, however, that Registrable Securities shall include (but
not be limited to) a number of shares of Common Stock equal to no less than 100%
of the maximum number of shares of Common Stock which would be issuable pursuant
to the issuance of Common Shares pursuant to the Purchase Agreement and upon
exercise of the Warrants, assuming such exercise occurred on the Closing Date or
the Filing Date, whichever date would result in the greater number of
Registrable Securities. Notwithstanding anything herein contained to the
contrary, such registered shares of Common Stock shall be allocated among the
Holders pro rata based on the total number of Registrable Securities issued or
issuable as of each date that a Registration Statement, as amended, relating to
the resale of the Registrable Securities is declared effective by the
Commission. Notwithstanding anything contained herein to the contrary, if the
actual number of shares of Common Stock issuable upon exercise of the Warrants
exceeds 100% of the number of shares of Common Stock issuable (1) pursuant to
the issuance of the Common Shares pursuant to the Purchase Agreement and (2)
upon exercise of the Warrants based upon a computation as at the Closing Date or
the Filing Date, the term "Registrable Securities" shall be deemed to include
such additional shares of Common Stock.
"Registration Statement" means the registration statement and any additional
registration statements contemplated by Section 2, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to the Holders, for which the
Holders will be reimbursed by the Company pursuant to Section 4.
"Warrants" means the A warrants and B warrants to purchase shares of Common
Stock issued in connection with the Purchase Agreement, and any other warrants
of like tenor issued in substitution or exchange thereof.
Registration. On or prior to the Filing Date the Company shall prepare and file
with the Commission a "shelf" Registration Statement covering all
Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form SB-2
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2, in which case such registration shall
be on another appropriate form in accordance herewith). The Company shall
(i) not permit any securities other than the Registrable
Securities to be included in the Registration Statement and those
securities on Schedule 7(c) hereto, (ii) use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act
(including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 12dl-2 promulgated under the Exchange
Act within five (5) Business Days of the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or not be subject to further
review) as soon as possible after the filing thereof, but in any event
prior to the Effectiveness Date, and to keep such Registration Statement
continuously effective under the Securities Act until such date as is the
earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the
Registrable Securities may be sold without any restriction pursuant to Rule
144(k) as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Company's transfer agent to such effect
(the "Effectiveness Period"). If an additional Registration Statement is
required, for any reason, to be filed because the actual number of shares
of Common Shares and Warrant Shares exceeds the number of shares of Common
Stock initially registered in respect of the Common Shares and the Warrant
Shares based upon the computation on the Closing Date, the Company shall
have twenty (20) Business Days to file such additional Registration
Statement, and the Company shall use its best efforts to cause such
additional Registration Statement to be declared effective by the
Commission as soon as possible, but in no event later than thirty (30) days
after filing.
Registration Procedures.
In connection with the Company's registration obligations hereunder, the Company
shall:
HHH. Prepare and file with the Commission on or prior to the Filing Date, a
Registration Statement on Form SB-2 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form
SB-2 such registration shall be on another appropriate form in
accordance herewith) in accordance with the method or methods of
distribution thereof as specified by the Holders (except if otherwise
directed by the Holders), and cause the Registration Statement to
become effective and remain effective as provided herein; provided,
however, that not less than five (5) Business Days prior to the filing
of the Registration Statement or any related Prospectus or any
amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall (i) furnish to
the Holders and any Special Counsel, copies of all such documents
proposed to be filed, which documents (other than those incorporated
by reference) will be subject to the review of such Holders and such
Special Counsel, and (ii) at the request of any Holder cause its
officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of counsel to such Holders, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities or any Special Counsel shall
reasonably object in writing within three (3) Business Days of their
receipt thereof.
III. 1. Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as
to the applicable Registrable Securities for the Effectiveness Period
and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus
to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or
any similar provisions then in force) promulgated under the Securities
Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any
amendment thereto and as promptly as possible provide the Holders true
and complete copies of all correspondence from and to the Commission
relating to the Registration Statement; and
(iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods
of disposition by the Holders thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
JJJ. Notify the Holders of Registrable Securities to be sold and any
Special Counsel as promptly as possible (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) when the
Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in
writing on such Registration Statement and (C) with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or
supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any
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 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 the light of the circumstances under which they were made,
not misleading.
The Company shall promptly furnish to Special Counsel, without charge, (i) any
correspondence from the Commission or the Commission's staff to the Company or
its representatives relating to any Registration Statement and (ii) promptly
after the same is prepared and filed with the Commission, a copy of any written
response to the correspondence received from the Commission.
KKK. Use its best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of, (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, at the earliest practicable moment.
LLL. If requested by the Holders of a majority in interest of the
Registrable Securities, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement
such information as the Company reasonably agrees should be included
therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable
after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment.
MMM. Furnish to each Holder and any Special Counsel, without charge, at
least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
NNN. Promptly deliver to each Holder and any Special Counsel, without
charge, as many copies of the Registration Statement, Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the
Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
OOO. Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holders
and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification)
of such Registrable Securities for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any
Holder requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
PPP. Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold pursuant to a Registration Statement, which certificates shall be
free of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as
any Holder may request at least two (2) Business Days prior to any
sale of Registrable Securities.
QQQ. Upon the occurrence of any event contemplated by Section 3(c)(vi), as
promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
RRR. Use its best efforts to cause all Registrable Securities relating to
such Registration Statement to be listed on Nasdaq and any other
securities exchange, quotation system, market or over-the-counter
bulletin board, if any, on which similar securities issued by the
Company are then listed as and when required pursuant to the Purchase
Agreement.
SSS. Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its
security holders earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 not later than
forty-five (45) days after the end of any twelve (12)-month period (or
ninety (90) days after the end of any twelve (12)-month period if such
period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the
requirements of Rule 158.
TTT. Require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the
Registrable Securities of any such Holder who fails to furnish such
information within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended
Registration Statement.
If the Registration Statement refers to any Holder by name or otherwise as the
holder of any securities of the Company, then such Holder shall have the right
to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any Registrable
Securities under the Registration Statement until it has received copies of the
Prospectus as then amended or supplemented as contemplated in Section 3(g) and
notice from the Company that such Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section 3(c) and
(ii) it and its officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to them in
connection with sales of Registrable Securities pursuant to the Registration
Statement.
Each Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement contemplated
by Section 3(j), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
UUU. If (i) there is material non-public information regarding the Company
which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and
which the Company is not otherwise required to disclose, or (ii) there
is a significant business opportunity (including, but not limited to,
the acquisition or disposition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or
other similar transaction) available to the Company which the Board
reasonably determines not to be in the Company's best interest to
disclose and which the Company would be required to disclose under the
Registration Statement, then the Company may suspend effectiveness of
a registration statement and suspend the sale of Registrable
Securities under a Registration Statement for a period not to exceed
twenty (20) consecutive days, provided that the Company
may not suspend its obligation under this Section 3(n) for more than
forty-five (45) days in the aggregate during any twelve (12) month
period (each, a "Blackout Period"); provided, however, that no such
suspension shall be permitted for consecutive twenty (20) day periods,
arising out of the same set of facts, circumstances or transactions.
VVV. Within two (2) business days after the Registration Statement which
includes the Registrable Securities is ordered effective by the
Commission, the Company shall deliver, and shall cause legal counsel
for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities
are included in such Registration Statement) confirmation that the
Registration Statement has been declared effective by the Commission
in the form attached hereto as Exhibit A.
Registration Expenses
All fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation the following: (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the Nasdaq and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed, (B) with respect to
filings required to be made with the Commission, and (C) in compliance with
state securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and Special Counsel for the Holders, in the case of the Special Counsel,
to a maximum amount of $25,000 (v) Securities Act liability insurance, if the
Company so desires such insurance, and (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.
Indemnification
WWW. Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each
Holder, the officers, directors, agents, brokers (including brokers
who offer and sell Registrable Securities as principal as a result of
a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees of each of them, each Person
who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of
each such controlling Person, and the respective successors, assigns,
estate and personal representatives of each of the foregoing, to the
fullest extent permitted by applicable law, from and against any and
all claims, losses, damages, liabilities, penalties, judgments, costs
(including, without limitation, costs of investigation) and expenses
(including, without limitation, attorneys' fees and expenses)
(collectively, "Losses"), as incurred, arising out of or relating to
any untrue or alleged untrue statement of a material fact contained in
the Registration Statement, any Prospectus or any form of prospectus
or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances
under which they were made) not misleading, except to the extent, but
only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, which
information was reasonably relied on by the Company for use therein or
to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto. The
Company shall notify the Holders promptly of the institution, threat
or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of an Indemnified Party (as defined
in Section 5(c) hereof) and shall survive the transfer of the
Registrable Securities by the Holders.
XXX. Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees
of such controlling Persons, and the respective successors, assigns,
estate and personal representatives of each of the foregoing, to the
fullest extent permitted by applicable law, from and against all
Losses, as incurred, arising solely out of or based solely upon any
untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or arising
solely out of or based solely upon any omission of a material fact
required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the 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 omitted from any
information so furnished in writing by such Holder to the Company
specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the
Company for use in the Registration Statement, such Prospectus or such
form of prospectus or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in
writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus Supplement.
Notwithstanding anything to the contrary contained herein, the Holder
shall be liable under this Section 5(b) for only that amount
as does not exceed the net proceeds to such Holder as a result of the
sale of Registrable Securities pursuant to such Registration
Statement.
YYY. Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify
the Person from whom indemnity is sought (the "Indemnifying Party) in
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination
is not subject to appeal or further review) that such failure shall
have proximately and materially adversely prejudiced the Indemnifying
Party.
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section) shall be
paid to the Indemnified Party, as incurred, within ten (10) Business Days of
written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
ZZZ. Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party
and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or
made by, or relates to information supplied by, such Indemnifying,
Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to
the limitations set forth in Section 5(c), any reasonable attorneys'
or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification
provided for in this Section was available to such party in accordance
with its terms. Notwithstanding anything to the contrary contained
herein, the Holder shall be liable or required to contribute under
this Section 5(c) for only that amount as does not exceed the net
proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. The indemnity and contribution
agreements contained in this Section are in addition to any liability that the
Indemnifying Parties may have to the Indemnified Parties
Rule 144.
As long as any Holder owns Common Shares, Warrants or Warrant Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act and to promptly furnish the Holders with true and complete copies of all
such filings. As long as any Holder owns Common Shares, Warrants or Warrant
Shares, if the Company is not required to file reports pursuant to Section 13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Holders and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Person to sell Conversion Shares and Warrant Shares without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including providing any legal opinions of
counsel to the Company referred to in the Purchase Agreement. Upon the request
of any Holder, the Company shall deliver to such Holder a written certification
of a duly authorized officer as to whether it has complied with such
requirements.
Miscellaneous.
AAAA. Remedies. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
BBBB. No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has, as of the date hereof entered into and currently
in effect, nor shall the Company or any of its subsidiaries, on or
after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. Neither the Company nor any of its
subsidiaries has previously entered into any agreement currently in
effect granting any registration rights with respect to any of its
securities to any Person, except as set forth on Schedule 7(c)
hereto. Without limiting the generality of the foregoing, without
the written consent of the Holders of a majority of the then
outstanding Registrable Securities, 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 the Holders set forth herein, and are not otherwise in conflict
with the provisions of this Agreement.
CCCC. No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant
hereto and the security holders listed on Schedule 7(c) hereto) may
include securities of the Company in the Registration Statement, and
the Company shall not after the date hereof enter into any agreement
providing such right to any of its security holders, unless the
right so granted is subject in all respects to the prior rights in
full of the Holders set forth herein, and is not otherwise in
conflict with the provisions of this Agreement.
DDDD. Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering (i) Common Shares or (ii)
Warrant Shares, 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 its then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other
employee benefit plans, the Company shall send to each holder of
Registrable Securities written notice of such determination and, if
within thirty (30) days after receipt of such notice, any such
holder shall so request in writing (which request shall specify the
Registrable Securities intended to be disposed of by the Holders),
the Company will cause the registration under the Securities Act of
all Registrable Securities which the Company has been so requested
to register by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered,
provided that if at any time after giving written notice of its
intention to register any securities and prior to the effective date
of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to
such holder and, thereupon, (i) in the case of a determination not
to register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not
from its obligation to pay expenses in accordance with Section 4
hereof), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities being registered pursuant to this Section 7(d) for the
same period as the delay in registering such other securities. The
Company shall include in such registration statement all or any part
of such Registrable Securities such holder requests to be
registered; provided, however, that the Company shall not be
required to register any Registrable Securities pursuant to this
Section 7(d) that are eligible for sale pursuant to Rule 144(k) of
the Securities Act. In the case of an underwritten public offering,
if the managing underwriter(s) or underwriter(s) should reasonably
object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with
the managing underwriter should reasonably determine that the
inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and
based on such determination recommends inclusion in such
registration statement of fewer or none of the Registrable
Securities of the Holders, then (x) the number of Registrable
Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number
of Registrable Securities requested to be included in the
registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable
Securities, or (y) none of the Registrable Securities of the Holders
shall be included in such registration statement, if the Company
after consultation with the underwriter(s) recommends the inclusion
of none of such Registrable Securities; provided, however, that if
securities are being offered for the account of other persons or
entities as well as the Company, such reduction shall not represent
a greater fraction of the number of Registrable Securities intended
to be offered by the Holders than the fraction of similar reductions
imposed on such other persons or entities (other than the Company).
EEEE. Failure to File Registration Statement and Other Events. The Company
and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date
and not declared effective by the Commission on or prior to the
Effectiveness Date and maintained in the manner contemplated herein
during the Effectiveness Period or if certain other events occur.
The Company and the Holders further agree that it would not be
feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or
prior to the Filing Date, or is not declared effective by the
Commission on or prior to the Effectiveness Date (or in the event an
additional Registration Statement is filed because the actual number
of Common Shares and Common Stock into which the Warrants are
exercisable exceeds the number of shares of Common Stock initially
registered is not filed and declared effective within the time
periods set forth in Section 2), or (ii) the Company fails to file
with the Commission a request for acceleration in accordance with
Rule 12dl-2 promulgated under the Exchange Act within five (5)
Business Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration
Statement will not be "reviewed," or not subject to further review,
or (iii) the Registration Statement is filed with and declared
effective by the Commission but thereafter ceases to be effective as
to all Registrable Securities at any time prior to the expiration of
the Effectiveness Period, without being succeeded immediately by a
subsequent Registration Statement filed with and declared effective
by the Commission, or (iv) trading in the Common Stock shall be
suspended or if the
Common Stock is delisted from Nasdaq for any reason for more than
three (3) Business Days in the aggregate, or (v) the conversion
rights of the Holders are suspended for any reason, including by the
Company, or (vi) the Company breaches in a material respect any
covenant or other material term or condition to this Agreement, the
Certificate of Designation, the Purchase Agreement (other than a
representation or warranty contained therein) or any other
agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby,
and such breach continues for a period of thirty days after written
notice thereof to the Company, or (vii) the Company has breached
Section 3(n) of this Agreement (any such failure or breach being
referred to as an "Event"), the Company shall pay as liquidated
damages for such failure and not as a penalty (the "Liquidated
Damages") to each Holder an amount equal to one percent (1%) of such
Holder's pro rata share of the purchase price paid by all Holders
for all shares of Common Shares purchased and then outstanding
pursuant to the Purchase Agreement for the initial thirty (30) day
period following the Event until the applicable Event has been
cured, which amount shall be pro rated for any period less than
thirty (30) days, and two percent (2%) of such Holder's pro rata
share of the purchase price paid by all Holders for all shares of
Common Shares purchased and then outstanding pursuant to the
Purchase Agreement for each thirty (30) day period thereafter until
the applicable Event has been cured, which shall be pro rated for
any period less than thirty (30) days (the "Periodic Amount").
Payments to be made pursuant to this Section 7(e) shall be due and
payable immediately upon demand at the option of the Holders in
cash. 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 damages that may be incurred by the
Holders if the Registration Statement is not filed on or prior to
the Filing Date or has not been declared effective by the Commission
on or prior to the Effectiveness Date and maintained in the manner
contemplated herein during the Effectiveness Period or if any other
Event as described herein has occurred.
FFFF. Specific Enforcement, Consent to Jurisdiction.
1. The Company and the Holders acknowledge and agree that
irreparable damage would occur in the event that any of the
provisions of this Registration Rights Agreement or the
Purchase Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of
this Registration Rights Agreement or the Purchase Agreement
and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity.
2. Each of the Company and the Purchasers (i) hereby irrevocably
submits to the jurisdiction of the United States District
Court for the Southern District of New York and the courts of
the State of New York located in New York county for the
purposes of any suit, action or proceeding arising out of or
relating to this Agreement or the Purchase Agreement and (ii)
hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum
or that the venue of the suit, action or proceeding is improper.
Each of the Company and the Purchasers consents to process being
served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
in this Section 7(f) shall affect or limit any right to serve
process in any other manner permitted by law.
GGGG. 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
each of the Holders. 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 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.
HHHH. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on
the earlier of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m.,
eastern standard time, on a Business Day, (ii) the Business
Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m.,
eastern standard time, on any date and earlier than 11:59
p.m., eastern time, on such date, (iii) the Business Day
following the date of mailing, if sent by nationally
recognized overnight courier service or (iv) actual receipt by
the party to whom such notice is required to be given. The
addresses for such communications shall be with respect to
each Holder at its address set forth under its name on
Schedule A attached hereto, or with respect to the
Company, addressed to:
Virtual Communities, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Avi ▇▇▇▇▇▇▇▇▇
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to any Holder shall be sent to the addresses
listed on Schedule A attached hereto, if applicable. Copies of notices to the
Company shall be sent to Wuersch & ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Facsimile no.: (212)
509-9559. Copies of notices to the Holders shall be sent to (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇
LLP, The Chrysler Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇.
IIII. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and
permitted assigns and shall inure to the benefit of each Holder and
its successors and assigns. The Company may not assign this
Agreement or any of its rights or obligations hereunder without the
prior written consent of each Holder. Each Purchaser may assign its
rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.
JJJJ. Assignment of Registration Rights. The rights of each Holder
hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this
Agreement, shall be automatically assignable by each Holder to any
transferee of such Holder of all or a portion of the shares of
Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after
such assignment, (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (a)
the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or
assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this
Section, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions of this Agreement, and
(v) such transfer shall have been made in accordance with the
applicable requirements of the Purchase Agreement. In addition, each
Holder shall have the right to assign its rights hereunder to any
other Person with the prior written consent of the Company, which
consent shall not be unreasonably withheld. The rights to assignment
shall apply to the Holders (and to subsequent) successors and
assigns.
KKKK. 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.
LLLL. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to
principles of conflicts of law thereof. This Agreement shall not be
interpreted or construed with any presumption against the party
causing this Agreement to be drafted.
MMMM. Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
NNNN. Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable
in any respect, 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.
OOOO. Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit
or affect any of the provisions hereof.
PPPP. Shares Held by the Company and its Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the
Company or its Affiliates (other than any Holder or transferees or
successors or assigns thereof if such Holder is deemed to be an
Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage and
shall not be counted as outstanding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
VIRTUAL COMMUNITIES, INC.
By:
--------------------------------------
Name:
Title:
MAGELLAN INTERNATIONAL, LTD.
By:
--------------------------------------
Name:
Title:
ASPEN INTERNATIONAL, LTD.
By:
--------------------------------------
Name:
Title:
ACQUA WELLINGTON VALUE FUND, LTD.
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Title:
THE CUTTYHUNK FUND LIMITED
By:
--------------------------------------
Name:
Title:
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
[ADDRESS]
Attn: _____________
Re: Virtual Communities, Inc.
Ladies and Gentlemen:
We are counsel to Virtual Communities, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Common Stock and Warrants Purchase Agreement (the "Purchase Agreement"), dated
as of March 31, 2000, by and among the Company and the purchasers named therein
(collectively, the "Holders") pursuant to which the Company issued to the
Holders shares (the "Common Shares") of its Common Stock, par value $.01 per
share (the "Common Stock"), and issued warrants (the "Warrants") to purchase
shares of the Company's Common Stock. Pursuant to the Purchase Agreement, the
Company has also entered into a Registration Rights Agreement with the Holders
(the "Registration Rights Agreement"), dated as of March 31, 2000, pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
Common Shares and the shares of Common Stock issuable upon exercise of the
Warrants, under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ________________, 2000, the Company filed a Registration Statement
on Form ___ (File No. 333-________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the resale of the
Registrable Securities which names each of the present Holders as a selling
stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and, accordingly, the
Registrable Securities are available for resale under the 1933 Act in the manner
specified in, and pursuant to the terms of the Registration Statement.
Very truly yours,
By:
cc: [LIST NAMES OF HOLDERS]
SCHEDULE A to the
REGISTRATION RIGHTS AGREEMENT
FOR VIRTUAL COMMUNITIES, INC.
Names and Address of Purchasers
Magellan International, Ltd.
Charlotte House
Charlotte Street
Nassau, Bahamas
Tel. no.: ▇▇▇-▇▇▇-▇▇▇▇
Fax no.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Aspen International, Ltd.
Charlotte House
Charlotte Street
Nassau, Bahamas
Tel. no.: ▇▇▇-▇▇▇-▇▇▇▇
Fax no.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Acqua Wellington Value Fund Ltd.
c/o MeesPierson Fund Services
(Bahamas) Limited
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Centre
▇.▇. ▇▇▇ ▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Tel. no.: ▇▇▇-▇▇▇-▇▇▇▇
Fax no.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
The Cuttyhunk Fund Limited
c/o Optima Fund Management
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel. no.: ▇▇▇-▇▇▇-▇▇▇▇
Fax no.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 7(c) to the
REGISTRATION RIGHTS AGREEMENT
FOR VIRTUAL COMMUNITIES, INC.