ETHOS ENVIRONMENTAL, INC. AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
This
Amended and Restated Registration Rights Agreement (this “Agreement”) is entered
into as of January 30, 2007 by and among Ethos Environmental, Inc., a
Nevada corporation (the “Company”), National Advisors, Inc., a California
corporation (“National”), the National Advisors, Inc. 401(k) Profit Sharing Plan
(the “Plan”), the
Suncoast Financial Mortgage Corporation Pension and Profit Sharing Plan
(“Suncoast”), Scott, Andy, ▇▇▇▇, Inc., a California corporation (“▇▇▇”) and ▇▇▇
▇. ▇▇▇▇▇▇▇▇, as the nominee for himself, and certain of the Holders and others
(“▇▇▇▇▇▇▇▇”) (National, the Plan, Suncoast, ▇▇▇ and ▇▇▇▇▇▇▇▇ are each referred
to in this Agreement as a “Holder” and collectively as the
“Holders”).
WHEREAS,
the Company entered into a Registration Rights Agreement as of January 30,
2006 with ESSEL Enterprises, LLC (“ESSEL”), and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as the nominee
for himself, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇
(“▇▇▇▇▇▇▇▇”); and
WHEREAS,
ESSEL and ▇▇▇▇▇▇ ▇▇▇▇▇ assigned their interests under that January 30, 2006
Registration Rights Agreement to National and the Plan, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
assigned his interest under that agreement to ▇▇▇; and
WHEREAS,
certain of the Holders hold a warrant to purchase 1,900,000 shares of the
Company’s common stock (the “Warrant”); and
WHEREAS,
▇▇▇▇▇▇▇▇ as a nominee of certain of the Holders and others holds an option
to
purchase one million shares of common stock of the Company under an Option
granted to it by Neus Leben Stiftung (the “SO Agreement”) in connection with the
loan of $4,750,000 to the Company; and
WHEREAS,
certain of the Holders have certain rights to acquire additional shares of
the
Company’s common stock under an Investor Rights Agreement with the Company and
certain of its shareholders (the “Rights Agreement”); and
WHEREAS,
the January 30, 2006 Registration Rights Agreement provides that the Company
and
the holders of not less than two-thirds (2/3’s) of the Registrable Shares (as
defined in that agreement) can enter into an amendment of that agreement
which
shall be binding upon all of the parties thereto and the Holders hold not
less
than two thirds of the Registrable Shares (as defined in that
agreement);
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NOW,
THEREFORE, in consideration of the mutual agreements and covenants contained
herein and for other good and valuable consideration, the receipt of which
is
hereby acknowledged, the Company and the Holders hereby agree that the January
30, 2006 registration Rights Agreement shall be amended and restated in its
entirety by this Agreement, which shall provide as follows:
1. Definitions.
As used
herein:
(a) The
term
“Holder” means any person owning or having the right to acquire Registrable
Shares or any assignee thereof in accordance with Section 2(k)
hereof.
(b) The
terms
“register,” “registered,” and “registration” refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act (as defined below) and the applicable rules and regulations thereunder,
and
the declaration or ordering of the effectiveness of such registration
statement.
(c) For
the
purposes hereof, the term “Registrable Shares” means and includes (i) the
shares of common stock of the Company issued or issuable under the Warrant,
(ii) the shares of common stock of the Company transferred or transferable
to ▇▇▇▇▇▇▇▇ upon his exercise of his option rights under the SO Agreement,
(iii) any shares of common stock of the Company issued or issuable to
▇▇▇▇▇▇▇▇ under the Rights Agreement and (iv) other security which is issued
as a result of a stock split, dividend or other distribution with respect
to or
in exchange for or in replacement of the shares referenced in (i), (ii) or
(iii)
above, excluding in all cases, however, any Registrable Shares sold by a
person
in a transaction in which his or her rights under Section 2 are not
assigned.
(d) The
term
“Ownership Percentage” means and includes, with respect to each Holder of
Registrable Shares requesting inclusion of Registrable Shares in an offering
pursuant to this Agreement, the number of Registrable Shares held by such
Holder
divided by the aggregate of (i) all Registrable Shares held by all Holders
requesting registration in such offering and (ii) the total number of all
other securities entitled to registration pursuant to any agreement with
the
Company approved by the Board of Directors and held by others participating
in
the underwriting.
(e) The
term
“Securities Act” means the Securities Act of 1933, as amended.
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(f) The
term
“Public Offering” means and includes the closing of an underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of securities to the general public for
the
account of the Company.
2. Registration
Rights.
(a) “Piggy
Back” Registration.
If at
any time the Company shall determine to register under the Securities Act
(including pursuant to a demand of any stockholder of the Company exercising
registration rights) any of its common stock held by a Holder (other than
a
registration relating solely to the sale of securities to participants in
a
Company employee benefits plan, a registration on any form which does not
include substantially the same information (except as to the selling Holders)
as
would be required to be included in a registration statement covering the
sale
of the Registrable Shares or a registration in which the only common stock
being
registered is common stock issuable upon conversion of debt securities which
are
also being registered), it shall send to each Holder written notice of such
determination and, if within twenty (20) days after receipt of such notice,
such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of the Registrable Shares that such
Holder requests to be registered. If any Holder disapproves of the terms
of any
underwriting referred to in this section, he may elect to withdraw therefrom
by
written notice to the Company and the underwriter. Notwithstanding the
foregoing, if, in connection with any offering involving an underwriting
of
common stock to be issued by the Company, the managing underwriter shall
impose
a limitation on the number of shares of common stock included in any such
registration statement because, in such underwriter’s judgment, such limitation
is necessary based on market conditions: (a) if the registration statement
is for the Initial Public Offering of the Company’s securities, the Company may
exclude, to the extent so advised by the underwriters, the Registrable Shares
from the underwriting; provided, however, that if the underwriters do not
entirely exclude the Registrable Shares from such Initial Public Offering,
the
Company shall be obligated to include in such registration statement, with
respect to the requesting Holder, an amount of Registrable Shares equal to
the
product of (i) the number of Registrable Shares that remain available for
registration after the underwriter’s cut back and (ii) such Holder’s
Ownership Percentage, as that term is defined in Section 1(d); and (b) if
the registration statement is not for the Initial Public Offering of the
Company’s securities, the Company shall be obligated to include in such
registration statement, with respect to the requesting Holder, an amount
of
Registrable Shares equal to the product of (i) the number of Registrable
Shares that remain available for registration after the underwriter’s cut back
and (ii) such Holder’s Ownership Percentage, as that term is defined in
Section 1(d); provided, however, that the aggregate value of Registrable
Shares to be included in such registration may not be so reduced to less
than
twenty percent (20%) of the total value of all securities included in such
registration. If any Holder disapproves of the terms of any underwriting
referred to in this section, he may elect to withdraw therefrom by written
notice to the Company and the underwriter. No incidental right under this
Section 2(a) shall be construed to limit any registration required under
Section 2(b).
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(b) Registration
on Form S-3.
This
provision is applicable once the Company commences a Public Offering. Thereupon,
in case the Company shall receive from one or more Holder or Holders of at
least
twenty percent (20%) of the Registrable Shares a written request or requests
that the Company effect a registration on Form S-3 (or any similar form
promulgated by the Securities and Exchange Commission) and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:
(i) within
ten (10) days of the receipt after such notice give written notice of the
proposed registration, and any related qualification or compliance, to all
other
Holders; and
(ii) as
soon
as practicable, effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the
sale
and distribution of all or such portion of such Holder’s or Holders’ Registrable
Shares as are specified in such request, together with all or such portion
of
the Registrable Shares of any other Holder or Holders joining in such request
as
are specified in a written request given within twenty (20) days after receipt
of such written notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this Section 2(b): (1) if Form S-3 or a
similar form is not available for such offering by the Holders; (2) if the
Company shall furnish to the Holders a certificate signed by the President
of
the Company stating that in the good faith judgment of the Board of Directors
of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time,
in
which event the Company shall have the right to defer the filing of the Form
S-3
registration statement for a period of not more than sixty (60) days after
receipt of the request of the Holder or Holders under this Section 2(b);
provided, however, that the Company shall not utilize this right more than
once
in any twelve (12) month period; (3) if the Holders are otherwise eligible
to sell all of their Registrable Shares within a 90 day period under Rule
144 of
the Securities Act; (4) if such Form S-3 Registration covers an offering of
less than $500,000 of Registrable Shares, or (5) if the Company has, within
the twelve (12) month period preceding the date of such request, already
effected two registrations on Form S-3 for the Holders pursuant to this
Section 2(b); (6) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent
to
service of process in effecting such registration, qualification or compliance;
or (7) the Company has already effected three (3) registrations on Form S-3
for the Holders pursuant to this Section 2(b).
(iii) Subject
to the foregoing, the Company shall file a registration statement covering
the
Registrable Shares and other securities so requested to be registered as
soon as
practicable after receipt of the request or requests of the Holders.
(c) Effectiveness.
(i) The
Company shall use its reasonable best efforts to maintain the effectiveness
for
up to nine (9) months of any registration statement it files pursuant to
which
any of the Registrable Shares are being offered; provided, however, that:
(i) such nine-month period shall be extended for a period of time equal to
the period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of common stock (or other
securities) of the Company and (ii) in the case of any registration of
Registrable Shares on Form S-3 or any similar form which are intended to
be
offered on a continuous or delayed basis, such nine-month period shall be
extended, if necessary, to keep the registration statement effective until
the
earlier to occur of (A) twenty-four (24) months following the effectiveness
of the registration statement, or (B) the date that all such Registrable
Shares are sold, provided that Rule 415, or any successor rule under the
Act, permits an offering on a continuous or delayed basis.
(ii) The
Company will from time to time amend or supplement such registration statement
it files and the prospectus contained therein as and to the extent necessary
to
comply with the Securities Act and any applicable state securities statute
or
regulation.
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(d) Indemnification.
(i) Indemnification
of Holders.
In the
event that the Company registers any of the Registrable Shares under the
Securities Act, the Company will indemnify and hold harmless each Holder
and
each underwriter of the Registrable Shares so registered (including any broker
or dealer through which such shares may be sold) and each person, if any, who
controls such Holder or any such underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses,
claims, damages, expenses or liabilities (or any action in respect thereof),
joint or several, to which they or any of them become subject under the
Securities Act or under any other statute or at common law or otherwise,
and,
except as hereinafter provided, will reimburse each such Holder, each such
underwriter and each such controlling person, if any, for any legal or other
expenses reasonably incurred by them or any of them, as such expenses are
incurred, in connection with investigating or defending any actions whether
or
not resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained
in the
registration statement, in any preliminary or amended preliminary prospectus
or
in the prospectus (or the registration statement or prospectus as from time
to
time amended or supplemented by the Company); (ii) 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 in order to make the statements
therein not misleading; or (iii) any violation by the Company of the
Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), a state securities law or any rule or regulation under the Securities
Act, the Exchange Act or any state securities law; provided, however, that
the
indemnity contained in this Section 2(d)(i) will not apply where such
untrue statement or omission was made in such registration statement,
preliminary or amended, preliminary prospectus or prospectus in reliance
upon
and in conformity with information furnished in writing to the Company in
connection therewith by such Holder of Registrable Shares, any such underwriter
or any such controlling person expressly for use therein. Promptly after
receipt
by any Holder of Registrable Shares, any underwriter or any controlling person
of notice of the commencement of any action in respect of which indemnity
may be
sought against the Company, such Holder of Registrable Shares, or such
underwriter or such controlling person, as the case may be, will notify the
Company in writing of the commencement thereof, and, subject to the provisions
hereinafter stated, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel reasonably
satisfactory to such Holder of Registrable Shares, such underwriter or such
controlling person, as the case may be), and the payment of expenses insofar
as
such action shall relate to any alleged liability in respect of which indemnity
may be sought against the Company. Such Holder of Registrable Shares, any
such
underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
in
the event the representation of such Holder, underwriter or controlling person
by counsel retained by or on the behalf of the Company would be inappropriate
due to conflicts of interest between any such person and any other party
represented by such counsel in such proceeding or action, in which case the
Company shall pay, as incurred, the fees and expenses of such separate counsel.
The Company shall not be liable to indemnify any person under this Section
2(d)(i) for any settlement of any such action effected without the Company’s
consent (which consent shall not be unreasonably withheld). The Company shall
not, except with the approval of each party being indemnified under this
Section
2(d)(i) (which approval will not be unreasonably withheld), consent to entry
of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
parties being so indemnified of a release from all liability in respect to
such
claim or litigation.
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(ii) Indemnification
of Company.
In the
event that the Company registers any of the Registrable Shares under the
Securities Act, each Holder of the Registrable Shares so registered will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each underwriter of
the
Registrable Shares so registered (including any broker or dealer through
which
any of such shares may be sold) and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act from and against
any and all losses, claims, damages, expenses or liabilities (or any action
in
respect thereof), joint or several, to which they or any of them may become
subject under the Securities Act or under any other statute or at common
law or
otherwise, and, except as hereinafter provided, will reimburse the Company
and
each such director, officer, underwriter or controlling person for any legal
or
other expenses reasonably incurred by them or any of them, as such expenses
are
incurred, in connection with investigating or defending any actions whether
or
not resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus
or
in the prospectus (or the registration statement or prospectus as from time
to
time amended or supplemented) 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 in order to make the statements therein not misleading, but
only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by such Holder, expressly for use therein; provided, however, that
such Holder’s obligations hereunder shall be limited to an amount equal to the
proceeds to such Holder of the Registrable Shares sold in such registration.
Promptly after receipt of notice of the commencement of any action in respect
of
which indemnity may be sought against such Holder of Registrable Shares,
the
Company will notify such Holder of Registrable Shares in writing of the
commencement thereof, and such Holder of Registrable Shares shall, subject
to
the provisions hereinafter stated, assume the defense of such action (including
the employment of counsel, who shall be counsel satisfactory to the Company)
and
the payment of expenses insofar as such action shall relate to the alleged
liability in respect of which indemnity may be sought against such Holder
of
Registrable Shares. The Company and each such director, officer, underwriter
or
controlling person shall have the right to employ separate counsel in any
such
action and to participate in the defense thereof in the event the representation
of the Company, any of its officers or directors or any underwriter or
controlling person by counsel retained by or on the behalf of such Holder
would
be inappropriate due to conflicts of interest between any such person and
any
other party represented by such counsel in such proceeding or action, in
which
case such Holder shall pay, as incurred, the fees and expenses of such separate
counsel. Notwithstanding the two preceding sentences, if the action is one
in
which the Company may be obligated to indemnify any Holder of Registrable
Shares
pursuant to Section 2(d), the Company shall have the right to assume the
defense of such action, subject to the right of such Holders to participate
therein as permitted by Section 2(d). Such Holder shall not be liable to
indemnify any person for any settlement of any such action effected without
such
Holder’s consent (which consent shall not be unreasonably withheld). Such Holder
shall not, except with the approval of the Company (which approval shall
not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to the party being so indemnified of a release
from
all liability in respect to such claim or litigation.
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(e) Contribution.
If the
indemnification provided for in Section 2(d) is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to
any loss, liability, claim, damage, or expense referred to therein, then
the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party
as a
result of such loss, liability, claim, damage, or expense in such proportion
as
is appropriate to reflect the relative fault of the indemnifying party on
the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage,
or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to
information supplied by the indemnifying party or by the indemnified party
and
the parties’ relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(f) Exchange
Act Registration.
With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the Securities Exchange
Commission (the “SEC”) that may at any time permit a Holder to sell securities
of the Company to the public without registration or pursuant to a registration
on Form S-3, the Company agrees to:
(i) make
and
keep public information available, as those terms are understood and defined
in
SEC Rule 144, at all times after ninety (90) days after the effective date
of the first registration statement filed by the Company for the offering
of its
securities to the general public;
(ii) take
such
reasonable action, including the voluntary registration of its common stock
under Section 12 of the 1934 Act, as is necessary to enable the Holders to
utilize Form S-3 or a similar form for the sale of their Registrable Shares,
at
all times after the effective date of the first registration statement filed
by
the Company for the offering of its securities to the general
public;
(iii) file
on a
timely basis with the Securities and Exchange Commission all information
that
the Commission may require under either of Section 13 or Section 15(d)
of the Exchange Act and, so long as it is required to file such information,
take all action that may be required as a condition to the availability of
Rule 144 under the Securities Act (or any successor exemptive rule
hereinafter in effect) with respect to the Company’s common stock;
and
(iv) furnish
to any Holder forthwith upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144,
(ii) a copy of the most recent annual or quarterly report of the Company as
filed with the Securities and Exchange Commission, and (iii) any other
reports and documents that a Holder may reasonably request in order to avail
itself of any rule or regulation of the Securities and Exchange Commission
allowing a Holder to sell any such Registrable Shares without
registration.
(g) Further
Obligations of the Company.
Whenever the Company is required hereunder to register Registrable Shares,
it
agrees that it shall also do the following:
(i) Furnish
to each selling Holder such copies of each preliminary and final prospectus
and
any other documents that such Holder may reasonably request to facilitate
the
public offering of its Registrable Shares;
(ii) Use
its
reasonable best efforts to register or qualify the Registrable Shares to
be
registered pursuant to this Agreement under the applicable securities or
“blue
sky” laws of such jurisdictions as any selling Holder may reasonably request;
provided, however, that the Company shall not be obligated to qualify to
do
business in any jurisdiction where it is not then so qualified or to take
any
action that would subject it to the service of process in suits other than
those
arising out of the offer or sale of the securities covered by the registration
statement in any jurisdiction where it is not then so subject;
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(iii) Notify
each Holder of Registrable Shares covered by such registration statement
at any
time when a prospectus relating thereto is required to be delivered under
the
Act of the happening of any event as a result of which the prospectus included
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 the
light
of the circumstances then existing;
(iv) Use
its
reasonable best efforts to cause all such Registrable Shares registered
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(v) Provide
a
transfer agent and registrar for all Registrable Shares registered pursuant
hereunder and a CUSIP number for all such Registrable Shares, in each case
not
later than the effective date of such registration;
(vi) In
the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
with
the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such
an
agreement;
(vii) Furnish,
at the request of any Holder requesting registration of Registrable Shares
pursuant to this Section 2, on the date that such Registrable Shares are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 2, if such securities are being sold through
underwriters:
(1) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given
to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Shares;
and
8
(2) “comfort”
letters signed by the Company’s independent public accountants who have examined
and reported on the Company’s financial statements included in the registration
statement, to the extent permitted by the standards of the American Institute
of
Certified Public Accountants, covering substantially the same matters with
respect to the registration statement (and the prospectus included therein)
and
(in the case of the accountants’ “comfort” letters) with respect to events
subsequent to the date of the financial statements, as are customarily covered
in opinions of issuer’s counsel and in accountants’ “comfort” letters delivered
to the underwriters in underwritten public offerings of securities, but only
if
and to the extent that the Company is required to deliver or cause the delivery
of such opinion or “comfort” letters to the underwriters in an underwritten
public offering of securities;
(viii) Permit
each selling Holder or his counsel or other representatives to inspect and
copy
such corporate documents and records as may reasonably be requested by them,
subject to appropriate confidentiality restrictions; and
(ix) Furnish
to each selling Holder, upon request, a copy of all documents filed and all
correspondence from or to the Securities and Exchange Commission in connection
with any such offering unless confidential treatment of such information
has
been requested of the Securities and Exchange Commission.
(h) Obligations
of the Holders.
In
connection with the registration of the Registrable Shares, the Holders shall
have the following obligations:
(i) It
shall
be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Shares
of a particular Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Shares held by it, and the
intended method of disposition of the Registrable Shares held by it, as shall
be
reasonably required to effect the registration of such Registrable Shares
and
shall execute such documents in connection with such registration as the
Company
may reasonably request. At least twenty (20) days prior to the first anticipated
filing date of the registration statement, the Company shall notify each
Holder
of the information the Company requires from each such Holder (the “Requested
Information”) if such Holder has any Registrable Shares included in the
registration statement. If at least two (2) business days prior to the filing
date the Company has not received the Requested Information from a Holder
(a
“Non-Responsive Holder”), then the Company may file the registration statement
without including Registrable Shares of such Non-Responsive Holder;
(ii) Each
Holder, by such Holder’s acceptance of the Registrable Shares, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the registration statement hereunder,
unless
such Holder has notified the Company in writing of such Holder’s election to
exclude all of such Holder’s Registrable Shares from the registration statement;
and
(iii) Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 2(g)(iii), above, such Holder
will immediately discontinue disposition of Registrable Shares pursuant to
the
registration statement covering such Registrable Shares until such Holder’s
receipt of copies of the supplemented or amended prospectus and, if so directed
by the Company, such Holder shall deliver to the Company (at the expense
of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Holder’s possession, of the prospectus covering such
Registrable Shares current at the time of receipt of such notice; provided
that
such Holder may retain one copy of each such prospectus for its
files.
(i) Expenses.
In the
case of a registration under Sections 2(a) or 2(b), the Company shall bear
all costs and expenses of each such registration, including, but not limited
to,
printing, legal and accounting expenses, Securities and Exchange Commission
filing fees and “blue sky” fees and expenses; provided, however, that the
Company shall have no obligation to pay or otherwise bear (i) any portion
of the fees or disbursements of more than one counsel for the Holders in
connection with the registration of their Registrable Shares, which in no
event
shall exceed a reasonable fee, (ii) any portion of the underwriter’s
commissions or discounts attributable to the Registrable Shares being offered
and sold by the Holders of Registrable Shares, or (iii) any of such
expenses if the payment of such expenses by the Company is prohibited by
the
laws of a state in which such offering is qualified and only to the extent
so
prohibited.
9
(j) Transfer
of Registration Rights.
The
registration rights of a Holder of Registrable Shares under this Agreement
may
be transferred as set forth below (provided (1) the transferee is bound by
the terms of this Agreement and (2) the Company is given written notice
prior to such transfer) to: (i) any partner or affiliate of a Holder;
(ii) in the case of an individual, any member of the immediate family of
such individual or to any trust for the benefit of the individual or any
such
family member or members; or (iii) any other transferee which receives the
lesser of (A) at least 50,000 Registrable Shares, or (B) all of the
Registrable Shares held by the Holder.
(k) No
Superior Rights.
The
Company hereby warrants and represents to Essel that there are no other
registration rights outstanding granted by the Company to any person or entity.
Furthermore, the Company will not grant registration rights to any person
or
entity that are superior to the rights granted hereunder without first obtaining
the prior written consent of the Holders of a majority of the Registrable
Shares. In the event that the Company grants rights superior to the rights
granted hereunder after obtaining such written consent, any superior rights
granted to other persons or entities shall apply to the Holders and shall
be
deemed to be incorporated into this Agreement. The Company may grant subordinate
and piggy-back registration rights to the rights granted hereunder without
any
such consent.
(l) Market
Stand-Off Agreement.
Provided that all Holders are treated equally and all officers and directors
of
the Company are also so bound, no Holder shall, to the extent requested by
any
managing underwriter of the Company, sell or otherwise transfer or dispose
of
(other than to donees who agree to be similarly bound) any Registrable Shares
during a period (the “Stand-Off Period”) (i) 180 days following the
effective date of a registration statement of the Company’s Initial Public
Offering filed under the Securities Act, and (ii) 120 days following the
effective date of a registration statement of any secondary offering of the
Company under the Securities Act, (or in each case such shorter period as
the
Company or managing underwriter may authorize), and except in each case,
for
securities sold as part of the offering covered by such registration statement
in accordance with the provisions of this Agreement. In order to enforce
the
foregoing covenant, the Company may impose stock transfer restrictions with
respect to the Registrable Shares of each Holder until the end of the Stand-Off
Period. Notwithstanding the foregoing, the obligations described in this
Section 2(l) shall not apply to a registration relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future, or a registration relating solely to an SEC Rule 145 transaction
on Form
S-4 or similar forms which may be promulgated in the future.
(m) Termination
of Registration Rights.
The
obligations of the Company to register any Holder’s Registrable Shares pursuant
to this Section 2 shall terminate five (5) years after the Company’s
Initial Public Offering with aggregate proceeds of at least $20 million at
a
public offering price of at least ten dollars per share or, with respect
to any
Holder, at such time as all of the Registrable Securities of such Holder
may be
sold within a three month period under Securities and Exchange Commission
Rule
144.
10
3. Assignability.
Subject
to the provisions of Section 2(j), this Agreement shall be binding upon and
inure to the benefit of the respective heirs, successors and assigns of the
parties hereto.
4. Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of California; provided, however, that if any California law or laws
require or permit the application of the laws of any other jurisdiction to
this
Agreement, such California law or laws shall be disregarded with the effect
that
the remaining laws of the State of California shall nonetheless
apply.
5. Amendment.
Any
modification, amendment, or waiver of this Agreement or any provision hereof,
either retroactively or prospectively, shall be in writing and executed by
the
Company and the Holders of not less than two-thirds (2/3’s) of the Registrable
Shares which shall be binding upon all of the parties hereto; provided however,
that no such modification, amendment or waiver shall reduce the aforesaid
percentage of Registrable Shares without the consent of the record or beneficial
holders of no less than seventy-five percent (75%) of the Registrable
Shares.
6. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
7. Notice.
Any
notice required or permitted to be given under this Agreement shall be in
writing and either shall be mailed by certified mail, postage prepaid, return
receipt requested, or sent by overnight courier service, or personally delivered
to a representative of the receiving party, or sent by telecopy. Notices
shall
mailed, sent, delivered, addressed as follows or to such other address as
a
party may designate by proper notice hereunder:
11
| If to any Holder: |
National Advisors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
|
| with a copy to: |
▇▇▇▇▇▇▇▇▇ Traurig LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
|
| If to the Company: |
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇▇ de Vilmorin
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
|
| with a copy to: |
Law Offices of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
|
| with a copy to: |
SteadyLaw Group LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇)-▇▇▇-▇▇▇▇
|
12
Any
communication so addressed and mailed shall be deemed to be given on the
earliest of (a) when actually delivered, (b) on the first business day
after deposit with an overnight courier service, or (c) on the third
business day after deposit in the United States mail, postage prepaid, in
each
case to the address of the intended addressee, and any communication so
delivered in person shall be deemed to be given when receipted for by, or
actually received by, Essel or the Company, as the case may be. If given
by
telecopy, a notice shall be deemed given and received when the telecopy is
transmitted to the party’s telecopy number and confirmation of complete receipt
is received by the transmitting party during normal business hours or on
the
next business day if not confirmed during normal business hours. Any party
may
designate a change of address by written notice to the other by giving at
least
ten (10) days prior written notice of such change of address.
8. Severability.
In
case
any provision of this Agreement shall be invalid, illegal, or unenforceable,
it
shall, to the extent practicable, be modified so as to make it valid, legal
and
enforceable and to retain as nearly as practicable the intent of the parties;
and the validity, legality, and enforceability of the remaining provisions
shall
not in any way be affected or impaired thereby.
9. Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of the parties
with
respect to the matters contemplated herein. This Agreement supersedes any
and
all prior agreements and understandings between the parties as to the subject
matter of this Agreement. Accordingly, this Agreement may not be contradicted
by
evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
10. Headings.
The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect any of the terms hereof.
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
|
“COMPANY”
By:
Its:
|
|
|
“NATIONAL”
NATIONAL
ADVISORS, INC.
By:
Its:
|
|
|
▇▇▇
▇. ▇▇▇▇▇▇▇▇, as nominee
|