Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (this "Agreement") is made and entered
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into as of May 16, 2006, by and between Aventura Holdings, Inc., a Florida
corporation (referred to as "Aventura" or the "Company"), and ▇▇▇▇▇▇▇ Holdings,
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LLC, a Michigan limited liability company (referred to as "▇▇▇▇▇▇▇" or the
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"Investor"). All other capitalized terms not defined herein have the meaning
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given to them in the Securities Purchase Agreement of even date herewith.
R E C I T A L S
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A. Contemporaneously with the delivery of this Agreement, ▇▇▇▇▇▇▇, Ohio
Funding Group, Inc. ("Ohio Funding") and Aventura are closing the transactions
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contemplated by that certain Securities Purchase Agreement of even date
herewith, among such parties (the "Securities Purchase Agreement") and Aventura
is issuing and delivering a Class A Common Stock Purchase Warrant to ▇▇▇▇▇▇▇ of
even date herewith (the "Warrant"). In addition, pursuant to the Securities
Purchase Agreement, the Investor will receive two hundred million (200,000,000)
shares of common stock of Aventura (together with any Class A Common Stock
purchased pursuant to the Warrant, referred to as the "Aventura Stock").
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B. The Company and the undersigned parties hereto desire to enter
into this Agreement in order to document the rights and obligations set forth in
this Agreement.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. REGISTRATION RIGHTS.
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1.1 Definitions. For purposes of this Section 1:
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(a) Registration. The terms "register," "registered," and
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"registration" refer to a registration effected by preparing and filing a
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registration statement in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration or ordering of effectiveness of such
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registration statement.
(b) Registrable Securities. The term "Registrable Securities" means: (1)
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all the shares of Aventura Stock issued pursuant to the Securities Purchase
Agreement and all the shares of Common Stock of the Company issued or issuable
upon the exercise of the Warrant (the "Investor's Shares") and (2) any shares of
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Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
all such shares of Common Stock described in clause (1) of this subsection (b);
excluding in all cases, however, any Registrable Securities sold by a person in
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a transaction in which rights under this Section 1 are not assigned in
accordance with this Agreement or any Registrable Securities which are sold at
any time after a class of equities securities of the Company is publicly traded,
to the public without volume limitations pursuant to Rule 144 promulgated under
the Securities Act ("Excluded Shares"). Excluded Shares shall not constitute
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"Registrable Securities."
(c) Registrable Securities Then Outstanding. The number of shares of
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"Registrable Securities Then Outstanding" shall mean the number of shares of
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Common Stock which are Registrable Securities and which (1) are then issued and
outstanding or (2) are then issuable pursuant to the exercise or conversion of
then outstanding and then exercisable options, warrants or convertible
securities, including without limitation the Aventura Stock.
(d) Investor. For purposes of this Agreement, the term "Investor" means any
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person owning of record Registrable Securities or any assignee of record of such
Registrable Securities to whom rights under this Section 1 have been duly
assigned in accordance with this Agreement.
(e) SEC. The term "SEC" or "Commission" means the U.S. Securities and
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Exchange Commission.
1.2 Demand Registration.
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(a) Request byInvestor. If the Company shall receive at any time after
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the earlier of (i) May 16, 2006 or (ii) such period specified by the
underwriters as the "lock-up" period not to exceed one hundred eighty (180) days
after the effective date of the Company's Public Offering, a written request
from the Investor that the Company file a registration statement under the
Securities Act covering the registration of Registrable Securities pursuant to
this Section 1.2, then the Company shall as soon as practicable following
written notice of such request ("Request Notice") commence the registration
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under the Securities Act of all Registrable Securities which the Investor
requests to be registered and included in such registration, subject only to the
limitations of this Section 1.2.
(b) Underwriting. If the Investor intends to distribute the Registrable
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Securities covered by its request by means of an underwriting, then it shall so
advise the Company as a part of its request made pursuant to this Section 1.2.
The Investor proposing to distribute its securities through such underwriting
shall enter into an underwriting agreement in customary form with the managing
underwriter(s) selected for such underwriting by the Company. Notwithstanding
any other provision of this Section 1.2, if the underwriter(s) advise(s) the
Company in writing that the inclusion of all such securities required to be
included in such registration statement would have an adverse effect on the
price of such securities and thus require a limitation of the number of
securities to be underwritten then the Company shall so advise the Investor, and
the number of Registrable Securities that may be included in the underwriting
shall be reduced as required by the underwriter(s); provided, however, that the
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number of shares of Registrable Securities to be included in such underwriting
and registration shall not be reduced unless all other securities of the Company
are first entirely excluded from the underwriting and registration. Any
Registrable Securities excluded and withdrawn from such underwriting shall be
withdrawn from the registration. If the Investor disapproves of the terms of
the underwriting, it may elect to withdraw therefrom by written notice to the
Company no less than ten (10) days prior to the effective date of the
registration statement.
(c) Maximum Number of Demand Registrations. The Company is obligated to
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effect only two (2) such registrations pursuant to this Section 1.2.
(d) Expenses. Expenses incurred in connection with a registration pursuant
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to this Section 1.2 shall be borne by the Company as follows: all registration
and qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company (but excluding underwriters' discounts and commissions),
and fees and disbursements of one (1) counsel of up to twenty-five thousand
dollars ($25,000) selected by the Investor. Notwithstanding the foregoing, the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to this Section 1.2 if the registration request is
subsequently withdrawn at the request of the Investor, unless the Investor
agrees to forfeit its right to one (1) demand registration pursuant to this
Section 1.2; provided, further, however, that if at the time of such withdrawal,
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the Investor has learned of a material adverse change in the condition, business
or prospects of the Company not known to the Investor at the time of its request
for such registration, then the Investor shall not be required to pay any of
such expenses and shall retain its rights pursuant to this Section 1.2.
1.3 Piggyback Registrations. The Company shall notify the Investor in
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writing at least fifteen (15) days prior to filing any registration statement
under the Securities Act for purposes of effecting a public offering of
securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to any employee benefit plan or a
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corporate reorganization) and will afford the Investor an opportunity to include
in such registration statement all or any part of the Registrable Securities
then held by the Investor. The Investor shall, within ten (10) days after
delivery of the above-described notice from the Company, so notify the Company
in writing, and in such notice shall inform the Company of the number of
Registrable Securities the Investor wishes to include in such registration
statement. If the Investor decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the Company, the
Investor shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement(s) as may be
filed by the Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.
(a) Expenses. The Company shall bear all registration expenses
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incurred in connection with a registration pursuant to Section 1.3 (excluding
underwriters' and brokers' discounts and commissions), all federal and state
"Blue Sky" registration and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company and the fees and disbursements
of one counsel for the selling Investor which shall not exceed ten thousand
dollars ($10,000).
(b) Maximum Number of Piggyback Registrations. The Company is obligated to
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effect an unlimited number of such registrations pursuant to this Section 1.3.
1.4 Obligations of the Company. Whenever required to effect the
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registration of any Registrable Securities under this Agreement, the Company
shall keep the Investor advised in writing to the initiation of each
registration, qualification and compliance and as to the completion thereof and
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, in the case of any registration
pursuant to Section 1.2 other than a public offering, keep such registration
statement effective for up to ninety (90) days or until the distribution
described in the registration statement has been completed.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Investor such number of copies of the registration
statement, preliminary prospectus and final prospectus, and such other documents
as they may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them that are included in such registration.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions (not to exceed ten (10) such jurisdictions) as shall be reasonably
requested by the Investor, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) 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(s) of such offering.
(f) Notify the Investor at any time when a prospectus relating thereto is
required to be delivered under the Securities 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. Upon receipt of any such notice, the Investor agrees not to sell any
Registrable Securities pursuant to the registration statement until such time as
the Company has filed such amendments or supplements to such registration
statement as the Company believes are required to be filed to comply with the
provisions of the Securities Act, which the Company shall file promptly.
(g) Furnish, in the event of an underwritten public offering, at the
request of the Investor requesting registration of Registrable Securities, on
the date that such Registrable Securities are delivered to the underwriters for
sale, (i) a copy of an opinion, dated as of 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, and (ii) a copy of a "comfort" letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accounts to underwriters in an underwritten public offering, addressed to
the underwriters.
1.5 Furnish Information. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to Section 1 that the
Investor shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be required to timely effect the registration of their
Registrable Securities.
1.6 Delay of Registration. The Investor shall not have any right to obtain
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or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.7 Indemnification. In the event any Registrable Securities are included
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in a registration statement under Section 1:
(a) By the Company. To the fullest extent permitted by law, the
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Company will indemnify and hold harmless the Investor, and its officers and
directors and each person, if any, who controls the Investor within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses, claims, damages, liabilities or expenses
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(and actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, arising out of, or based upon any of the following
statements, omissions or violations (collectively a "Violation"):
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(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, or
(iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any federal or state securities law, or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any federal
or state securities law in connection with the offering covered by such
registration statement; and the Company shall reimburse the Investor, and its
officer or director or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
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that the indemnity agreement contained in this subsection 1.7(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company, nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises solely out of or is based
solely upon a Violation which occurs in reliance upon and in conformity with
information furnished to the Company by an instrument duly executed by the
Investor expressly for use in connection with such registration.
(b) Notice. Promptly after receipt by an indemnified party under this
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Section 1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
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have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if the indemnified party has been advised in writing
by counsel that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.7, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.7.
(c) Defect Eliminated in Final Prospectus. The foregoing indemnity
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agreements of the Company is subject to the condition that, insofar as they
relate to any Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
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indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was furnished to the person asserting the loss, liability,
claim or damage at or prior to the time such action is required by the
Securities Act.
(d) Survival. The obligations of the Company and Investor under this
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Section 1.7 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
1.8 Rule 144 Reporting. With a view to making available the benefits
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of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) So long as the Investor owns any Registrable Securities, to furnish to
the Investor forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
ninety (90) days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the Exchange Act (at any time after it has become
subject to the reporting requirements of the Exchange Act), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as the Investor may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Investor to sell
any such securities without registration (at any time after the Company has
become subject to the reporting requirements of the Exchange Act).
1.9 Termination of the Company's Obligations. The Company shall have
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no obligations pursuant to Section 1 with respect to: (i) any request or
requests for registration made by the Investor on a date more than five (5)
years after the Closing Date under the Securities Purchase Agreement; or (ii)
any Registrable Securities proposed to be sold by a Investor in a registration
pursuant to Section 1.2 or Section 1.3 if, in the reasonable opinion of counsel
to the Company experienced in securities laws and offerings, all such
Registrable Securities proposed to be sold by a Investor may be sold in a
three-month period without registration under the Securities Act pursuant to
Rule 144 under the Securities Act.
2. TRANSFERS, ASSIGNMENT AND AMENDMENT.
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2.1 Assignment. Notwithstanding anything herein to the contrary, the
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registration rights of the Investor under Section 1 may be assigned with prior
notice to the Company only in connection with a valid transfer of the
Registrable Securities as long as the transferee agrees to be bound by the
provisions of this Agreement. No party may be assigned any of the foregoing
rights unless the Company is given written notice by the assigning party at the
time of such assignment stating the name and address of the assignee and
identifying the securities of the Company as to which the rights in question are
being assigned, and any such assignee shall receive such assigned rights subject
to all the terms and conditions of this Agreement, including without limitation
the provisions of this Section.
2.2 Amendment of Rights; Additional Registration Rights. Any provision of
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this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investor.
Any amendment or waiver effected in accordance with this Section shall be
binding upon the Investor, each permitted successor or assignee of the Investor,
and the Company. No party shall be granted additional registration rights by
the Company unless approved by the written consent of the Company and the
Investor (and/or any of their permitted successors or assigns).
3. TRANSFEREES; LEGENDS ON CERTIFICATES.
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3.1 Effect on Transferees. Each and every transferee or assignee of
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any shares of capital stock of the Company from the Investor shall be bound by
and subject to the terms and conditions of this Agreement that are applicable to
such transferee's transferor or assignor, and the Company shall require, as a
condition precedent to the transfer of any shares of capital stock of the
Company subject to this Agreement, that the transferee agrees in writing to be
bound by, and subject to, all the terms and conditions of this Agreement.
3.2 Legend. The Investor agrees that all Company share certificates
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now or hereafter held by them that represent shares of capital stock of the
Company subject to this Agreement will be stamped or otherwise imprinted with a
legend to read as follows:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AGREEMENTS AND
RESTRICTIONS AS PROVIDED IN THE PROVISIONS OF AN REGISTRATION RIGHTS AGREEMENT,
A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE CORPORATION."
4. GENERAL PROVISIONS.
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4.1 Notices. Any notice, request or other communication required or
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permitted hereunder shall be in writing and shall be given as provided in the
Securities Purchase Agreement.
4.2 Entire Agreement; Amendment. This Agreement constitutes and
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contains the entire agreement and understanding of the parties with respect to
the subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties respecting the subject matter hereof. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived, either
generally or in a particular instance and either retroactively or prospectively,
only with the written consent of the Company and the Investor. Any amendment or
waiver effected in accordance with this Section 4.2 shall be binding upon each
person who is, or who becomes, a party to this Agreement or otherwise bound by
the provisions of this Agreement, and each future holder of securities subject
to this Agreement.
4.3 Governing Law. This Agreement shall be construed and enforced in
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accordance with the laws of the State of Florida excluding the conflicts of
laws.
4.4 Severability. If one or more provisions of this Agreement are held to
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be unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.
4.5 Third Parties. Nothing in this Agreement, express or implied, is
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intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
4.6 Successors and Assigns. Subject to the provisions of Section 2.1, the
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provisions of this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and permitted assigns of the parties hereto.
4.7 Captions. The captions to sections of this Agreement have been inserted
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for identification and reference purposes only and shall not be used to construe
or interpret this Agreement.
4.8 Costs and Attorneys' Fees. In the event that any action, suit or other
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proceeding is instituted concerning or arising out of this Agreement or any
transaction contemplated hereunder, the prevailing party shall recover all of
such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
4.9 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is
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a reference to a specific number of shares of Common Stock or preferred stock of
the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE COMPANY: THE INVESTOR:
AVENTURA HOLDINGS, INC. ▇▇▇▇▇▇▇ HOLDINGS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: President and CEO Its: Manager