EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October 26, 1999 (this
"Agreement"), is made by and between INTELLIQUIS INTERNATIONAL, INC., a Nevada
corporation (the "Company") and ROBI Investors LLC, a Delaware limited liability
company (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of the
date hereof among the Purchaser and the Company (the "Securities Purchase
Agreement"), the Company has agreed to issue and sell to the Purchaser, (i) two
thousand (2,000) shares (the "Initial Shares") of the Company's 6% Convertible
Series A Preferred Stock, stated value $1,000 per share (the "Preferred Stock"),
(ii) a warrant (the "Initial Warrant") to purchase one hundred thousand
(100,000) shares of the common stock par value $.001 per share of the Company
(the "Common Stock") and (iii) a Conditional Warrant to purchase up to an
additional three thousand (3,000) shares of Preferred Stock (the "Additional
Shares" and together with the Initial Shares, collectively, the "Preferred
Shares") and warrants to purchase up to one hundred fifty thousand (150,000)
shares of Common Stock (the "Additional Warrant" and together with the Initial
Warrant, collectively, the "Warrants");
WHEREAS, pursuant to the terms of the Preferred Shares and the
Warrants, (i) upon the conversion of the Preferred Shares, (ii) in lieu of
dividend payments on the Preferred Shares and (iii) upon exercise of the
Warrants, the Company will issue to the Purchaser shares of Common Stock (such
shares are referred to herein as the "Shares"); and
WHEREAS, to induce the Purchaser to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms
shall have the following meanings:
(i) "Effectiveness Deadline" shall have the meaning
set forth in section 2(a)(i) hereof.
(ii) "Filing Deadline" shall have the meaning set
forth in Section 2(a)(i) hereof.
(iii) "Initial Registration Statement" means a
registration statement or registration statements of the Company filed under the
Securities Act covering Registrable Securities relating to the Initial Shares
and the Additional Shares and, if applicable, the Series A Preferred Stock.
(iv) "Purchase Price" means the aggregate purchase
price paid by the Purchaser for the Initial Shares, the Additional Shares, the
Conditional Warrant and the Warrants.
(v) "Register," "Registered," and "Registration"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or ordering
of effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "Commission").
(vi) "Registrable Securities" means the Shares and
the Warrants.
(vii) "Registration Statement" means the Initial
Registration Statement and the Warrant Registration Statement.
(viii) "Warrant Registration Statement" means a
registration statement or registration statements of the Company filed under the
Securities Act covering Registrable Securities relating to the Warrants.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings set-forth in the Securities Purchase Agreement.
2. Registration.
a. Mandatory Registrations.
(i) Initial Registration Statement. The Company shall prepare, and, as soon as
practicable but in no event later than thirty (30) days after the Initial
Closing Date (as defined in the Securities Purchase Agreement) (the "Filing
Deadline"), file with the Commission an Initial Registration Statement or
Initial Registration Statements (as necessary) on Form SB-2, covering the resale
of all of the Registrable Securities. In the event that Form SB-2 is unavailable
for such a registration, the Company shall use such other form as is available
for such a registration. Any Initial Registration Statement prepared pursuant
hereto shall register for resale at least that number of shares of Common Stock
equal to the product of (x) two and, (y) the sum of (i) the maximum number of
Shares that are issuable upon conversion of the Initial Shares and the
Additional Shares on the date of filing, and (ii) the maximum number of Shares
issuable upon exercise of the Warrants, in each case, without regard to any
limitation on any holder's ability to convert any of the Warrants or the
Preferred Shares and without regard to whether any or all of such Preferred
Shares or Warrants have been issued to Purchaser (on the date calculated, the
"Minimum Conversion Amount"). Such Registration Statement shall state that, in
accordance with Rule 416 under the Securities Act, it also covers such
indeterminate number of additional Shares as may become issuable upon conversion
of such Preferred Shares or exercise of such
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Warrants (i) resulting from any adjustment in the applicable Conversion Price of
such Preferred Shares or the Exercise Price of such Warrants or (ii) to prevent
dilution resulting from stock splits or stock dividends. If at any time the
Minimum Conversion Amount exceeds the total number of Shares so registered, the
Company shall, within five (5) business days after receipt of a written notice
from the Purchaser, either (i) amend the Registration Statement or Registration
Statements filed by the Company pursuant to the preceding sentence, if such
Registration Statement has not been declared effective by the Commission at that
time, to register all of the Shares into which the Initial Shares, the
Additional Shares and the Warrants may be converted or exercised, as applicable,
or (ii) if such Registration Statement has been declared effective by the
Commission at that time, file with the Commission an additional Registration
Statement on Form SB-2, or such other appropriate form, to register the number
of shares of Common Stock into which the Initial Shares, Additional Shares, and
Warrants may be converted or exercised, as applicable, that exceed the number of
Shares already registered. The Company shall use its best efforts to have the
Initial Registration Statement declared effective within the earliest to occur
of (i) ninety (90) days following the Initial Closing Date(ii) if the Commission
elects not to conduct a review of the Initial Registration Statement, the date
which is three (3) business days after the date upon which either the Company or
its counsel is so notified, whether orally or in writing; or (iii) if the
Initial Registration Statement is reviewed by the Commission, the date which is
three (3) business days after the date upon which the Company or its counsel is
notified by the Commission, whether orally or in writing, that the Commission
has no further comments with respect to the Initial Registration Statement or
that the Initial Registration Statement may be declared effective. The earliest
of such dates is referred to herein as the "Required Effective Date."
Notwithstanding the use of the terms "Required Filing Date" and "Required
Effective Date" herein, the Company shall at all times use its best efforts to
file each required Registration Statement or amendment to a Registration
Statement as soon as possible after the Closing Date or after the date the
Company becomes obligated to file such Registration Statement or amendment, as
the case may be, and to cause each such Registration Statement or amendment to
become effective as soon as possible thereafter. No securities of the Company
other than the Registrable Securities shall be included in any such Registration
Statement.
(ii) The Company shall keep each Registration
Statement effective pursuant to Rule 415 at all times until such date as is the
earlier of (i) the date on which all of the Registrable Securities have been
sold, (ii) the date on which the Registrable Securities (in the opinion of
counsel to the Purchaser) may be immediately sold without restriction (including
without limitation as to volume by each holder thereof) without registration
under the Securities Act and (iii) the date which is twenty four (24) months
following the date on which the Registration Statement was declared effective
(the "Registration Period").
(b) Payments by the Company.
(i) (A) If the Registration Statement covering the
Registrable Securities is not filed in proper form with the Commission on or
prior to the Filing Deadline, (B) if the Registration Statement covering the
Registrable Securities is not effective on or prior to the Effectiveness
Deadline, (C) if the number of Shares listed for trading on the OTC Bulletin
Board or the NASDAQ SmallCap Stock Market, as applicable, or reserved by the
Company for issuance shall be insufficient, for any period of five (5)
consecutive days at any time after the Effectiveness Deadline, for issuance upon
the conversion of the Initial Shares, the Additional
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Shares and the exercise of the Warrants, or (D) upon the occurrence of a
Blackout Event (as described in Section 3(f) or Section 3(g) below), for any
period of five (5) consecutive days at any time after the Effectiveness Deadline
(each of the events described in clauses (A) through (D) of this paragraph are
referred to herein as a "Registration Default"), the Company will make payments
to the Purchaser in such amounts and at such times as shall be determined
pursuant to this Section 2(b).
(ii) The amount (the "Periodic Amount") to be paid
by the Company to the Purchaser as of each thirty (30) day period during which a
Registration Default shall be in effect (each such period, a "Default Period")
shall be equal to (x) with respect to the Default Period which begins ninety
(90) days after the Initial Closing Date and ends one hundred and twenty (120)
days after the Initial Closing Date, one percent (1%) of the Purchase Price paid
by the Purchaser and (y) thereafter, two percent (2%) of the Purchase Price;
provided that, with respect to any Default Period during which the relevant
Registration Defaults shall have been cured, the Periodic Amount shall be pro
rated for the number of days during such period during which the Registration
Defaults were pending; and provided, however, that the payment of such Periodic
Amounts shall not relieve the Company from its continuing obligations to
register the Warrants and Shares pursuant to Section 2(a).
(iii) Each Periodic Amount shall be payable by the
Company in cash or other immediately available funds to the Purchaser monthly,
without demand therefor by the Purchaser.
(iv) The parties acknowledge that the damages which
may be incurred by the Purchaser if the Registration Statement is not filed by
the Filing Deadline, if the Registration Statement has not been declared
effective by the Effectiveness Deadline, or if the provisions of Section 3(e) or
3(f) become applicable, may be difficult to ascertain. The parties agree that
the Periodic Amount represents a reasonable estimate on the part of the parties,
as of the date of this Agreement, of the amount of such damages.
(c) Piggyback Registration. (i) If at any time or from time to
time, the Company shall determine to register any of its securities, for its own
account or the account of any of its shareholders, other than a Registration
relating solely to employee share option plans or pursuant to an acquisition
transaction on Form S-4, the Company will:
(A) provide to the Purchaser written notice
thereof as soon as practicable prior to filing the Registration Statement; and
(B) include in such Registration Statement
and in any underwriting involved therein, all of the Registrable Securities
specified in a written request by the Purchaser made within fifteen (15) days
after receipt of such written notice from the Company.
(ii) If the Registration is for a registered public offering involving
an underwriting, the Company shall so advise the Purchaser as a part of the
written notice given pursuant to this Section. In such event, the rights of the
Purchaser hereunder shall include participation in such underwriting and the
inclusion of the Registrable Securities in the underwriting to the extent
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provided herein. To the extent that the Purchaser proposes to distribute its
securities through such underwriting, the Purchaser shall (together with the
Company and any other security holders of the Company distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Section, if the managing underwriter of such underwriting determines that
marketing factors require a limitation of the number of shares to be offered in
connection with such underwriting, the managing underwriter may limit the number
of Registrable Securities to be included in the Registration and underwriting
(provided, however, (a) the Registrable Securities shall not be excluded from
such underwritten offering prior to any securities held by officers and
directors of the Company or their affiliates, (b) the Registrable Securities
shall be entitled to at least the same priority in an underwritten offering as
any of the Company's existing security holders, and (c) the Company shall not
enter into any agreement that would provide any security holder with priority in
connection with an underwritten offering greater than the priority granted to
the Purchaser hereunder). The Company shall so advise any of its other security
holders who are distributing their securities through such underwriting pursuant
to their respective piggyback registration rights, and the number of shares of
Registrable Securities and other securities that may be included in the
registration and underwriting shall be allocated among the Purchaser and all
other security holders of the Company in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities held by the Purchaser and
such other security holders at the time of the filing of the registration
statement. If the Purchaser disapproves of the terms of any such underwriting,
it may elect to withdraw therefrom by written notice to the Company. Any
Registrable Securities so excluded or withdrawn from such underwriting shall be
withdrawn from such Registration.
(d) Timely Filing. The Company covenants that it shall file
all reports required to be filed by the Company with the Commission in a timely
manner.
(e) Priority in filing. From the date hereof until one hundred
eighty (180) days following the effective date of the Initial Registration
Statement pursuant to Section 2(a) of this Agreement, the Company shall not
permit the registration of any of its securities under the Securities Act to
become effective, other than those covered by this Agreement, without the prior
written approval of the Purchaser. The foregoing notwithstanding, the Company
may permit a registration statement to become effective during the foregoing
period provided that (i) such registration statement relates to a firm
commitment underwritten offering of the Company's securities that provides the
Company with at least ten million dollars ($10,000,000), or (ii) such
registration statement covers Common Stock of the Company which were sold
subsequent to the date of this Agreement at a price per share equal to the
market price of the Common Stock on the date of its purchase.
3 Obligations of the Company. In connection with the
registration of the Registrable Securities, the Company shall do each of the
following:
(a) Prepare and file with the Commission the Registration
Statements required by Section 2 of this Agreement and such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectuses used in connection with the Registration
Statement, each in such form as to which the Purchaser and its counsel shall not
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have objected, as may be necessary to keep the Registration effective at all
times during the Registration Period, and, during the Registration Period,
comply with the provisions of the Securities Act with respect to the disposition
of all of the Registrable Securities and all of the Warrants of the Company
covered by the Registration Statement until such time as all of such Registrable
Securities and all of such Warrants have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
the Registration Statement;
(b) Furnish to the Purchaser, if the Registrable Securities of
the Purchaser are included in the Registration Statement, and its legal counsel
identified to the Company, promptly after the same is prepared and publicly
distributed, filed with the Commission, or received by the Company, a copy of
the Registration Statement, each preliminary prospectus, each final prospectus,
and all amendments and supplements thereto and such other documents, as the
Purchaser may reasonably request in order to facilitate the disposition of its
Registrable Securities and Warrants;
(c) Furnish to the Purchaser and its counsel copies of any
correspondence between the Company and the Commission with respect to any
registration statement or amendment or supplement thereto filed pursuant to this
Agreement;
(d) Use all best efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Purchaser may
reasonably request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period and (iv) take all other actions necessary
or advisable to qualify the Registrable Securities for sale in such
jurisdictions, provided that in connection therewith, the Company shall not be
required to qualify as a foreign corporation or to file a general consent to the
service of process in any jurisdiction;
(e) List such securities on the OTC Bulletin Board and all the
other national securities exchanges on which any securities of the Company are
then listed, and file any filings required by the OTC Bulletin Board and/or such
other exchanges.
(f) As promptly as practicable after becoming aware of such
event, notify each Purchaser of the occurrence of any event of which the Company
has knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and to use its best efforts to promptly prepare a
supplement or amendment to the Registration Statement or other appropriate
filing with the Commission to correct such untrue statement of omission, and to
deliver a number of copies of such supplement or amendment to the Purchaser as
the Purchaser may reasonably request;
(g) As promptly as practicable after becoming aware of such
event, notify the Purchaser who holds Warrants or Registrable Securities being
sold (or, in the event of an
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underwritten offering, the underwriters) of the issuance by the Commission or
any stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time, and to use its best efforts to promptly
obtain the withdrawal of such stop order or other suspension of effectiveness;
(h) As promptly as practicable after becoming aware of such
event, notify the Purchaser who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission or any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time, and
to use its best efforts to promptly obtain the withdrawal of such stop order or
other suspension of effectiveness (the occurrence of any of the events described
in paragraphs (f) and (g) of this Section 3 is referred to herein as a "Blackout
Event");
(i) During the period commencing upon (i) the Purchaser's
receipt of a notification pursuant to Section 3(f) above, or (ii) the entry of a
stop order or other suspension of effectiveness of the Registration Statement
described in Section 3(g) above, and ending at such time as (y) the Company
shall have completed the applicable filings (and if applicable, such filings
shall have been declared effective) and shall have delivered to the Purchaser
the documents required pursuant to Section 3(f) above, or (z), such stop order
or other suspension of the effectiveness of the Registration Statement shall
have been removed, the Company shall be liable to remit the payments required to
be paid pursuant to Section 2(b) above;
(j) If the offering is underwritten, at the request of a
Purchaser, to furnish on the date that Registrable Securities are delivered to
the underwriters for sale pursuant to such registration: (i) an opinion dated
such date of counsel representing the Company for the purposes of such
registration, addressed to the underwriters and to any Purchaser selling
Registrable Securities in connection with such underwriting, stating that such
registration statement has become effective under the Securities Act and that
(A) to the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Securities Act and (B)
the registration statement, the related prospectus and each amendment or
supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements or other financial data contained
therein) and (ii) a letter dated such date from the Company's independent public
accountants addressed to the underwriters and to the Purchaser, stating that
they are independent public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five (5) business days prior to the date of
such letter) with respect to such registration as such underwriters may
reasonably request; and
(k) Cooperate with the Purchaser to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and to enable such certificates
for the Registrable Securities to be in such denominations or amounts, as the
case may be, as the Purchaser may reasonably request, and
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registered in such names as the Purchaser may request; and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the Commission, the Company shall deliver,
and shall cause legal counsel selected by the Company to deliver, to the
transfer agent for the Registrable Securities (with copies to the Purchaser) an
appropriate instruction and opinion of such counsel.
4. Obligations of the Purchaser. In connection with the
registration of the Registrable Securities, the Purchaser shall have the
following obligations:
(a) Take all other reasonable actions necessary to expedite
and facilitate the disposition by the Purchaser of the Warrants and the
Registrable Securities pursuant to the Registration Statement.
(b) Furnish to the Company such information regarding itself,
the Warrants and Registrable Securities held by it, and the intended method of
disposition of the Warrants and the Registrable Securities held by it, as shall
be reasonably required to effect the registration of such Warrants and such
Registrable Securities, and the Purchaser shall execute such documents in
connection with such registration as the Company may reasonably request. At
least five (5) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify the Purchaser of the
information the Company included in the Registration Statement.
(c) The Purchaser, by its acceptance of the Warrants or
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder.
(d) The Purchaser agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(f)
or 3(g) above, it will immediately discontinue disposition of its Warrants or
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such copies of the supplemented or amended
prospectus contemplated by Section 3(f) or 3(g) shall be furnished to the
Purchaser.
5. Expenses of Registration. All expenses, other than
underwriting discounts and commissions and other fees and expenses of investment
bankers and other than brokerage commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and qualification fees, printing
and accounting fees, and the fees and disbursements of counsel for the Company,
and the fees of one counsel to the Purchaser with respect to each Registration
Statement filed pursuant hereto, shall be borne by the Company.
6. Indemnification. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) The Company will indemnify and hold harmless the
Purchaser, each of its officers, directors, shareholders and members, and each
person, if any, who controls the Purchaser within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Person"), against any losses,
claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the
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Exchange Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereof
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the
Commission) or the omission to state therein any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state or
foreign securities law or any rule or regulation under the Securities Act, the
Exchange Act or any state or foreign securities law (the matters in foregoing
clauses (i) through (iii) being, collectively, "Violations"). The Company shall,
subject to the provisions of Section 6(b) below, reimburse the Purchaser,
promptly as such expenses are incurred and are due and payable, for any legal
and other costs, expenses and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise, including without limitation,
the costs, expenses and disbursements, as and when incurred, of investigating,
preparing or defending any such action, suit, proceeding or investigation
(whether or not in connection with litigation in which the Purchaser is a
party), incurred by it in connection with the investigation or defense of any
such Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) shall not (i) apply to
any Claim arising out of or based upon a modification which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) with respect to any preliminary prospectus, inure to
the benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the final prospectus, as then amended or supplemented, if such final
prospectus was timely made available by the Company pursuant to Section 3(b)
hereof; (iii) be available to the extent that such Claim is based upon a failure
of the Purchaser to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the
Company pursuant to Section 3(b) hereof; or (iv) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Purchaser pursuant to Section 9. The Purchaser
will indemnify the Company and its officers and directors against any Claims
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company, by or on behalf
of the Purchaser, expressly for use in connection with the preparation of the
Registration Statement, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company in this Section 6.
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(b) Promptly after receipt by an Indemnified Person under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and to the
extent that the indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person, provided, however, that an Indemnified Person shall have the right to
retain its own counsel with the reasonable fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding. In such event, the Company shall
pay for only one separate legal counsel for the Purchaser, and such legal
counsel shall be selected by the Purchaser. The failure to deliver written
notice to an indemnifying party within a reasonable time after the commencement
of any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person under this Section 6, except to the extent that the
indemnifying party is materially prejudiced in its ability to such action. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
(c) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of an unconditional and irrevocable release from all
liability in respect of such claim or litigation.
(d) Notwithstanding the foregoing, to the extent that any
provisions relating to indemnification or contribution contained in the
underwriting agreements entered into among the Company, the underwriters and the
Purchaser in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in such underwriting agreements
shall be controlling as to the Registrable Securities included in the public
offering; provided, however, that if, as a result of this Section 6(d), the
Purchaser, its officers, directors, shareholders, members or any person
controlling the Purchaser is or are held liable with respect to any Claim for
which they would be entitled to indemnification hereunder but for this Section
6(d) in an amount which exceeds the aggregate proceeds received by the Purchaser
from the sale of Registrable Securities included in a registration pursuant to
such underwriting agreement (the "Excess Liability"), the Company shall
reimburse the Purchaser for such Excess Liability.
7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited under applicable law, the indemnifying party
agrees to contribute to the amount paid or payable by such indemnified party as
a result of such loss, claim, damage, liability or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and the Indemnified Person on the other hand in connection with the
statements or omissions which resulted in such Claim, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and the Indemnified
10
Person shall be determined by reference to, among other things, whether the
untrue statement of a material fact or the omission to state a material fact on
which such Claim is based relates to information supplied by the indemnifying
party or by the Indemnified Person, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. Notwithstanding the forgoing, (a) no contribution shall be made under
circumstances where the payor would not have been liable for indemnification
under the fault standards set forth in Section 6, (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net proceeds received by such seller from the
sale of such Registrable Securities. The Company and the Purchaser agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro-rata allocation (even if the Purchaser and any other party
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in this Section.
8. Reports Under Exchange Act.
With a view to making available to the Purchaser the benefits
of Rule 144 promulgated under the Securities Act or any other similar rule or
regulation of the Commission that may at any time permit the Purchaser to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to:
(i) make and keep public information available, as
those terms are understood and defined in Rule 144;
(ii) 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; and
(iii) furnish to the Purchaser so long as the
Purchaser owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or periodic report of the Company and such other reports and documents so filed
by the Company and (iii) such other information as may be reasonably requested
to permit the Purchaser to sell such securities pursuant to Rule 144 without
registration.
9. Assignment of the Registration Rights. The rights to have the
Company register Warrants or Registrable Securities pursuant to this Agreement
shall be automatically assigned by Purchaser to any transferee of all or any
portion of the Initial Shares, Additional Shares, Warrants or the underlying
Common Stock held by Purchaser if: (a) Purchaser 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; (b) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee and (ii) the Securities with respect to which such registration rights
are being transferred or assigned; (c) at or before the time the Company
receives the written notice contemplated by clause (b) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and
11
(d) the transfer of the relevant Securities complies with the restrictions set
forth in Section 4 of the Securities Purchase Agreement.
10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Purchaser.
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon Purchaser and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Warrants or
Registrable Securities whenever such person or entity owns of record such
Warrants or Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with
respect to the same Warrants or Registrable Securities, the Company shall act
upon the basis of the instructions, notice or election received from the
registered owner of such Warrants or Registrable Securities.
(b) Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be effective upon
personal delivery, via facsimile (upon receipt of confirmation of error-free
transmission and mailing a copy of such confirmation postage prepaid by
certified mail, return receipt requested) or two business days following deposit
of such notice with an internationally recognized courier service, with postage
prepaid and addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
(10) days advance written notice to each of the other parties hereto.
COMPANY: Intelliquis International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Law Office of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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PURCHASER: ROBI Investors LLC
WEC Asset Management LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, except for provisions with
respect to internal corporate matters of the Company which shall be governed by
the corporate laws of the State of Nevada. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such validity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. Subject to the provisions of Section 10 hereof, this
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(e) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure for the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
13
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(h) The Company acknowledges that any failure by the Company
to perform its obligations under Section 2(a), or any delay in such performance
could result in direct damages to the Purchaser, and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay. Nothing herein shall limit the Purchaser's right to
pursue any claim seeking such direct damages.
[REMAINDER OF PAGE INTENTIONALLY BLANK, SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
undersigned.
"COMPANY"
INTELLIQUIS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title:President
"PURCHASER"
ROBI INVESTORS LLC
By: WEC ASSET MANAGEMENT LLC, Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
15
October 26, 1999
ROBI Investors LLC
c\o WEC Asset Management LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Intelliquis International, Inc.
Dear Sirs:
This opinion is delivered to you pursuant to a Securities
Purchase Agreement (the "Purchase Agreement") dated as of October 25, 1999,
between ROBI Investors LLC, a Delaware limited liability company (the
"Purchaser") and Intelliquis International, Inc., a Nevada corporation (the
"Company"), in connection with the sale by the Company and purchase by the
Purchaser of the Company's Initial Shares, Initial Warrants and Conditional
Warrant (as such terms are defined in the Purchase Agreement). All capitalized
terms not otherwise defined herein shall have the meanings given them in the
Purchase Agreement.
We have examined and are familiar with the Certificate of
Incorporation and By-laws of the Company any and all amendments thereto. We have
also examined and are familiar with the Primary Agreements and any and all other
instruments executed and delivered by or on behalf of the Company in connection
with the Purchase Agreement and the transactions contemplated thereunder. In
addition to the foregoing, we have examined such minutes and other corporate
proceedings of the Company and such matters of law, documents and certificates
of public officials as we have deemed necessary in rendering our opinion. In all
such examinations, we have assumed the genuineness of all the signatures on
original documents and the conformity to original and certified documents of all
copies submitted to us as conformed or photostatic copies.
In rendering our opinions set forth below, we have relied upon
the representations made to us by the Company, through its officers and
directors, as well as the documents submitted to us by the Company. We have
assumed the legal capacity for all purposes relevant hereto of all natural
persons and, with respect to all parties to agreements or instruments relevant
hereto other than the Company, that such parties had the requisite power and
authority (corporate or otherwise) to execute, deliver and perform such
agreements or instruments, that such agreements or instruments have been duly
authorized by all requisite action (corporate or otherwise), executed and
delivered by such parties and that such agreements or instruments are the valid,
binding and enforceable obligations of such parties.
Based upon the foregoing, we are of the opinion that:
1. The Company and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada, and has all requisite corporate power and authority to own its
properties and to carry on its business as now being conducted and is duly
qualified and in good standing as a foreign corporation in, and is authorized to
do business under the laws of, each jurisdiction where the character of the
properties owned or leased by it or the transaction of its business makes such
qualification or authorization necessary and in which the failure to so qualify
would have a material adverse effect on the Company and its subsidiaries taken
as a whole.
2. The authorized and issued and outstanding capital stock of
the Company are as stated in Section 3(b) of the Purchase Agreement. All shares
of the outstanding capital stock of the Company have been validly issued and are
fully paid and non-assessable. To our knowledge, Schedule 3 (b) of the Purchase
Agreement accurately sets forth the information to be provided therein pursuant
to Section 3 (b) of the Purchase Agreement.
3. The issuance by the Company of the Initial Shares, Initial
Warrants and Conditional Warrant (collectively, the "Initial Securities"), the
Additional Shares and Additional Warrants (collectively, the "Additional
Securities") and the shares of Common Stock issuable upon conversion of, or in
lieu of dividend payments on, the Initial Shares and Additional Shares and
exercise of the Initial Warrants and Additional Warrants (collectively, the
"Shares") have been duly authorized and the Initial Securities have been validly
issued and the consideration to be paid therefor under the Purchase Agreement
has been fully paid. The Common Stock issuable upon conversion of, or in lieu of
dividend payments on, the Preferred Stock, and upon exercise of the Warrants,
when issued in accordance with the Primary Documents, shall be duly and validly
issued, fully paid and non-assessable, and will not subject the holder thereof
to personal liability by reason of being such a holder. There are no preemptive
rights of any stockholder of the Company to acquire any of the Initial
Securities, the Additional Securities or the Shares (collectively, the
"Collective Securities").
4. The Common Stock is registered under Section 12 of the
Securities Exchange Act of 1934, as amended. The Company has duly filed all
materials and documents required to be filed pursuant to all reporting
obligations under either Section 13(a) or 15(d) of the Exchange Act, if any,
through the date hereof (prior to the offer and sale of the Securities). The
Common Stock is quoted on the over-the-counter bulletin board, and to our
knowledge there is no pending or contemplated action or
2
proceeding of any kind to suspend the trading or terminate quotation of the
Common Stock.
5. The Company has the requisite corporate power and
authority to enter into the Purchase Agreement and to issue and deliver the
Collective Securities.
6. The Primary Documents and the transactions contemplated
thereby, have been duly and validly authorized by the Company and are legal,
valid and binding agreements of the Company, enforceable in accordance with
their respective terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and to general principles of equity. The Certificate
of Designation has been duly executed and filed by the Company with the
Secretary of State of the State of Nevada in accordance with the General
Corporation Law of the State of Nevada and has been accepted for filing with the
Secretary of State.
7. The execution and delivery of the Primary Documents and the
consummation by the Company of the other transactions contemplated thereby, does
not and will not conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under, the Certificate of
Incorporation or By-laws of the Company, or, to our knowledge, (i) any material
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which they or any of their
properties or assets are bound, or (ii) any existing applicable law, rule, or
regulation or any applicable decree, judgment or order of any court or United
States Federal or state regulatory body, administrative agency, or any other
governmental body having jurisdiction over the Company, its subsidiaries, or any
of their properties or assets. Except as set forth on Schedule 3(h) to the
Purchase Agreement, neither the filing of the registration statement required to
be filed by the Company pursuant to the Registration Rights Agreement nor the
offering or sale of the Collective Securities gives rise to any rights for or
relating to the registration of any shares of the Common Stock.
8. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the entry into or the performance of the Primary Documents by
the Company.
9. To our knowledge, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending or
threatened against or affecting the Company or any of its subsidiaries, in which
an unfavorable decision, ruling or finding would have a material adverse effect
on the properties, business, condition (financial or other) or results of
operations of the Company and its subsidiaries,
3
taken as a whole, or the transactions contemplated by the Primary Documents, or
which would adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, the Primary
Documents.
10. To our knowledge, neither the Company nor any of its
subsidiaries is in default in the performance or observance of any obligation,
covenant or condition contained in any material indenture, mortgage, deed of
trust or other instrument or agreement to which it is a party or by which it or
its property may be bound.
11. Subject to the accuracy of the Purchaser's representations
and warranties set forth in Section 2 of the Purchase Agreement, the offer, sale
and issuance of the Securities and the other securities as contemplated by the
Purchase Agreement are exempt from the registration requirements of the
Securities Act.
This opinion is rendered only with regard to the matters set out in the
numbered paragraphs above. No other opinions are intended nor should they be
inferred. This opinion is based solely upon the laws of the United States and
the State of Nevada, as currently in effect and does not include an
interpretation or statement concerning the laws of any other state or
jurisdiction.
The opinions expressed herein are given to you solely for your
use in connection with the transactions contemplated by the Agreements and may
not be relied upon by any other person or entity or for any other purpose
without our prior written consent.
Very truly yours
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
4
