Exhibit 99.3
FORM OF
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement, dated the ____ day of
______________, 2002, is made by and between THE SAGEMARK COMPANIES LTD., a New
York corporation with offices at 1285 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company") and _____________________, an individual
residing at ____________________ ____________________ (the "Holder").
W I T N E S S E T H :
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WHEREAS, the Company is offering in a private placement to accredited
investors (the "Private Placement") up to Three Hundred Thirty Three Thousand
Three Hundred Thirty-four (333,334) shares of the Company's common stock, $.01
par value per share (the "Common Stock"); and
WHEREAS, in connection with the Private Placement, the Holder entered
into a Subscription Agreement with the Company of even date herewith (the
"Subscription Agreement"), pursuant to which the Holder desires to purchase
certain of the aforementioned shares of Common Stock; and
WHEREAS, as an inducement for the Holder to purchase shares of Common
Stock from the Company in the Private Placement, the Company has agreed to
undertake to register any Registrable Shares (as defined herein) of the Holder
under the Securities Act of 1933, as amended (the "Securities Act"), in
accordance with and subject to the terms and conditions hereinafter set forth in
this Registration Rights Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned do hereby agree as follows:
1. Definitions. For the purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Commission" shall mean the United States
Securities and Exchange Commission.
(b) "Common Stock" shall mean the $.01 par value per
share common stock of the Company.
(c) "Other Holders" shall mean all those persons or
entities, other than the Holder, who or which purchased other shares of Common
Stock from the Company in the Private Placement.
(d) "Other Shares" shall mean all of the shares of
the Company's Common Stock purchased by investors in the Private Placement,
other than the Registrable Shares.
(e) "Registration Statement" shall mean any
Registration Statement prepared and filed by the Company with the Commission in
which the Holder has the right to include or cause the Company to include
Registrable Shares pursuant to the terms of this Agreement.
(f) "Registrable Shares" shall mean all shares of
Common Stock acquired by the Holder from the Company pursuant to the
Subscription Agreement and held by the Holder at the time any notice is given by
the Holder pursuant to Sections 2.1 or 2.3 hereof.
2. Registration Rights.
2.1. If the Company, at any time, proposes to register any
of its equity securities under the Securities Act (other than in connection with
a merger, consolidation, acquisition of stock or assets of another entity, or
pursuant to Form ▇-▇, ▇▇▇▇ ▇-▇ or any subsequent similar or comparable form of
Registration Statement), for the account of any officer, director or owner of
five percent (5%) or more of the Company's issued and outstanding shares of
Common Stock, the Company shall give prompt notice to the Holder of its
intention to effect such registration and of such Holder's rights to include all
or a portion of the Registrable Shares in the Registration Statement relating
thereto (a "Registration Notice"). Upon any request of the Holder delivered to
the Company within ten (10) days after giving such Registration Notice, which
request shall specify the Registrable Shares intended to be disposed of by such
Holder and the intended method of disposition thereof, the Company shall include
such Registrable Shares held by the Holder in such Registration Statement;
provided, however, that:
(a) If the managing underwriter or underwriter in any
underwritten public offering shall advise the Company that it has determined not
to include all or any portion of the Registrable Shares requested by the Holder
to be included in such Registration Statement, then such Registrable Shares
shall be excluded from such Registration Statement; in case of an exclusion as
to only a portion of such Registrable Shares, all shares of Common Stock owned
by the Holder and the Other Holders for which registration has been requested
shall be allocated among the Holder and the Other Holders in accordance with the
provisions of subparagraph 2.1(b) below; and
(b) If securities proposed to be offered for sale
pursuant to any Registration Statement referred to in this Section 2.1 include
securities owned by Other Holders and the total number of securities to be
offered by the Holder and such Other Holders is required to be reduced pursuant
to a request from any managing underwriter or underwriter, the aggregate number
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of Registrable Shares to be included in such Registration Statement shall equal
the number of Registrable Shares which bears the same ratio to the maximum
number of securities that such managing underwriter or underwriter believes may
be included for the Holder and the Other Holders as the original number of
Registrable Shares proposed to be included therein by the Holder bears to the
total original number of securities proposed to be included therein by the
Holder and the Other Holders. In such event, the Company shall give the Holder
prompt notice of the number of Registrable Shares to be included in such
Registration Statement and the basis of the determination thereof.
2.2. Subject to the terms and provisions set forth in this
Section 2.2, the Holder shall have the right, commencing on the day following
the first anniversary of this Agreement, to cause the Company to prepare and
file a Registration Statement with the Commission with respect to all of the
Registrable Shares and to use its best efforts to cause such Registration
Statement to become and remain effective until all of the Registrable Shares are
sold or are legally capable of being publicly sold without registration under
the Securities Act. Should the Holder elect to exercise such right, the Holder
shall give notice of such election to the Company (a "Demand Registration
Notice") which shall specify the number of Registrable Shares intended to be
sold or otherwise transferred and the intended method of disposition thereof.
Within five (5) days of the receipt of a Demand Registration Notice, the Company
will (a) give notice of such election to the Other Holders (a "Notice to Other
Holders") offering such Other Holders the right to include their Other Shares in
such Registration Statement and requesting such Other Holders to notify the
Company, within five (5) days of the giving of such Notice to Other Holders, as
to whether they desire to have their Other Shares included in such Registration
Statement, or (b) within fifteen (15) days of the receipt of the Demand
Registration Notice, notify the Holder that the Company is not obligated to
prepare and file such Registration Statement, specifying the reason or reasons
for such determination.
2.3. Notwithstanding the provisions of Section 2.2 hereof,
if, in response to the Notice to Other Holders provided for in Section 2.2
above, Other Holders owning, in the aggregate, eighty (80%) percent or more of
the Other Shares do not elect to include their Other Shares in such Registration
Statement, the Company will have no obligation to prepare and file a
Registration Statement with respect to the Registrable Shares.
2.4. Notwithstanding any provision of this Section 2 to
the contrary:
(a) If, at any time after giving a Registration
Notice or receiving a Demand Registration Notice and prior to the effective date
of any Registration Statement filed by the Company with the Commission in
connection therewith, the Company shall determine not to register or to delay
the registration of such Registrable Shares, for any reason in its sole
discretion, the Company may give notice of such determination to the Holder and
thereupon shall be relieved of its obligation to register any Registrable Shares
in such Registration Statement; and in the case of a determination by the
Company to delay any such registration, the Company shall thereupon be permitted
to delay registering any of such Registrable Shares for the same period as the
delay in respect of the securities being registered thereunder; and
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(b) The Company will have no obligation to prepare
and file a Registration Statement with respect to the Registrable Shares if, at
the time a Registration Notice would be required to be given or a Demand
Registration Notice is received, the Holder has the legal right to publicly sell
such shares without registration under the Securities Act, pursuant to Rule
144(k) promulgated under the Securities Act or otherwise; and
(c) In no event shall the Company be required to
include any Registrable Shares in any registration statement filed or to be
filed by it in connection with a merger, consolidation, acquisition of stock or
assets of another entity, or pursuant to Form ▇-▇, ▇▇▇▇ ▇-▇ or any subsequent or
similar form of registration statement.
2.5. The Company's obligations pursuant to this Section 2
shall be subject to and conditioned upon the Holder providing the Company in a
timely manner with such information which the Company or any managing
underwriter or underwriter may request in connection with the Registration
Statement, including, but not limited to, information concerning the Holder, any
underwriter or broker-dealer engaged by the Holder, the proposed manner of
distribution of the Registrable Shares and any information requested by the
Commission.
2.6. As a condition to the registration rights granted to
the Holder under this Agreement, the Holder hereby agrees to cooperate with the
Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Shares.
2.7. The Company shall bear the entire cost and expense of
any registration of Registrable Shares pursuant to this Section 2, including,
without limitation, printing expenses, fees and disbursements of Company counsel
and accounting and audit fees and costs; provided, that the Holder shall bear
the fees of his, her or its own counsel and accountants, all registration and
filing fees (both Federal and state), and all transfer taxes and all
underwriting discounts or commissions applicable to the Registrable Shares sold
by him, her or it pursuant thereto.
3. Registration Procedures. In connection with the registration
of any of the Registrable Shares in accordance with the terms of this Agreement,
the Company shall (except as otherwise provided in this Agreement), as
expeditiously as possible:
3.1. Prepare and file a Registration Statement with the
Commission and use its best efforts to cause such Registration Statement to
become effective and remain effective until all of the Registrable Shares are
sold or become legally capable of being publicly sold without registration under
the Securities Act.
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3.2. Prepare and file with the Commission such amendments
and supplements to such Registration Statement and any prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all Registrable Shares covered by such
Registration Statement whenever the Holder shall desire to sell or otherwise
dispose of the Registrable Shares (including prospectus supplements with respect
to the sale of Registrable Shares from time to time in connection with a
Registration Statement pursuant to Rule 415 of the Commission).
3.3. Furnish the Holder with such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus in conformity with the
requirements of the Securities Act, and such other documents as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares.
3.4. Use its best efforts to register and qualify the
Registrable Shares covered by any such Registration Statement under such other
securities or "Blue Sky" laws of such jurisdictions as the Holder shall
reasonably request and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Holder to consummate the public
sale or other disposition of the Registrable Shares in such jurisdictions,
except that the Company shall not, for any such purpose, be required to qualify
to do business as a foreign corporation in any jurisdiction wherein it is not so
qualified or to file therein any general consent to service of process.
3.5. Enter into and perform its obligations under any
underwriting agreement, if the offering to which a Registration Statement is
filed hereunder is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriter of any such underwritten offering.
3.6. Notify the Holder, at any time when a prospectus
relating to any such Registration Statement is required to be delivered under
the Securities Act, of the happening of any event of which the Company has
knowledge, as a result of which such prospectus, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing.
3.7. Take such other actions as shall be reasonably
requested by the Holder to facilitate the registration and sale of the
Registrable Shares, provided, however, that the Company shall not be obligated
to take any actions not specifically required elsewhere herein which, in the
aggregate, would cost the Company in excess of $5,000.
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4. Indemnification.
4.1. The Company shall indemnify and hold harmless the
Holder and each affiliate, officer, director, shareholder, and partner of such
Holder, any underwriter or broker-dealer (as defined in the Securities Act), who
may purchase from or sell any Registrable Shares for the Holder, and each
person, if any, who controls such Holder or underwriter or broker-dealer (within
the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended) from and against any and all losses, claims, damages, liabilities,
costs and expenses (including attorneys' fees) (the "Losses") caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or any prospectus included therein or any related
application or other filing under any state securities law or by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading to which the Holder
or any of such persons may become subject under the Securities Act, the
Securities Exchange Act of 1934, as amended, or other Federal or state laws,
rules or regulations, at common law or otherwise, except insofar as such Losses
are caused by any such untrue statement or alleged untrue statement or omission
or alleged omission which is based upon information furnished or required to be
furnished to the Company by the Holder or any of such persons or entities
expressly for use in any Registration Statement.
4.2. The Holder shall indemnify and hold harmless the
Company, its directors, each officer signing a Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, the Company's counsel, any managing underwriter or underwriter (and each
person who controls the managing underwriter or the underwriter within the
meaning of the Securities Act), and each other person, whose securities are
being offered or sold pursuant to such Registration Statement, from and against
any and all Losses caused by any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or any prospectus
required to be filed or furnished in connection therewith, or any related
application or other filing under any state securities law or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading to
which the Company, or any of such persons may become subject under the
Securities Act, the Securities Exchange Act of 1934, as amended, or other
Federal or state laws, rules or regulations, at common law or otherwise, insofar
as such Losses are caused by any untrue statement or alleged untrue statement or
omission or alleged omission which is based upon information furnished to the
Company by the Holder expressly for use in any Registration Statement.
4.3. If any action or claim shall be brought or asserted
by a person or entity entitled to indemnification pursuant to subparagraphs 4.1
or 4.2 of this Agreement (an "Indemnified Party") against any person or entity
who or which is responsible to provide indemnification thereunder (an
"Indemnifying Party"), the Indemnified Party shall promptly notify the
Indemnifying Party in writing, of all of the particulars with respect thereto,
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and the Indemnifying Party shall assume the defense of any action or proceeding
relating thereto, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all legal and other expenses of such
defense. The failure of the Indemnified Party to so notify the Indemnifying
Party will not relieve the Indemnifying Party of any liability for
indemnification which it may have to the Indemnified Party hereunder, unless
such failure materially prejudices the rights of the Indemnifying Party. The
Indemnified Party shall have the right to employ separate counsel in any action
or proceeding relating to a claim for indemnification hereunder and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be borne by the Indemnified Party unless (a) the employment thereof has
been specifically authorized by the Indemnifying Party, in writing, or (b) the
Indemnifying Party has failed to assume the defense and employ counsel as
provided herein, or (c) the named parties to any such action or proceeding
(including any impleaded parties) include both an Indemnified Party and an
Indemnifying Party, and in the judgment of the counsel for the Indemnifying
Party, it is advisable for the Indemnified Party or controlling person to be
represented by separate counsel (in which case the Indemnifying Party shall not
have the right to assume the defense of such action or proceeding on behalf of
the Indemnified Party or such controlling person), it being understood, however,
that the Indemnifying Party shall, in connection with any one such action or
separate but substantially similar or related actions arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys at any time in each jurisdiction
for all indemnified parties (including the Holder and the Other Holders and
whether pursuant to this Agreement or any other agreements granting registration
rights), which firm shall be designated in writing by all such indemnified
parties. The Indemnifying Party shall not be liable for any settlement of any
such action or proceeding which is effected by an Indemnified Party without the
written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld), but if settled with such written consent, or if there be
a final judgment or decree for the plaintiff in any such action or proceeding by
a court of competent jurisdiction and the time to appeal shall have expired or
the last appeal shall have been denied, the Indemnifying Party agrees to
indemnify and hold harmless the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment.
4.4. If the indemnification provided for in this Agreement
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any Loss, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Loss 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 hand, in
connection with the matters which resulted in such Loss, as well as any other
relevant equitable considerations. The relevant fault of the Indemnifying Party
and 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, or alleged omission to state a material fact relates to information
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supplied by the Indemnifying Party or by the Indemnified Party and the party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statements or omissions. Notwithstanding the foregoing, the amount
that the Holder shall be obligated to contribute pursuant to this Agreement
shall be limited to an amount equal to the proceeds received by the Holder from
the Registrable Shares sold pursuant to the Registration Statement which gives
rise to such obligation to contribute (less the aggregate amount of any damages
which the Holder has otherwise been required to pay in respect of such Loss).
4.5. The indemnification provided for by this Section 4
shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Shares by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
5. Assignment of Rights. The rights of the Holder to request the
Company to register Registrable Shares pursuant to this Agreement may not be
assigned by the Holder other than by Will or pursuant to the laws of intestate
succession; provided that, in the event of the death of the Holder, such
registration rights may be exercised by the Holder's legal representative.
6. Miscellaneous.
6.1. Sole and Entire Agreement. This Agreement represents
the sole and entire agreement and understanding of the Company and the Holder
with respect to the subject matter hereof and may not be modified or amended
except by an instrument in writing signed by the party to be bound thereby.
6.2. Governing Law. This Agreement and the respective
rights and obligations of the Company and the Holder hereunder shall be governed
by and construed in accordance with the laws of the State of New York with
respect to contracts made and to be fully performed therein and without regard
to the principles of conflicts of laws thereof.
6.3. Binding Effect. This Agreement shall be binding upon
the Company and its successors and permitted assigns and shall inure to the
benefit of the Holder and its successors and assigns, heirs and legal
representatives. The Company shall not have the right to assign this Agreement,
or any of its obligations hereunder, without the written consent of the Holder.
6.4. Severability. If any provision of this Agreement is
held to be invalid or unenforceable by a court of competent jurisdiction, the
other provisions of this Agreement shall remain in full force and effect and
shall be unaffected thereby.
6.5. No Waiver by Holder. The Holder shall not be deemed,
by any act of omission sor commission, to have waived any of his, her or its
rights or remedies hereunder unless such waiver is in writing and signed by the
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Holder, and then only to the extent specifically set forth in any such writing.
A waiver of one event shall not be construed as continuing or constitute a bar
to or waiver of any right or remedy with respect to a subsequent event.
6.6. Further Assurances. The parties hereto hereby agree
that, at any time and from time to time after the date hereof, upon the
reasonable request of the other party hereto, they shall do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, such further acts, deeds, assignments, transfers, conveyances, and
assurances as may be reasonably required to more effectively consummate this
Agreement and the transactions contemplated thereby or to confirm or otherwise
effectuate the provisions of this Agreement.
6.7. Notices. All notices, consents, requests, demands and
other communications required or permitted to be given under this Agreement (the
"Notices") shall be in writing and delivered personally, receipt acknowledged,
or mailed by registered or certified mail, postage prepaid, return receipt
requested, addressed to the parties hereto at their respective addresses set
forth on the first page of this Agreement (or to such other address as either of
the parties hereto shall specify by notice given in accordance with this
provision). All such Notices shall be deemed given when personally delivered, as
aforesaid, or, if mailed as aforesaid, on the third business day after the
mailing thereof or on the day actually received, if earlier, except for a notice
of a change of address which shall be effective only upon receipt. Copies of all
Notices to the Company shall be sent to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
6.8. Inconsistencies. To the extent that there is any
inconsistency between the provisions of this Agreement and the provisions of the
Subscription Agreements, the provisions of this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be signed and dated the day and year above
written.
THE SAGEMARK COMPANIES LTD.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and
Chief Executive Officer
AGREED TO AND ACCEPTED
THIS __ DAY OF __________, 2002
___________________________________
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Print Name
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