REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July 19, 2000 (the
"Agreement"), is made by and between ▇▇▇▇▇▇▇▇ LABORATORIES, INC., a Utah
corporation (the "Company") and BENCHMARK MERCHANT PARTNERS, LP, a limited
partnership (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)
17,000,000 "unregistered" and "restricted" pre-split shares of the Company's
$.001 par value common stock at an aggregate price of $300,000 (the "Common
Stock"). The securities purchased pursuant to the Securities Purchase
Agreement shall be referred to as the ?Purchaser Shares?.
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) "Registration Statement" means a registration statement or
registration statements of the Company filed under the Securities Act covering
the Purchaser Shares.
(ii) "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").
Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Securities Purchase Agreement.
2. Registration.
(a) Registration Statement. The Company shall prepare, and, as soon as
practicable, file with the Commission a Registration Statement or Registration
Statements (as necessary) on Form SB-2, covering the resale of all of the
Purchaser Shares. 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 Registration Statement prepared pursuant hereto shall
register for resale all of the Purchaser Shares. The Company shall use its
best efforts to have the Registration Statement declared effective within the
earliest to occur of: (i) 360 days following the date hereof; or (ii) if the
Commission elects not to conduct a review of the Registration Statement, the
date which is five business days after the date upon which either the Company
or its counsel is so notified, whether orally or in writing. 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 practicable
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;
(b) The Purchaser Shares issued to Purchaser may be deemed shares issued
while ▇▇▇▇▇▇▇▇ was a shell, shall be filed for registration on the appropriate
form within 210 days of the execution of this Agreement. ▇▇▇▇▇▇▇▇ anticipates
the registration statement shall become effective within 150 days of its
filing. The Company agrees to pay all costs of registration and pay a late
penalty of $500 per day to Purchaser for every day the registration process
exceeds the 360 day limit.
(c) 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 Purchaser Shares have been sold; (ii) the date on
which the Purchaser Shares (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 24 months following the date on which the
Registration Statement was declared effective (the "Registration Period").
3. Obligations of the Company. In connection with the registration of the
Purchaser Shares, the Company shall do each of the following:
(a) Prepare and file with the Commission the Registration Statement
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 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 Purchaser Shares covered by the Registration
Statement until such time as all of such Purchaser Shares 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, promptly after the Registration Statement
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 Purchaser Shares;
(c) Use all best efforts to (i) register and qualify the Purchaser
Shares 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; and (iii) take such other actions as
may be necessary to maintain such registrations and qualifications in effect
at all times during the Registration Period;
(d) As promptly as practicable after becoming aware of such event,
notify the 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 or omission, and
to deliver a number of copies of such supplement or amendment to the Purchaser
as the Purchaser may reasonably request;
(e) As promptly as practicable after becoming aware of such event,
notify the Purchaser who holds Purchaser Shares being sold (or, in the event
of an underwritten offering, the underwriters) of the issuance by the
Commission of 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;
(f) If the offering is underwritten, at the request of the Purchaser, to
furnish on the date that Purchaser Shares 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 Purchaser Shares 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
(g) Cooperate with the Purchaser to facilitate the timely preparation
and delivery of certificates for the Purchaser Shares to be offered pursuant
to the Registration Statement and to enable such certificates for the
Purchaser Shares to be in such denominations or amounts, as the case may be,
as the Purchaser may reasonably request, and registered in such names as the
Purchaser may request.
4. Obligations of the Purchaser. In connection with the registration of the
Purchaser Shares, 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 Purchaser Shares pursuant
to the Registration Statement.
(b) Furnish to the Company such information regarding itself, the
Purchaser Shares held by it, and the intended method of disposition of the
Purchaser Shares held by it, as shall be reasonably required to effect the
registration of such Purchaser Shares, and the Purchaser shall execute such
documents in connection with such registration as the Company may reasonably
request.
(c) The Purchaser, by its acceptance of the Purchaser Shares, 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(d) or
3(e) above, it will immediately discontinue disposition of its Purchaser
Shares pursuant to the Registration Statement covering such Purchaser Shares
until such copies of the supplemented or amended prospectus contemplated by
Section 3(d) or 3(e) 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, with respect
to each Registration Statement filed pursuant hereto, shall be borne by the
Company.
6. Indemnification. In the event any Purchaser Shares 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 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").
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 Purchaser Shares 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. 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 reparation of the Registration
Statement, subject to such limitations and conditions as are applicable to the
Indemnification provided by the Company in this Section 6.
(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.
(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.
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 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: (i) 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; (ii) no seller of Purchaser
Shares guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Purchaser Shares who was not guilty of such fraudulent misrepresentation
and (iii) contribution by any seller of Purchaser Shares shall be limited in
amount to the net proceeds received by such seller from the sale of such
Purchaser Shares. 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, for so long as the Purchaser is not eligible to use Rule
144(k) for the resale of the Purchaser Shares, 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 Purchaser
Shares, promptly upon request: (1) a written statement by the Company that it
has complied with the reporting requirements of the Securities Act and the
Exchange Act; (2) 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 (3)
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 Purchaser Shares pursuant to this Agreement shall be automatically
assigned by Purchaser to any transferee of all or any portion of the Purchaser
Shares 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 (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 Purchaser Shares
whenever such person or entity owns of record such Purchaser Shares. If the
Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Purchaser Shares, the
Company shall act upon the basis of the instructions, notice or election
received from the registered owner of such Purchaser Shares.
(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 10 days advance written notice to each of the other parties
hereto.
COMPANY: ▇▇▇▇▇▇▇▇ LABORATORIES, INC.
Attn: Mr. W. A. ▇▇▇▇▇▇, Jr.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PURCHASER: BENCHMARK MERCHANT PARTNERS, LP
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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 Utah. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
County of Utah or the state courts of the State of Utah sitting in the County
of Utah 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 to the benefit of and be binding upon the successors and assigns
of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
undersigned.
"Company"
▇▇▇▇▇▇▇▇ LABORATORIES, INC.
By/s/W.A. ▇▇▇▇▇▇, Jr.
W. A. ▇▇▇▇▇▇, Jr., President
"Purchaser"
BENCHMARK MERCHANT PARTNERS, LP
By:/s/▇▇▇▇▇ ▇▇▇▇▇▇