REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 25 , 2001 (this
"AGREEMENT"), by and among ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Incorporated, a Nevada corporation
(the "COMPANY"), and the undersigned ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇ Self Employed Pension Plan and Trust (the "INVESTOR").
WHEREAS, pursuant to that certain Promissory Note dated as of January
25, 2001 (the "PROMISSORY NOTE"), by and among the Company and the Investor, the
Investor has agreed to acquire Three Hundred Seventy Five Thousand (375,000)
warrants to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "COMMON STOCK"), pursuant to the terms of the Promissory Note; and
WHEREAS, in connection with the Promissory Note, the Company has agreed
to register for sale by the Investor and certain transferees, the Common Stock
to be received by the Investor upon the exercise of the warrants pursuant to the
terms of the Promissory Note; and
WHEREAS, the parties hereto desire to enter into this Agreement to
evidence the foregoing agreement of the Company and the mutual covenants of the
parties relating thereto;
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the terms
and conditions set forth herein, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. Capitalized terms used herein that are
not otherwise defined shall have the meanings assigned to such terms in the
Promissory Note. In addition, in this Agreement the following terms shall have
the following respective meanings:
"AFFILIATE" means, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified.
"COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the relevant time.
"HOLDERS" shall mean (i) the Investor and (ii) each Person
holding Registrable Stock as a result of a transfer or assignment to that Person
of Registrable Stock permitted pursuant to Section 8 of this Agreement.
"INDEMNIFIED PARTY" has the meaning ascribed to it in Section
5(c) of this Agreement.
"INDEMNIFYING PARTY" has the meaning ascribed to it in Section
5(c) of this Agreement.
"PERSON" means an individual, corporation, partnership,
estate, trust, association, private foundation, joint stock company or other
entity.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
Registrable Stock in accordance with the method or methods of distribution
designated by the Holders, and the declaration or ordering of the effectiveness
of such registration statement by the Commission.
"REGISTRABLE STOCK" means the Common Stock to be received by
the Investor upon the exercise of the warrants pursuant to Section 6 of the
Promissory Note, except that as to any particular Registrable Stock, once issued
such securities shall cease to be Registrable Stock when (a) a registration
statement with respect to the sale of such securities becomes effective under
the Securities Act and such securities are disposed of in accordance with such
registration statement, (b) such securities are sold in accordance with Rule 144
(or any successor provision) under the Securities Act or (c) such Securities
become transferable within any consecutive 90-day period in accordance with Rule
144.
"RULE 144" means Rule 144 (or any successor provision)
promulgated by the Commission under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the relevant time.
Section 2. REQUIRED REGISTRATION. The Company shall use its reasonable
best efforts to prepare and file with the Commission, on or before March 25,
2001, a registration statement, which may be a post-effective amendment to an
existing registration statement of the Company, for the purpose of effecting a
Registration of the sale of the Registrable Stock issued by the Company pursuant
to Section 6 of the Promissory Note. The Company shall use its reasonable best
efforts to effect such Registration as soon as practicable (including, without
limitation, the execution of an undertaking to file post-effective amendments
and appropriate qualification under applicable state securities laws). The
Company shall use its reasonable best efforts to keep such Registrations
continuously effective until the earlier of (a) the second anniversary of the
date hereof, (b) the date on which all Registrable Stock have been sold pursuant
to such registration statement or Rule 144 and (c) the date on which all of the
Registrable Stock held by such Holder may be sold in any consecutive three month
period in accordance with Rule 144; PROVIDED, HOWEVER, that the Company shall
not be obligated to maintain the effectiveness of any Registration that is not
effected under Rule 415 for a period in excess of 90 days; PROVIDED, FURTHER,
that the Company shall not be obligated to take any action to effect any such
Registration, qualification or compliance pursuant to this Section 2 in any
particular jurisdiction
in which the Company would be required to (x) execute a general consent
to service of process in effecting such Registration, qualification or
compliance unless the Company is already subject to service in such
jurisdiction or (y) qualify as a foreign corporation in any jurisdiction
in which the Company is not then qualified.
Notwithstanding the foregoing, the Company shall have the right (the
"SUSPENSION RIGHT") to defer such filing (or suspend sales under any filed
registration statement or defer the updating of any filed registration statement
and suspend sales thereunder) for a period of not more than 120 days during any
one-year period ending on December 31, if the Company furnishes to the Holders a
certificate signed by an executive officer or any director of the Company
stating that, in the good faith judgment of the Company, it would be detrimental
to the Company and its stockholders to file such registration statement or
amendment thereto at such time (or continue sales under a filed registration
statement) and therefore the Company has elected to defer the filing of such
registration statement (or suspend sales under a filed registration statement).
Section 3. REGISTRATION PROCEDURES.
(a) The Company shall promptly notify the Holders of the
occurrence of the following events:
(i) when any registration statement relating to the
Registrable Stock or post-effective amendment thereto filed with the
Commission has become effective;
(ii) the issuance by the Commission of any stop order
suspending the effectiveness of any registration statement relating to
the Registrable Stock;
(iii) the suspension of an effective registration
statement by the Company in accordance with the last paragraph of
Section 2(a) hereof;
(iv) the Company's receipt of any notification of the
suspension of the qualification of any Registrable Stock covered by a
registration statement for sale in any jurisdiction; and
(v) the existence of any event, fact or circumstance
of which the Company has knowledge, that results in a registration
statement or prospectus relating to Registrable Stock or any document
incorporated therein by reference containing an untrue statement of
material fact or omitting to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading during the distribution of securities.
The Company agrees to use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of any such registration
statement or any state qualification as promptly as possible. The Investor
agrees by acquisition of the Registrable Stock that upon
receipt of any notice from the Company of the occurrence of any event of the
type described in Section 3(a)(ii), (iii), (iv) or (v) to immediately
discontinue their disposition of Registrable Stock pursuant to any
registration statement relating to such securities until the Investor's
receipt of written notice from the Company that such disposition may be made.
(b) The Company shall provide to the Holders, at no cost to
the Holders, a copy of the registration statement and any amendment thereto used
to effect the Registration of the Registrable Stock, each prospectus contained
in such registration statement or post-effective amendment and any amendment or
supplement thereto and such other documents as the requesting Holders may
reasonably request in order to facilitate the disposition of the Registrable
Stock covered by such registration statement. The Company consents to the use of
each such prospectus and any supplement thereto by the Holders in connection
with the offering and sale of the Registrable Stock covered by such registration
statement or any amendment thereto. If the Common Stock is listed on a "national
securities exchange" as defined in Rule 153 under the Securities Act at any time
during the period in which the Company is obligated to keep the registration
statement effective pursuant to Section 2(a), the Company shall also file a
sufficient number of copies of the prospectus and any post-effective amendment
or supplement thereto with such national securities exchange (or, if the Common
Stock is no longer listed thereon, with such other securities exchange or market
on which the Common Stock is then listed) so as to enable the Holders to have
the benefits of the prospectus delivery provisions of Rule 153 under the
Securities Act.
(c) The Company agrees to use its reasonable best efforts to
cause the Registrable Stock covered by a registration statement to be registered
with or approved by such state securities authorities as may be necessary to
enable the Holders to consummate the disposition of such stock pursuant to the
plan of distribution set forth in the registration statement; PROVIDED, HOWEVER,
that the Company shall not be obligated to take any action to effect any such
Registration, qualification or compliance pursuant to this Section 3 in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such Registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction or qualify as a foreign corporation in any jurisdiction in
which the Company is not then qualified.
(d) Subject to the Company's Suspension Right, if any event,
fact or circumstance requiring an amendment to a registration statement relating
to the Registrable Stock or supplement to a prospectus relating to the
Registrable Stock shall exist, as promptly as practicable upon becoming aware
thereof the Company agrees to notify the Holders and prepare and furnish to the
Holders a post-effective amendment to the registration statement or supplement
to the prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Stock, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
circumstances under which such statements were made.
(e) The Company agrees to use its reasonable efforts
(including the payment of any listing fees) to obtain the listing of all
Registrable Stock covered by the registration
statement on each securities exchange or automated quotation system on which
securities of the same class or series are then listed.
(f) The Company agrees to use its reasonable efforts to comply
with the Securities Act and the Exchange Act in connection with the offer and
sale of Registrable Stock pursuant to a registration statement, and, as soon as
reasonably practicable following the end of any fiscal year during which a
registration statement effecting a Registration of the Registrable Stock shall
have been effective, to make available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act.
(g) The Company agrees to cooperate with the selling Holders
to facilitate the timely preparation and delivery of certificates representing
Registrable Stock sold pursuant to a Registration and not bearing any Securities
Act legend and to enable certificates for such Registrable Stock to be issued
for such numbers of stock and registered in such names as the Holders may
reasonably request.
Section 4. EXPENSES OF REGISTRATION. All reasonable expenses, other
than underwriting discounts and commissions or fees and disbursements of counsel
for any of the Holders, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 hereof, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees and the fees and disbursements of counsel for the Company shall
be borne by the Company.
Section 5. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each Holder's
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (including reasonable legal expenses), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement or prospectus relating to
the Registrable Stock, or any amendment or supplement thereto, or based on 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,
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with information furnished in
writing to the Company by such Holder or underwriter for inclusion therein.
(b) Each Holder will indemnify the Company, each of its
directors and each of its officers who signs the registration statement, each
underwriter, if any, of the Company's securities covered by such registration
statement, and each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (including reasonable legal fees and expenses) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement or prospectus, or any
amendment or supplement thereto, or based on 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, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement or prospectus, in reliance upon and in conformity with information
furnished in writing to the Company by such Holder for inclusion therein.
(c) Each party entitled to indemnification under this Section
5 (the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
omission to so notify the Indemnifying Party shall not relieve it from any
liability which it may have to the Indemnified Party pursuant to the provisions
of this Section 5 except to the extent of the actual damages suffered by such
delay in notification. The Indemnifying Party shall assume the defense of such
action, including the employment of counsel to be chosen by the Indemnifying
Party to be reasonably satisfactory to the Indemnified Party, and payment of
expenses. The Indemnified Party shall have the right to employ its own counsel
in any such case, but the legal fees and expenses of such counsel shall be at
the expense of the Indemnified Party, unless the employment of such counsel
shall have been authorized in writing by the Indemnifying Party in connection
with the defense of such action, or the Indemnifying Party shall not have
employed counsel to take charge of the defense of such action or the Indemnified
Party shall have reasonably concluded that there are defenses available to it or
them which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified Party),
in any of which events such fees and expenses shall be borne by the Indemnifying
Party. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, which consent shall
not be unreasonably withheld, 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 Party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 5 is
unavailable to a party that would have been an Indemnified Party under this
Section 5 in respect of any expenses, claims, losses, damages and liabilities
referred to herein, then each party that would have been an Indemnifying Party
hereunder shall, in lieu of indemnifying such Indemnified Party, contribute to
the amount paid or payable by such Indemnified Party as a result of such
expenses, claims, losses, damages and liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and such Indemnified Party on the other in connection with the statement or
omission which resulted in such expenses, claims, losses, damages and
liabilities, as well as any other relevant equitable considerations. The
relative fault 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 supplied by the
Indemnifying Party or such Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 5(d).
(e) No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) In no event shall any Holder be liable for any expenses,
claims, losses, damages or liabilities pursuant to this Section 5 in excess of
the net proceeds to such Holder of any Registrable Stock sold by such Holder.
Section 6. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder shall
furnish to the Company such information as the Company may reasonably request
and as shall be required in connection with the Registration and related
proceedings referred to in Section 2 hereof. If any Holder fails to provide the
Company with such information within five days of receipt of the Company's
request, the Company's obligations under Section 2 hereof with respect to such
Holder or the Registrable Stock owned by such Holder shall be suspended until
such Holder provides such information.
Section 7. RULE 144 SALES.
(a) The Company covenants that it will use its reasonable
efforts to file the reports required to be filed by the Company under the
Exchange Act, so as to enable any Holder to sell Registrable Stock pursuant to
Rule 144 under the Securities Act.
(b) In connection with any sale, transfer or other disposition
by any Holder of any Registrable Stock pursuant to Rule 144 under the Securities
Act, the Company shall cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Stock sold and
not bearing any Securities Act legend and to enable certificates for such
Registrable Stock to be issued for such number of shares and registered in such
names as the selling Holder may reasonably request.
Section 8. ASSIGNMENT OF REGISTRATION RIGHTS. Subject to any transfer
restrictions otherwise applicable to the Registrable Stock, the rights of the
Holders hereunder, including the right to have the Company register Registrable
Stock pursuant to this Agreement, shall be assignable by each Holder to any
transferee of all or any portion of the Registrable Stock if: (a) the transfer
to such transferee is permitted under the Securities Act and applicable state
securities law or exemptions therefrom, (b) the Holder agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company after such assignment, (c) the Company is 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, (d) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws, (e) the transferee or
assignee agrees in writing for the benefit of the Company to be bound by all of
the provisions contained herein and (f) such transfer shall have been made in
accordance with any applicable requirements of the Promissory Note.
Section 9. MISCELLANEOUS.
(a) GOVERNING LAW, JURISDICTION AND WAIVER OF VENUE. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Nevada regardless of the fact that any of the parties hereto may be or
may become a resident of a different country, state, or jurisdiction. Any suit,
action, or proceeding arising out of, or with respect to, this Agreement shall
be filed in a court of competent jurisdiction within the County of Washoe, State
of Nevada or in the U.S. District Court for the District of Nevada, Northern
Division. The parties hereby consent to the personal jurisdiction of such courts
within the County of Washoe, State of Nevada and the U.S. District Court for the
District of Nevada, Northern Division. The parties hereby waive any objections
to venue in such courts with Washoe County, State of Nevada and the U.S.
District Court for the District of Nevada, Northern Division.
(b) ENTIRE AGREEMENT. This Agreement and the Promissory Note
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof.
(c) AMENDMENT. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby.
(d) NOTICES, ETC. Each notice, demand, request, request for
approval, consent, approval, disapproval, designation or other communication
(each of the foregoing being referred to herein as a notice) required or desired
to be given or made under this Agreement shall be in writing (except as
otherwise provided in this Agreement), and shall be effective and deemed to have
been received (i) when delivered in person, (ii) when sent by fax with receipt
acknowledged, (iii) five days after having been mailed by certified or
registered United States mail, postage prepaid, return receipt requested, or
(iv) the next business day after having been sent by a nationally recognized
overnight mail or courier service, receipt requested. Notices shall be addressed
as follows: (x) if to an Investor, at the Investor's address or fax number set
forth below its signature hereon, or at such other address or fax number as the
Investor shall have furnished to the Company in writing, or (y) if to any
assignee or transferee of an Investor, at such address or fax number as such
assignee or transferee shall have furnished the Company in writing, or (z) if to
the Company, at the address of its principal executive offices and addressed to
the attention of the President, or at such other address or fax number as the
Company shall have furnished to the Investor or any assignee or transferee. Any
notice or other communication required to be given hereunder to a Holder in
connection with a registration may instead be given to the designated
representative of such Holder.
(e) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
to be physically delivered to the other party within five days of the execution
hereof.
(f) SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
(g) SECTION TITLES. Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Financial Officer
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇, TRUSTEE OF THE
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ SELF EMPLOYED PENSION
PLAN AND TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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