EXHIBIT 4.09
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 24, 2000, between
Omni Nutraceuticals, Inc., a Utah corporation (together with any successors, the
"Corporation"), and Corporate Financial Enterprises, Inc., a Delaware
corporation ("CFE"), and American Equities, LLC, a California limited liability
company ("AELLC," and, together with CFE, "Investor").
The Investors own 3,000,000 shares (and may acquire an additional
1,500,000 shares) of the Company's 5% Convertible Preferred Stock, Series A (the
"Preferred Stock"), which are convertible into shares of Common Stock (as
defined) of the Corporation, warrants to purchase up to 775,000 shares of Common
Stock, and up to 782,000 shares of Common Stock to be designated by CFE. The
Corporation and the Investors deem it to be in their respective best interests
to set forth the rights of the Investors in connection with public offerings and
sales of shares of Common Stock and are entering into this Agreement as a
condition to and in connection with the Securities Purchase Agreement (as
defined).
NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Corporation and the
Investor hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "COMMON STOCK" shall mean the Common Stock, $0.01 par
value per share, of the Corporation.
(b) "COMMISSION" shall mean the Securities and Exchange
Commission or any other Federal agency at the time administering the Securities
Act.
(c) "PREFERRED STOCK" shall mean the Company's 5%
Convertible Preferred Stock.
(d) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934 or any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
(e) "INFORMATION" has the meaning ascribed thereto in
SECTION 6(i).
(f) "INITIAL PUBLIC OFFERING" means the first underwritten
public offering of Common Stock for sale to the public for the account of the
Corporation and offered on a "firm commitment" or "best efforts" basis pursuant
to an offering registered with the Commission under the Securities Act.
(g) "INSPECTORS" has the meaning ascribed thereto in
SECTION 6(i).
(h) "INVESTOR" shall mean the Investors or any successor to,
or assignee or transferee of, Investors.
(i) "INVESTORS' COUNSEL" has the meaning ascribed thereto in
SECTION 6(b).
(j) "MAJORITY INVESTORS" has the meaning ascribed thereto in
SECTION 2(d).
(k) "MATERIAL TRANSACTION" means any material transaction in
which the Corporation or any of its Subsidiaries proposes to engage or is
engaged, including a purchase or sale of assets or securities, financing,
merger, consolidation, tender offer or any other transaction that would require
disclosure pursuant to the Exchange Act, and with respect to which the board of
directors of the Corporation reasonably has determined in good faith that
compliance with this Agreement may reasonably be expected to either materially
interfere with the Corporation's or such Subsidiary's ability to consummate such
transaction in a timely fashion or require the Corporation to disclose material,
non-public information prior to such time as it would otherwise be required to
be disclosed.
(l) "OTHER SHARES" shall mean at any time those shares of
Common Stock which do not constitute Primary Shares or Registrable Shares.
(m) "PERSON" shall be construed as broadly as possible and
shall include, without limitation, an individual, a partnership, an investment
fund, a limited liability company, a corporation, an association, a joint shares
company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.
(n) "PRIMARY SHARES" shall mean at any time authorized but
unissued shares of Common Stock or shares of Common Stock held by the
Corporation in its treasury.
(o) "REGISTRABLE SHARES" shall mean any Restricted Shares or
Warrant Securities.
(p) "RESTRICTED SHARES" means, at any time, with respect to
any Investor, shares of Common Stock then owned by such Investor, as well as
shares of Common Stock issued or issuable upon conversion of Preferred Stock,
and includes: (i) Common Stock which may be issued as a dividend or
distribution; (ii) any other securities which by their terms are exercisable or
exchangeable for or convertible into Common Stock issued or issuable upon
conversion of the Preferred Stock; and (iii) any securities received in respect
of, or upon exercise, exchange or conversion of, the foregoing, in each case in
CLAUSES (i) through (iii) which at any time are held by such Investor, or any
transferee of Investor. As to any particular shares of Restricted Shares, such
shares shall cease to be shares of Restricted Shares when: (A) they have been
registered under the Securities Act, the registration statement in connection
therewith has been declared effective and they have been disposed of pursuant to
and in the manner described in such effective registration statement; (B) they
are sold or distributed pursuant to Rule 144 or
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may be sold or distributed by the holder thereof pursuant to Rule 144(k); (C)
they have been otherwise transferred and new certificates or other evidences of
ownership for them not bearing a restrictive legend and not subject to any stop
transfer order or other restriction on transfer have been delivered by the
Corporation or the issuer of other securities issued in exchange for the shares
of Restricted Shares; or (D) they have ceased to be outstanding.
(q) "REGISTRATION DATE" shall mean the date upon which the
registration statement pursuant to which the Corporation shall have initially
registered shares of Common Stock under the Securities Act for sale to the
public shall have been declared effective.
(r) "RULE 144" shall mean Rule 144 promulgated under the
Securities Act or any successor rule thereto or any complementary rule thereto
(such as Rule 144A).
(s) "SECURITIES ACT" shall mean the Securities Act of 1933
or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
(t) "STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase
Agreement, dated as of the date hereof, between the Corporation and the
Investors (as the same may be amended, restated, supplemented or otherwise
modified from time to time).
(u) "SUBSIDIARY" means, with respect to any Person, any
other Person of which the securities having a majority of the ordinary voting
power in electing the board of directors (or other governing body) of such other
Person, at the time as of which any determination is being made, are owned by
such first Person either directly or through one or more of its Subsidiaries.
(v) "WARRANT SECURITIES" means the shares of Common Stock
purchasable or purchased from time to time under the warrants issued pursuant to
the Warrant Agreement, dated as of the date hereof, between the Company and the
Investors, or acquirable or acquired upon any transfer of such warrants,
together with all additional securities receivable or received in payment of
dividends or distributions on or splits of those securities or received as a
result of adjustments provided for in said Warrant Agreement.
SECTION 2. DEMAND REGISTRATION.
If the Corporation shall, at any time after one year following the
date hereof be requested by the holders of at least 50% of the Restricted Shares
issued and sold by the Corporation pursuant to the Stock Purchase Agreement and
then outstanding (on a Common Stock equivalent basis) to effect a single
registration under the Securities Act of Registrable Shares constituting at
least 25% of the Registrable Securities, the Corporation shall, within 120 days
of such request, effect the registration under the Securities Act of the
Registrable Shares which the Corporation has been so requested to register;
PROVIDED, HOWEVER, that the Corporation shall not be obligated to effect any
registration under the Securities Act except in accordance with the following
provisions:
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(a) The Corporation may delay the filing or effectiveness of
any registration statement for a period of up to 120 days after the date of a
request for registration pursuant to this SECTION 2 if at the time of such
request (i) the Corporation is engaged, or has fixed plans to engage within 120
days after the date of such request, in a firm commitment underwritten public
offering of Primary Shares in which the holders of Registrable Shares may
include Registrable Shares pursuant to SECTION 3 or (ii) a Material Transaction
exists, PROVIDED that the Corporation may only so delay the filing or
effectiveness of its registration statements (if any) once in any 12-month
period pursuant to this SECTION 2(a).
(b) With respect to any registration pursuant to this
SECTION 2, the Corporation may include in such registration any Primary Shares
or Other Shares; PROVIDED, HOWEVER, that, if the managing underwriter advises
the Corporation that the inclusion of all Registrable Shares, Primary Shares and
Other Shares proposed to be included in such registration would interfere with
the successful marketing (including pricing) of the Registrable Shares proposed
to be included in such registration, then the number of Registrable Shares,
Primary Shares and Other Shares proposed to be included in such registration
shall be included in the following order:
(i) FIRST, the Registrable Shares requested to
be included in such registration (or, if necessary, such Registrable
Shares PRO RATA among the holders thereof based upon the number of
Registrable Shares requested to be registered by each such holder);
(ii) SECOND, the Primary Shares; and
(iii) THIRD, the Other Shares.
(c) At any time before the registration statement covering
Registrable Shares becomes effective, either Investors holding a majority of the
Registrable Shares requested to be registered (the "MAJORITY INVESTORS") may
request the Corporation to withdraw or not to file the registration statement or
the Corporation may withdraw or not file the registration if in the reasonable
judgement of the Corporation's Board of Directors such withdraw or failure to
file is reasonably required to comply with applicable laws or the interpretation
of the Staff of the Commission or to avoid a substantial liability (other than
expenses of such registration) which would have a material adverse effect on the
Corporation's financial condition; provided, however, that the Corporation shall
refile such registration statement within 180 days of the Corporation's withdraw
or determination not to file. In that event, if such request of withdrawal by
the Majority Investors shall not have been caused by the Corporation or its
financial condition, the holders shall have used their demand registration
rights under this SECTION 2 and the Corporation shall no longer be obligated to
register Registrable Shares pursuant to the exercise of such registration right
pursuant to this SECTION 2 and the expenses incurred by the Corporation through
the date of such request shall be reimbursed. In the event the Corporation shall
withdraw or fail to file the registration statement, the holders shall not have
used their demand registration rights under this SECTION 2 and shall be entitled
to reimbursement of their expenses through the date of such withdrawal or
failure to file. A registration shall not count as
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a registration statement initiated pursuant to SECTION 2(a) unless it becomes
effective and the selling holders are able to sell at least 80% of their
Registrable Shares requested to be included in such registration statement, or
except as otherwise provided in this Section 2(c).
(d) Notwithstanding anything in Section 2, 3 or 4 provided
to the contrary, the Corporation's obligation to register shares of Common Stock
under the Securities Act hereunder shall be suspended during any time (i) such
shares of Common Stock are registered pursuant to a then effective registration
statement under the Act or (ii) the Registrable Securities become eligible for
sale pursuant to Rule 144(k).
SECTION 3. PIGGYBACK REGISTRATION.
If the Corporation at any time proposes for any reason to register
shares of Common Stock under the Securities Act (other than on Form S-4, F-4 or
S-8 promulgated under the Securities Act or any successor forms thereto), it
shall promptly give written notice to the Investor of its intention to so
register such shares and, upon the written request, delivered to the Corporation
within 30 days after delivery of any such notice by the Corporation, of the
Investor to include in such registration Registrable Shares and/or Warrant
Securities (which request shall specify the number of Registrable Shares and/or
Warrant Securities proposed to be included in such registration), the
Corporation shall cause all such Registrable Shares and/or Warrant Securities to
be included in such registration on the same terms and conditions as the
securities otherwise being sold in such registration; PROVIDED, HOWEVER, that,
if the managing underwriter advises the Corporation that the inclusion of all
Registrable Shares and/or Warrant Securities requested to be included in such
registration would interfere with the successful marketing (including pricing)
of the Primary Shares or Other Shares proposed to be registered by the
Corporation, then the number of Primary Shares, Registrable Shares, Warrant
Securities and Other Shares proposed to be included in such registration shall
be included in the following order of priority:
(i) FIRST, the Primary Shares;
(ii) SECOND, the Registrable Shares and Warrant
Securities requested to be included in such registration (or, if
necessary, PRO RATA among the holders thereof, based upon the number
of Registrable Shares and Warrant Securities requested to be
registered by each such holder); and
(iii) THIRD, the Other Shares.
SECTION 4. REGISTRATIONS ON FORM S-3.
Anything contained in SECTION 2 to the contrary notwithstanding, at
such time as the Corporation shall have qualified for the use of Form S-3
promulgated under the Securities Act or any successor form thereto, the Investor
shall have the right to request in writing one registration on Form S-3 (or any
successor form thereto) of Registrable Shares and/or Warrant
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Securities within any 12-month period, which request or requests shall: (i)
specify the number of Registrable Shares and/or Warrant Securities intended to
be sold or disposed of and the holders thereof; (ii) state the intended method
of disposition of such Registrable Shares and/or Warrant Securities; and (iii)
relate to Registrable Shares and/or Warrant Securities having an aggregate gross
offering price of at least $500,000. A requested registration in compliance with
this SECTION 4 shall not count as a registration statement initiated pursuant to
SECTION 2, so long as such registration remains current and effective.
SECTION 5. REQUIRED REGISTRATION.
The Company shall, within 90 days of the date hereof (the "Required
Filing Date"), file a registration statement covering the Common Stock
underlying the Preferred Stock and the Warrants. Such registration statement
shall be effective within 150 days of the date hereof (the "Required Effective
Date"). If, for any reason, such registration statement is not filed within such
90 day period, or declared effective within such 150 day period, the holders of
the Preferred Stock and Warrants shall be entitled to liquidated damages equal
to 0.067% of the purchase price of the Preferred Stock pursuant to the Stock
Purchase Agreement for each day following the Required Filing Date and/or
Required Effective Date until the registration statement is declared effective
("Delay Damages"). The Company shall pay all registration expenses (other than
commissions and selling expenses) associated with such registration, and shall
keep such registration statement effective and current for a period of not less
than the sooner of (i) two years from the date of this Agreement, or (ii) the
date on which all the shares of Common Stock registered under such registration
statement have been disposed or (iii) the date on which such shares of Common
Stock become eligible for sale pursuant to Rule 144(k) or its equivalent. No
other securities will be included in the registration statement other than the
securities described above without the written consent of Investor, other than
the shares of Common Stock described on Exhibit A attached hereto. The Company
shall amend such registration statement to include the Common Stock underlying
any additional shares of Preferred Stock purchased by Investor pursuant to the
Stock Purchase Agreement.
SECTION 6. PREPARATION AND FILING.
If, and whenever, the Corporation is under an obligation pursuant to
this Agreement to effect the registration of any Registrable Shares, the
Corporation shall, as expeditiously as practicable:
(a) cause a registration statement that registers such
Registrable Shares to become and remain effective for a period of one year or
such earlier period in which all of such Registrable Shares have been disposed
of or become eligible for sale pursuant to Rule 144(k) or its equivalent;
(b) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, a prospectus
relating thereto or any amendments or supplements relating to such a
registration statement or prospectus, to one counsel selected by the Majority
Investors (the "INVESTORS' COUNSEL"), copies of all such documents proposed to
be
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filed (it being understood that such five-business-day period need not apply to
successive drafts of the same document proposed to be filed so long as such
successive drafts are supplied to the Investors' Counsel in advance of the
proposed filing by a period of time that is customary and reasonable under the
circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
at least a period of one year or such earlier period in which all of such
Registrable Shares have been disposed of or become eligible for sale pursuant to
Rule 144(k) or its equivalent and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of such Registrable
Shares;
(d) notify in writing the Investors' Counsel promptly of (i)
the receipt by the Corporation of any notification with respect to any comments
by the Commission with respect to such registration statement or prospectus or
any amendment or supplement thereto or any request by the Commission for the
amending or supplementing thereof or for additional information with respect
thereto, (ii) the receipt by the Corporation of any notification with respect to
the issuance by the Commission of any stop order suspending the effectiveness of
such registration statement or prospectus or any amendment or supplement thereto
or the initiation or threatening of any proceeding for that purpose (and the
Corporation shall use its best efforts to prevent the issuance thereof or, if
issued, to obtain its withdrawal) and (iii) the receipt by the Corporation of
any notification with respect to the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purposes;
(e) register or qualify such Registrable Shares under such
other securities or blue sky laws of such jurisdictions as the Investor
reasonably requests, to keep such registrations or qualifications in effect for
so long as the registration statement covering such Registrable Shares remains
in effect and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Investor to consummate the disposition in
such jurisdictions of the Registrable Shares owned by the Investor; provided,
however, the Corporation shall not be required to qualify to do business in any
such jurisdictions;
(f) furnish to the Investor or other holders of such
Registrable Shares such number of copies of a summary prospectus, if any, or
other prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such Investor or
holders may reasonably request in order to facilitate the public sale or other
disposition of such Registrable Shares;
(g) cause such Registrable Shares to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Corporation to enable the
Investor or other holders of such Registrable Shares to consummate the
disposition of such Registrable Shares;
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(h) notify on a timely basis the Investor or other holders
of such Registrable Shares at any time when a prospectus relating to such
Registrable Shares is required to be delivered under the Securities Act within
the appropriate period mentioned in SUBSECTION (a) of this SECTION 6, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of the Investor or other holders
of Registrable Shares, prepare and furnish to Investor or such other holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the offerees
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit 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;
(i) make available upon reasonable notice and during normal
business hours, for inspection by the Investor or other holders of such
Registrable Shares any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent retained
by the Investor or underwriter (collectively, the "INSPECTORS"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Corporation (collectively, the "RECORDS"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Corporation's officers, directors and employees to supply all information
(together with the Records, the "INFORMATION") reasonably requested by any such
Inspector in connection with such registration statement. Any of the Information
which the Corporation determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be disclosed by the
Inspectors, unless (i) the disclosure of such Information is necessary to avoid
or correct a misstatement or omission in the registration statement, (ii) the
release of such Information is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction, or (iii) such Information has been made
generally available to the public through no breach of any duty owed the
Corporation. The Investors agree that they will, upon learning that disclosure
of such Information is sought in a court of competent jurisdiction, give notice
to the Corporation and allow the Corporation, at the Corporation's expense, to
undertake appropriate action to prevent disclosure of the Information deemed
confidential;
(j) use its best efforts to obtain from its independent
certified public accountants "COLD COMFORT" letters in customary form and at
customary times and covering matters of the type customarily covered by cold
comfort letters;
(k) use its best efforts to obtain from its counsel an
opinion or opinions in customary form, naming the Investor as an additional
addressee or party who may rely thereon;
(l) provide a transfer agent and registrar (which may be the
same entity and which may not be the Corporation) for such Registrable Shares;
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(m) issue to any underwriter to which the Investor holding
such Registrable Shares may sell shares in such offering certificates evidencing
such Registrable Shares;
(n) list such Registrable Shares on any national securities
exchange on which any shares of Common Stock are listed or, if shares of Common
Stock are not listed on a national securities exchange, use its best efforts to
qualify such Registrable Shares for inclusion on the automated quotation system
of the National Association of Securities Dealers, Inc. (the "NASD"), or such
other national securities exchange as the holders of a majority of such
Registrable Shares shall reasonably request and provided that the Corporation
meets the listing criteria of such exchange; and
(o) otherwise comply with all applicable rules of the
Commission, and timely file all reports required to be filed pursuant to the
Securities and Exchange Act of 1934, as amended; and
(p) use its best efforts to take all other commercially
reasonable steps necessary to effect the registration of such Registrable Shares
contemplated hereby.
Each holder of Registrable Shares which are being or have been
registered pursuant to this Agreement shall provide to the Corporation, upon the
request of the Corporation, such written information and materials as the
Corporation may reasonably request in order to effect or maintain such
registration. Each holder of Registrable Shares, upon receipt of any notice from
the Corporation of any event of the kind described in SECTION 6(h), shall
forthwith discontinue the disposition of such Registrable Shares pursuant to the
registration statement covering such Registrable Shares until such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
SECTION 6(h), and, if so directed by the Corporation, such holder shall deliver
to the Corporation all copies, other than permanent file copies then in such
holder's possession, of the prospectus covering such Registrable Shares at the
time of receipt of such notice.
SECTION 7. EXPENSES.
All expenses (other than underwriting discounts and commissions
relating to the Registrable Shares, as provided in the last sentence of this
SECTION 7) incurred by the Corporation or any Investor in complying with this
Agreement, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NYSE, AMEX, NASD and other
domestic or foreign exchanges, as applicable), fees and expenses of complying
with securities and blue sky laws, printing expenses, fees and expenses of the
Corporation's counsel and accountants and fees and expenses of one legal counsel
for the Investors (the "Investors' Counsel"), shall be paid by the Corporation;
PROVIDED, HOWEVER, that all underwriting discounts and selling commissions (but
not non-accountable expense allowances) applicable solely to the Registrable
Shares and Other Shares shall be borne by the holders selling such Registrable
Shares and Other Shares, in proportion to the number of Registrable Shares and
Other Shares sold by each such holder.
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SECTION 8. INDEMNIFICATION.
(a) To the extent permitted by law, in connection with any
registration of any Registrable Shares under the Securities Act pursuant to this
Agreement, the Corporation shall indemnify and hold harmless each holder of
Registrable Shares and any other Person acting on behalf of the holders of
Registrable Shares and each other Person, if any, who controls any of the
foregoing Persons within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several (or actions in respect
thereof), to which any of the foregoing Persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or allegedly untrue statement of a material fact contained in
the registration statement under which such Registrable Shares were registered
under the Securities Act, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, any amendment or
supplement thereto or any document incident to registration or qualification of
any Registrable Shares, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or, with respect to
any prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation by the
Corporation of the Securities Act or state securities or blue sky laws
applicable to the Corporation and relating to action or inaction required of the
Corporation in connection with such registration or qualification under such
state securities or blue sky laws; and shall reimburse the holders of
Registrable Shares, such other Person acting on behalf of the holders of
Registrable Shares and each such controlling Person for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Corporation shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action (including any legal or other
expenses incurred) arises out of or is based upon an untrue statement or
allegedly untrue statement or omission or alleged omission made in said
registration statement, preliminary prospectus, final prospectus, amendment,
supplement or document incident to registration or qualification of any
Registrable Shares in reliance upon and in conformity with written information
furnished to the Corporation through an instrument duly executed by the holders
of Registrable Shares specifically for use in the preparation thereof;
(b) To the extent permitted by law, in connection with any
registration of Registrable Shares under the Securities Act pursuant to this
Agreement, each seller of Registrable Shares shall severally and not jointly
indemnify and hold harmless (in the same manner and to the same extent as set
forth in SECTION 8(a)) the Corporation, each director of the Corporation, each
officer of the Corporation who shall sign such registration statement, each
underwriter, broker or other Person acting on behalf of the holders of
Registrable Shares and each Person who controls any of the foregoing Persons
within the meaning of the Securities Act with respect to any statement or
omission from such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, if such statement or omission was made
in reliance upon and in
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conformity with written information furnished to the Corporation or such
underwriter through an instrument duly executed by such seller specifically for
use in connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document;
PROVIDED, HOWEVER, that the maximum amount of liability in respect of such
indemnification shall be in proportion to and limited to, in the case of each
seller of Registrable Shares, an amount equal to the net proceeds actually
received by such seller (i) from the sale of Registrable Shares effected
pursuant to such registration and (ii) any Delay Damages.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action involving a claim referred to in SECTIONS 8(a)
and 8(b), such indemnified party will, if a claim in respect thereof is made
against an indemnifying party, give written notice to the latter of the
commencement of such action. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; PROVIDED, HOWEVER, that, if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this SECTION 8, then the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party and such indemnifying party shall reimburse such indemnified party and any
Person controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity agreement provided in this
SECTION 8. The indemnifying party shall not be liable to indemnify any
indemnified party for any settlement of any claim or action effected without the
consent of the indemnifying party, which consent may not be unreasonably
withheld. The indemnifying party may not settle any claim or action brought
against an indemnified party unless such indemnified party is released from all
and any liability as part of such settlement.
(d) If the indemnification provided for in this SECTION 8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage, liability or action referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amounts paid or payable by such
indemnified party as a result of such loss, claim, damage, liability or action
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 in
connection with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations; PROVIDED, HOWEVER, that, if the circumstances described in
either proviso of SECTION 8(a) apply to the indemnified party, then the
indemnifying party shall not be obligated to contribute with respect to such
loss, claim, damage, liability or action to the extent set forth in
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such proviso. The relative fault of the indemnifying party and of 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
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Corporation and the sellers of Registrable Shares
agree that it would not be just and equitable if contribution pursuant to
SECTION 8(d) were determined by PRO RATA allocation (even if the holders and any
underwriters 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 SECTIONS 8(c) and 8(c). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in SUBSECTION (d) of this SECTION 8 shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim.
SECTION 9. UNDERWRITING AGREEMENT.
Notwithstanding the provisions of SECTIONS 5, 6, 7 and 8, to the
extent that the sellers of Registrable Shares shall enter into an underwriting
or similar agreement, which agreement contains provisions covering one or more
issues addressed in such Sections, the provisions contained in such agreement
addressing such issue or issues shall control; PROVIDED, HOWEVER, that any such
agreement to which the Corporation is not a party shall not be binding upon the
Corporation.
SECTION 10. OBLIGATIONS OF THE INVESTORS.
(a) Each seller of Registrable Shares shall furnish to the
Corporation such written information regarding such seller and the distribution
proposed by the sellers as the Corporation may reasonably request in writing and
as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement(s) hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement, thereby waiving its
rights to have its Registrable Securities registered thereunder.
(c) In the event Investors holding a majority of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
12
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement(s), thereby waiving its
rights to have its Registrable Securities registered thereunder.
(d) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 6(h), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(h) and, if so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) all copies in such Investor's possession of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements
relating to such underwritten registration, (ii) completes and executes all
reasonable questionnaires, powers of attorney, indemnities, lock-up agreements
for periods up to 180 days, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and (iii)
agrees to pay its pro rata share of all underwriting discounts and commissions.
SECTION 11. EXCHANGE ACT COMPLIANCE.
From the Registration Date or such earlier date as a registration
statement filed by the Corporation pursuant to the Securities Act relating to
any class of the Corporation's securities shall have become effective, the
Corporation shall comply with all of the reporting requirements of the Exchange
Act applicable to it (whether or not it shall be required to do so) and shall
comply with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Common Shares. The Corporation shall cooperate with the Investor in
supplying such information as may be necessary for the Investor to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
SECTION 12. MERGERS, ETC.
The Corporation shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Corporation shall not be
the surviving corporation unless the surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume the
obligations of the Corporation under this Agreement, and for that purpose
references hereunder to "Registrable Shares" shall be deemed to include the
common stock, if any, that holders of Registrable Shares would be entitled to
receive in exchange for Common Stock under any such merger, consolidation or
reorganization; PROVIDED, HOWEVER, that,
13
to the extent holders of Registrable Shares receive securities that are by their
terms convertible into common stock of the issuer thereof, then only such shares
of common stock as are issued or issuable upon conversion of said convertible
securities shall be included within the definition of "Registrable Shares."
SECTION 13. NEW CERTIFICATES.
As expeditiously as possible after the effectiveness of any
registration statement filed pursuant to this Agreement, the Corporation will
deliver in exchange for any legended certificate evidencing Restricted Shares so
registered, new stock certificates not bearing any restrictive legends, PROVIDED
that, in the event less than all of the Restricted Shares evidenced by such
legended certificate are registered, the holder thereof agrees that a new
certificate evidencing such unregistered shares will be issued bearing the
appropriate restrictive legend.
SECTION 14. NO CONFLICT OF RIGHTS.
The Corporation represents and warrants to the Investor that the
registration rights granted to the Investor hereby do not conflict with any
other registration rights granted by the Corporation. The Corporation shall not,
after the date hereof, grant any registration rights which conflict with or
impair the registration rights granted hereby.
SECTION 15. TERMINATION.
This Agreement shall terminate and be of no further force or effect
on the date on which all the Registrable Shares have been registered under the
Securities Act and have been disposed or have become eligible for sale under
Rule 144(k) or its equivalent.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the
Corporation and the Investor and, subject to SECTION 17, the respective
successors and assigns of the Corporation and the Investor.
SECTION 17. ASSIGNMENT.
Investor may assign its rights hereunder to any purchaser or
transferee of Registrable Shares, whereupon such purchaser or transferee shall
have the benefits of, and shall be subject to the restrictions contained in,
this Agreement as if such purchaser or transferee was originally included in the
definition of "Investor" herein and had originally been a party hereto. Within a
reasonable time following such assignment, the assignee shall provide to the
Corporation a written notice of the name and address of such transferee or
assignee, and such other information as the Corporation may reasonably request.
14
SECTION 18. SEVERABILITY.
It is the desire and intent of the parties hereto that the
provisions of this Agreement be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 19. ENTIRE AGREEMENT.
This Agreement and the other writings referred to therein or
delivered pursuant thereto, contain the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
arrangements or understandings with respect thereto.
SECTION 20. NOTICES.
All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, telecopied, sent by internationally-recognized overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) If to the Corporation, to:
Omni Nutraceuticals, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
(ii) If to Investor, to:
Corporate Financial Enterprises, Inc.
0000 Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
15
And:
American Equities, LLC
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
All such notices and other communications shall be deemed to have
been given and received (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of delivery by
internationally-recognized overnight courier, on the first business day
following such dispatch and (c) in the case of mailing, on the third business
day following such mailing.
SECTION 21. MODIFICATIONS; AMENDMENTS; WAIVERS.
The terms and provisions of this Agreement may not be modified or
amended, nor may any provision be waived, except pursuant to a writing signed by
the Corporation and the holders of at least a majority of the Registrable Shares
then outstanding; PROVIDED, HOWEVER, that no such modification, amendment or
waiver that would treat any holder of Registrable Shares then outstanding in a
non-ratable, discriminatory manner shall be made without the prior written
consent of such holder. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
SECTION 22. COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement. A facsimile
counterpart signature to this Agreement shall be acceptable if the originally
executed counterpart is delivered within a reasonable period thereafter.
SECTION 23. HEADINGS.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
SECTION 24. GOVERNING LAW.
This Agreement will be governed by and construed in accordance with
the domestic laws of the State of California, without giving effect to any
choice of law or conflicting provision or rule.
16
SECTION 25. JURISDICTION AND VENUE.
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself or himself and its or his property, to the
non-exclusive jurisdiction of any California court or federal court of the
United States of America sitting in the State of California, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in any
such California court or, to the extent permitted by law, in such federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Should any party
institute any action, suit or other proceeding arising out of or relating to
this Agreement, the prevailing party shall be entitled to receive from the
losing party reasonable attorneys' fees and costs incurred in connection
therewith, along with all costs of defense, investigation, preparation, experts
and collection.
(b) Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it or he may legally and
effectively do so, any objection that it or he may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
the Agreement in any of the courts referred to in SECTION 25(a). Each of the
parties hereto irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) The parties further agree that the mailing by certified
or registered mail, return receipt requested, of any process required by any
such court shall constitute valid and lawful service of process against them,
without the necessity for service by any other means provided by law.
SECTION 26. WAIVER OF JURY TRIAL.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
* * * * *
17
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first written above.
Omni Nutraceuticals, Inc.
By: /s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
Chief Executive Officer
American Equities, LLC
By: /s/ Xxxx Xxxxxxxx
------------------------------
Xxxx Xxxxxxxx
President
Corporate Financial Enterprises, Inc.
By: /s/ Xxxxx Xxxxxxx
------------------------------
Xxxxx Xxxxxxx
President
18
EXHIBIT A
SHARES OF COMMON STOCK OF OMNI
NUTRACEUTICALS, INC. TO BE REGISTERED
1. All common shares owned by Xxxx and Xxxxxxxxx Xxxxx.
2. 25,000 shares issued to Xxx Xxxxxxxx.
3. $700,000 of shares to be issued to Xx. Xxxx Xxxxx (or his designee) in
connection with the proposed Passion/Omni joint venture.
4. 25,000 shares each to be issued to Xxxx Xxxxxxx, Xxxxx Xxxxxxxxxx and
Xxxxxxxx Xxxxxxx, the Company's Independent Directors.
5. Shares issuable to Xxxx Xxxxxx under his existing consulting agreement
(not to exceed 75,000 shares).
6. All shares to be issued under the Company's Stock Option plan.
7. An aggregate of 600,000 shares to be designated by Corporate Financial
Enterprises.
