EXHIBIT 10.6(c)
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 31, 2004,
by and among On Alert Systems, Inc., a Nevada Corporation ( the "Company"), and
Equipment Depot, Inc., a Florida corporation (the "Seller"), and each of the
undersigned (together with their Company approved respective affiliates and/or
any assignee or transferee of all of their respective rights hereunder, the
"Shareholders").
WHEREAS:
A. In connection with the Equipment Purchase Agreement by and among the parties
hereto of even date herewith (the "EPA"), the Company has agreed, upon the terms
and subject to the conditions contained therein, to issue to the Shareholders
common stock in the aggregate amount of eight hundred sixteen thousand (816,000)
shares (the "Stock"), subject to certain adjustments (the Adjustment Shares),
upon the terms and subject to the limitations and conditions set forth in the
EPA.
B. To induce the Shareholders to execute and deliver the EPA, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations there under, or any similar successor
statute (collectively, the "1933 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 each of the
Shareholders hereby agree as follows:
1. DEFINITIONS. a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "Shareholders" means the Sellers, inclusive of their agents, officers,
directors, shareholders, or lien holders, as applicable, of the
Equipment transferred to the Company pursuant to the EPA, and any
Company approved transferee or assignee that agrees to become bound by
the provisions of this Agreement in accordance with Section 9 hereof.
Any Shareholder who wishes to transfer or assign unregistered shares
obtained pursuant to the EPA must receive the written approval of the
Company prior to the Transfer Agent's transfer of such securities to
the assignee, except where such transfer is a result of the death of
an individual in whose name such shares are titled, or the dissolution
or bankruptcy of any entity to which such shares are titled, or as a
result of hypothecation or pledge of the shares to a securities broker
dealer or lender, under which conditions no consent by the Company is
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required, along with such information and instructions regarding the
entity or individual to whom the shares are being assigned, including,
but not limited to, the relationship to the assignor, and any other
reasonable and ordinary information necessary to effect the transfer
or assignment according to then existing Federal and State securities
regulations and procedures. Such permitted assignee or transferee
shall, as a condition to the effectiveness of such assignment, be
required to execute a counterpart to this Agreement agreeing to be
treated as a Shareholder, whereupon such assignee or transferee shall
have the benefits of, and shall be subject to the restrictions
contained in, this Agreement as if such assignee or transferee was
originally included in the definition of an Shareholder herein, and
had originally been a party hereto.
(ii) "lien holders" includes any entity or individual, as of the date of
this Agreement, or during the term of this Agreement, which shall hold
a lien on any of the Equipment or any of the assets or income or cash
flow of the Company or the Shareholders, or any broker dealer or
lender to which any Registrable Securities are so pledged or
hypothecated.
(iii)"register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act, or pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of any or either of such Registration
Statements by the United States Securities and Exchange Commission
(the "SEC").
(iv) "Registrable Securities" means the Stock newly issued or transferred
pursuant to the EPA.
(v) "Registration Statement" means a registration statement of the Company
under the 0000 Xxx.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the EPA.
2. REGISTRATION.
(a) The Company shall prepare and file with the SEC a Registration Statement on
Form SB-1, XX-0, X-0, X-0 (or, if said Forms are not then available, on
such form of Registration Statement as is then available to effect a
registration of the Registrable Securities pursuant to the EPA), which
Registration Statement, to the extent allowable under the 1933 Act and the
rules and regulations promulgated there under (including Rules 415 & 416),
will include those Registrable Securities eligible for registration
pursuant to the provisions of Section 2 (b) herein. The Company shall use
its reasonable best efforts to keep the Registration Statement effective
pursuant to Rule 415 promulgated under the 1933 Act and available for sales
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of all of the Registrable Securities at all times until the earlier of (i)
the date as of which the Shareholders may sell all of the Registrable
Securities without restriction pursuant to Rule 144(k) promulgated under
the 1933 Act (or successor thereto) or (ii) the date on which the
Shareholders shall have sold all the Registrable Securities and no
available amount remains under the Purchase Agreement (the "REGISTRATION
PERIOD"). The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain
any 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,
in light of the circumstances in which they were made, not misleading.
(b) The Company shall register fifty percent (50%) of the Seller Shares in the
first registration statement filed by the Company subsequent to the Closing
in which such Shares may be legally registered, inclusive of any additional
Adjustment Shares issued to maintain aggregate value of the shares
initially issued, or collateral or penalty shares received by the Seller
pursuant to the EPA, the MPC and this Agreement, of even date hereof,
wherein one half of the shares to be so registered shall bear a lock-up
provision so noted on each certificate for securities so registered which
shall expire on December 26th, 2004, but shall file such registration
statement not later than 120 days subsequent to the Closing Date of the
EPA. The Company has represented to the Seller and the Shareholders that it
intends to file an SB-2 or S-3 registration statement during 2004, or will
seek exemptions applicable to these Shares, and will retain counsel who is
to prepare such registration within the time so stated herein so as to
timely comply with the provisions hereunder. If the Company is unable, for
any cause, to effect such registration, or effect such exemptions, the
Seller shall assist Company in effecting such registration, and the Company
shall provide all necessary cooperation to the Seller, within the intent of
this Agreement, to complete the effectiveness of such registration, and
shall reimburse Seller for their costs of registering such shares, to the
extent the Sellers incur such costs. Failure by the Company to file by the
120th day subsequent to the Closing Date of the EPA (the "first default
date") shall result in the following remedies to the Seller, as applicable:
1) If the Company fails to file a registration statement by the 120th day
subsequent to the Closing Date of the EPA, the Company shall issue 300,000
common shares to the Shareholders, pro-rata; and/or,
2) If the Company fails to file a registration statement by the 180th day
subsequent to the Closing Date of the EPA (the "second default date")
, the Seller shall: (i) rescind the transaction, repossess the
Equipment, or any portion thereof not otherwise sold, retain
possession of the 204,000 registered (or exempt) shares, retain
possession of 400,000 of the Registrable Securities, cancel the MPC,
refund to the Company the remainder of the Registrable Securities in
the possession of the Company, and seek any and all legal remedies to
recover the reasonable and ordinary costs to the Seller of the
repossession of its Equipment; or, (ii) in the event that the Company
has secured a loan collateralized by the Equipment, to the extent that
the MPC remains partially due, if any amount is due to the Seller, or
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in the event that the Company has sold all, or essentially all, of the
Equipment, then the Company shall title to the Seller a sufficient
amount of the Company's products so as to recover for the Seller
$700,000 from the gross sales proceeds of the first of any and all
contracts that are payable to the Company subsequent to the second
default date for the delivery of their products or services, plus any
balance still due and payable from the MPC, and since the Company has
retained all the Equipment, the Shareholders shall retain all the
Shares received at the closing of the EPA, as well as any subsequent
shares received pursuant to this Agreement, the EPA, or any subsequent
Agreement between the Parties.
3) If the Company files a registration statement within the 180 day
period following the Closing of the EPA, but the registration
statement, for any reason, is not declared effective by the SEC,
within 120 days of the filing of the registration statement, then the
penalties described in Section 2 (b) (1) and (2) of this Agreement
shall be payable, as applicable.
(c) Registrable Securities become eligible for registration as set forth
herein, and as set forth in this sections 2, sub-sections (e) and (f)
herein, subsequent to the 180th day from the closing of the EPA, on a
pro rata basis. All remaining Registrable Securities not registered
subsequent to the 180th day from the closing of the EPA may be sold
pursuant to Rule 144, except at the earliest event of either: (a) the
sale, transfer, exchange, or hypothecation by the Company of the
Equipment purchased with the Seller Shares; or (b) upon the date of a
change of control in the Company's ownership, as evidenced by the
execution of a binding agreement by the Company, in which at least
forty-five percent (45%) of the voting stock of the Company is
transferred, sold, exchanged, reissued, or hypothecated, except, a
sale of forty-five percent (45%) of the voting stock shall not be
construed as a change of control when sold in an underwritten or
syndicated public offering to more than one hundred (100) shareholders
by an NASD member Broker/Dealer; upon the occurrence of either such
event, all remaining Registrable Securities not registered subsequent
to the 180th day from the closing of the EPA shall be registered
promptly by the Company. If the Company is unable, for any cause, to
effect such registration, the Seller shall assist Company in effecting
such registration, and the Company shall provide all necessary
cooperation to the Seller, within the intent of this Agreement, to
complete the effectiveness of such registration. The dollar value of
stock, for the purpose of this agreement, shall be the value of the
book purchase by the buyer on the day the sale is consummated.
(e) Underwritten Offering. Upon the written request of the Shareholders
delivered to the Company within ten (10) days after delivery of any
such notice by the Company specifying the number of eligible
Registrable Securities proposed to be included in such registration
and stating that such Shareholders desire to sell such Registrable
Securities in the public securities markets, the Company shall use its
best efforts to cause all such Registrable Securities to be included
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in such registration on the same terms and conditions as the
securities otherwise being sold in such registration so as to permit a
public offering and resale of all such Registrable Securities under
the Securities Act by the Shareholders as a selling stockholder and
not as an underwriter; provided, however, that if the managing
underwriter advises the Company and the Shareholders in writing that
the inclusion of all Registrable Securities proposed to be included in
such registration would interfere with the successful marketing
(including pricing) of the registered shares, then the number of
Registrable Securities and other shares of Common Stock to be included
in such registration shall be reduced, pro rata.
(f) Piggy-Back Registrations. Subject to the last sentence of this Section
2(f), if at any time prior to the expiration of the Registration
Period (as hereinafter defined) the Company shall determine to file
with the SEC a Registration Statement relating to an offering for its
own account or the account of others under the 1933 Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business, or equity
securities issuable in connection with stock option or other bona
fide, employee benefit plans), the Company shall send to each
Shareholder who is entitled to registration rights under this Section
2 (c) written notice of such determination and, if within fifteen (15)
days after the effective date of such notice, such Shareholders shall
so request in writing, the Company shall include in such Registration
Statement all or any part of the Registrable Securities such
Shareholders requests to be registered, except that if, in connection
with any underwritten public offering for the account of the Company
the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment,
marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion of
the Registrable Securities with respect to which such Shareholders
have requested inclusion hereunder as the underwriter shall permit.
Any exclusion of Registrable Securities shall be made pro rata among
the Shareholders seeking to include Registrable Securities in
proportion to the number of Registrable Securities sought to be
included by such Shareholders. No right to registration of Registrable
Securities under this Section 2 shall be construed to limit any
registration required under this Section 2 hereof.
(g) The Company shall not be required by this Section 2 to include the
Registrable Securities in any Registration Statement which is to be
filed if, in the opinion of counsel of the Company, the proposed
offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would
result in all Company or transferees obtaining securities which are
not restricted securities.
(h) The Company shall not be precluded from including, in any registration
statement that it is required to file pursuant to pre-existing
agreements or contracts, any other securities apart from the
Registrable Securities. At the time of this Agreement, the Company
warrants and confirms that no pre-existing agreements or contracts
exist.
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3. EXEMPTION FROM REGISTRATION
In the event that the Registrable Securities become eligible for any
exemption from registration other than under Rule 144 or 145, as set forth
herein, prior to the 60th day subsequent to the Closing Date of the EPA, then
coincident to the availability of such applicable exemption, or in the event
that the Company issues Shares exempt from Registration under the Act, then 25%
of such Shares shall be available for sale by the Shareholders 120 days
subsequent to the Closing Date of the EPA, and 25% of such Shares shall be
available for sale by the Shareholders on December 26th, 2004. In the absence of
such initial issuance, or in any other occurrence or event, any such
certificates issued to Shareholders utilizing such applicable exemptions shall
bear lock-up dates only to the extent and duration that would otherwise have
been available pursuant to the Shareholders registration rights, as set forth in
this Agreement, as if the shares were subject to one or more of the registration
dates set forth herein instead of the exemption. No certificate shall bear a
lock-up provision later than December 26th, 2004. To the extent any of the
Registrable Securities held by Shareholders are not subject to such exemption,
all the provisions of this RRA are applicable to all unregistered Registrable
Securities, whether any portion of the Registrable Securities were subject to
any such applicable exemption from registration.
4. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall, using their best good faith efforts, prepare and file
with the SEC, Registration Statements with respect to the number of Registrable
Securities provided in Section 2, and thereafter use its best efforts to cause
such Registration Statement relating to Registrable Securities to become
effective as soon as possible after such filing, and if applicable, keep the
Registration Statement effective pursuant to Rule 415 at all times until such
date as is the earlier of (i) the date on which all of the Registrable
Securities have been sold and (ii) the date on which the Registrable Securities
(in the opinion of counsel to the Shareholders) may be immediately sold to the
public without registration or restriction (including without limitation as to
volume by each holder thereof) under the 1933 Act (the "Registration Period"),
which Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any 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.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statements and the prospectus used in connection with the Registration
Statements as may be necessary to keep the Registration Statements effective at
all times during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statements
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statements. The Company shall use its
best efforts to cause such amendments and/or new Registration Statements to
become effective as soon as practicable following the filing thereof.
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c. The Company shall furnish to counsel for the Seller, or its Agent, as
applicable, whose Registrable Securities are included in a Registration
Statement, one copy of each Registration Statement and any amendment thereto,
after the same is prepared, at least three business days prior to its public
distribution and filing with the SEC (the "comment period"), in each case
relating to such Registration Statement (other than any portion of any thereof
which contains information for which the Company has sought confidential
treatment), so that the Seller's counsel or Agent, as applicable, may make
comments or suggestions prior to the filing. Failure to provide such comment
period shall be an event of default under this agreement unless waived in
writing by the Seller prior to the initiation of the comment period.
d. The Company shall furnish to Shareholders whose Registrable Securities
are included in a Registration Statement, one copy of each Registration
Statement and any amendment thereto, after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company, in each case
relating to such Registration Statement (other than any portion of any thereof
which contains information for which the Company has sought confidential
treatment), and after the Registration Statement is declared effective by the
SEC, such number of copies of a prospectus, including a preliminary prospectus,
and all amendments and supplements thereto and such other documents as such
Shareholders may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Shareholders.
The Company will notify the Shareholders in writing of the effectiveness of
each Registration Statement or any post-effective amendment.
e. The Company shall use reasonable efforts to assist Shareholders to (i)
register and qualify the Registrable Securities covered by the Registration
Statements under such other securities or "blue sky" laws of such jurisdictions
in the United States as the Shareholders 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 during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) pay any costs, inclusive of legal and filing costs incurred by
the Company, of "blue sky" qualification or registration of Stock of any
Shareholders in jurisdictions or states in which the shares must be separately
qualified or registered; and (b) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3(e),
(c) subject itself to general taxation in any such jurisdiction, (d) file a
general consent to service of process in any such jurisdiction, (e) provide any
undertakings that cause the Company undue expense or burden, or (f) make any
change in its charter or bylaws, which in each case the Board of Directors of
the Company determines to be contrary to the best interests of the Company and
its shareholders, and (v) provide appropriate information, in a timely manner
from the date of request by a Shareholder, to either Company's SEC counsel or
any Shareholder's SEC counsel whose credentials have been approved by Company's
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SEC counsel, to allow required legal opinions of counsel to be presented to the
appropriate parties to facilitate the sale of Shareholders' Shares pursuant to
Rule 144 or 145, as applicable. The Company shall bear the expense of one legal
opinion per Shareholder, and each shareholder shall bear the expense of any
additional Rule 144 opinion requests. If Company's counsel is utilized for such
opinion (s), each Shareholder shall pay the Company, in advance, the normal and
ordinary legal fee expense for each such additional request.
f. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of any Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment.
g. The Company, subsequent to its merger with the mergee, shall seek to
list all its securities of the same class issued by the Company to the
Shareholders, on the American Stock Exchange, or the NASDAQ SMALLCAP, or the
Chicago, Philadelphia or Boston regional stock exchanges, prior to 180th day
from the Closing of the EPA. Copies of the preliminary listing application for
each such exchange so applied, without attachments or exhibits, shall be
provided to the Seller, or its Agent, as applicable, and copies of disposition
letters received by the Company from such exchanges shall be transmitted by
facsimile to the then notice number of record for the Seller. In the event that
the company fails to achieve a listing on any of the aforementioned exchanges,
despite their best good faith efforts to do so, then this failure, at the time
of the last exchange to so notify the Company of its refusal to list the
Company's securities on that exchange, shall trigger a penalty payment pursuant
to this Agreement to be added to the MPC, in an amount equal to five (5) percent
of the value of the unregistered securities at the time that the penalty is
effective. The dollar value of stock, for the purpose of this agreement, shall
be the value of the book purchase by the Company on the Closing Date.
h. The Company shall (i) cause all the Registrable Securities covered by
the Registration Statement to be listed on each national or regional securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) to the extent the securities
of the same class or series are not then listed on a national or regional
securities exchange, secure the designation and quotation, of all the
Registrable Securities covered by the Registration Statement on the OTCBB.
Failure to maintain an OTCBB listing for a period of more than sixty (60) days
during the Registration Period shall trigger a penalty payment pursuant to this
Agreement to be added to the MPC, in an amount equal to five (5) percent of the
value of the unregistered securities at the time that the penalty is effective.
The dollar value of stock, for the purpose of this agreement, shall be the value
of the book purchase by the Company on the Closing Date.
i. The Company shall at all times during the term of this agreement
maintain a transfer agent and registrar, which may be a single entity, for the
Registrable Securities.
j. Subsequent to the effectiveness of any registration statement referred
to herein, the Company shall cooperate with the Shareholders who hold
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing registered securities pursuant to such Registration
Statement. The Company will be responsible for the cost of a single certificate
for each such shareholder's shares. Should Shareholders request certificates in
denominations or amounts which require more than a single certificate, the costs
and expenses of such requests shall be at the expense of the Shareholders.
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5. OBLIGATIONS OF THE SHAREHOLDERS.
In connection with the registration of the Registrable Securities, the
Shareholders shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company with
respect to the Registrable Securities of particular Shareholders that such
Shareholders furnish to the Company any information regarding each Shareholder
reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request. At least thirty (30) days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Shareholder of the information the Company requires from each such
Shareholder.
b. Each Shareholder, by such Shareholders' 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
Statements hereunder, unless such Shareholder has notified the Company in
writing of such Shareholders' election to exclude all of such Shareholders'
Registrable Securities from the Registration Statements.
c. No Shareholder may participate in any underwritten registration
hereunder unless such Shareholders (i) agree to sell such Shareholders'
Registrable Securities on the basis provided in any underwriting arrangements in
usual and customary form entered into by the Company, (ii) completes and
executes all questionnaires, powers of attorney, indemnifications, 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 and any expenses in excess of those
payable by the Company pursuant to Section 5 below.
6. EXPENSES OF REGISTRATION.
All reasonable expenses, incurred in connection with SEC registrations and
filings pursuant to Sections 2, 3 and 4, other than underwriting discounts and
commissions, including, without limitation, all listing and qualification fees,
printing and accounting fees, and the fees and disbursements of counsel for the
Company, shall be borne by the Company.
The Company shall not be liable for any unusual or extraordinary costs of
registering the Shareholders shares beyond the customary and ordinary costs of
such registration. Shareholders shall be responsible for such costs or expenses
as they incur them; any delays by Shareholders that cause the delay of the
effectiveness of any registration statement filed by the Company, which includes
any portion of the delaying Shareholders Stock, may cause the Company, or those
delaying Shareholders, to incur additional or extraordinary expenses or fees,
and to that extent, such Shareholders may be deemed liable for such costs.
7. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the maximum extent permitted by law, the Company agrees to indemnify
and hold harmless the Shareholders, each of the Shareholder's officers,
directors, employees, agents and attorneys, and each person, if any, who
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controls the Shareholder within the meaning of the Securities Act (each a
Distributing Shareholder") against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees and expenses), to which the Distributing Shareholder,
or any such other aforementioned person, 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 any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, or any related prospectus or amendment or supplement
thereto, 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; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based (i) upon the wrongful actions of the
Shareholder; (ii) any market loss or pricing of the Securities upon sale; or
(ii) upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by the
distributing Shareholder, its counsel or affiliates, specifically for use in the
preparation thereof or (ii) by the Shareholder's failure to deliver to the
Company a copy of the most recent prospectus (including any amendments or
supplements thereto).
(b) To the maximum extent permitted by law, the Distributing Shareholders
agrees that it will indemnify and hold harmless the Company, and each officer
and director of the Company or person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees and expenses) to which the Company or any such
officer, director or controlling person 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 any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement, or any related prospectus or amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in such Registration Statement, prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by such Distributing Shareholder, its counsel or affiliates,
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability, which the Distributing Shareholder may
otherwise have.
c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action against such indemnified party, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
which it may have to any indemnified party except to the extent the failure of
the indemnified party to provide such written notification actually prejudices
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the ability of the indemnifying party to defend such action. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, assume the defense thereof,
subject to the provisions herein stated and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified parties as a group
shall have the right to employ one separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party unless (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by its counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the indemnified party or any other
indemnified party (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the indemnified party, which firm shall be
designated in writing by the indemnified party). No settlement of any action
against an indemnified party shall be made without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld so long
as such settlement includes a full release of claims against the indemnified
party. All fees and expenses of the indemnified party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and all reasonable attorneys' fees and expenses) shall be paid to the
indemnified party, as incurred, within ten (10) business days of written notice
thereof to the indemnifying party; provided, that the indemnifying party may
require such indemnified party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such indemnified
party is not entitled to indemnification hereunder.
8. Contribution. In order to provide for just and equitable contribution under
the Securities Act in any case in which (i) the indemnified party makes a claim
for indemnification pursuant to Section 7 hereof, but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 7 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
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Distributing Shareholder shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys' fees and expenses),
in either such case (after contribution from others) on the basis of relative
fault 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 Company on the
one hand or the Distributing Shareholder on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Distributing Shareholders agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. 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.
Notwithstanding any other provision of this Section 8, in no event shall
the Shareholder be required to undertake liability to any person under this
Section 8 for any amounts in excess of the dollar amount of the proceeds
received by such Shareholder from the sale of such Shareholder's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable
Securities are registered under the Securities Act.
9 . REPORTS UNDER THE 1934 ACT.
With a view to making available to the Shareholders the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Shareholders to sell securities of the
Company to the public without registration ("Rule 144"). The Company agrees to:
a. Make and keep public information available, as those terms are defined
in Rule 144;
b. Provide to each Shareholder, so long as such Shareholders own
Registrable Securities, information as may be reasonably requested to permit the
Shareholders to sell such securities pursuant to Rule 144.
c. Provide to each Shareholder the name and phone number of its Securities
Counsel, so as to facilitate any opinions required for the Shareholder to
utilize exemptions pursuant to Rule144 .
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d. Provide to each Shareholder, upon request, in a timely, commercially
reasonable manner, written authorization from an empowered officer of the
Company, to make such transfers, assignments, grants, gifts, bequeaths, or
hypothecations as any Shareholder may request, from time to time, until all the
Registrable Securities are registered, so as to comply with the regulations of
Rule 144, as amended.
The Shareholders agree to:
a. Pay to the Company the ordinary and usual cost, at the time of the
request of the Shareholder, invoiced by the Company's Securities Counsel, to
provide any opinion required to effect sales of Stock pursuant to Rule 144,
payable prior to the issuance of such opinion by counsel, except for the first
such request from each Shareholder, which expense shall be born by the Company.
b. Pay any expenses incurred in the process of facilitating the sale of
their Stock pursuant to Rule 144, inclusive of, but not limited to, any couriers
and Transfer Agent fees for additional certificates in excess of the original
certificate issued at the Closing of the EPA to each Shareholder, and the
original certificates issued at the Registration of any of the Shareholders'
Shares.
c. Abide by the provisions set forth herein regarding the timing of the
eligibility of Registerable Securities, whereas any Stock not eligible for
registration by the date upon which a Shareholder wishes to execute a sale of
Stock pursuant to Rule 144 would likewise not be eligible at that time for a
sale pursuant to Rule 144, except after twelve months subsequent to the date of
the execution of the EPA.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions 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 written consent of the Company, each of the
Shareholders (to the extent such Shareholders still owns Registrable Securities)
Any amendment or waiver effected in accordance with this Section 9 shall be
binding upon each Shareholder and the Company.
11. Compliance with Securities Laws. The offer, grant, sale, hypothecation
and/or issuance and/or transfer of the Shares will not be in violation of the
Act, the Securities and Exchange Act of 1934, as amended ("Exchange Act"), any
state securities or "blue sky" law, or the Charter Documents, when offered,
transfer, or sold in accordance with this Contract.
12. Transfer Restrictions. There are no restrictions on the transfer of capital
stock of the Company imposed by the Charter Documents, any Contract to which
Company is a party, any order of any court or any governmental agency to which
Company is subject, or any state or federal securities laws.
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13. MISCELLANEOUS.
a. This Agreement is binding upon and inures to the benefit of the parties
hereto and their respective heirs, permitted successors and permitted assigns.
b. Any notices required or permitted to be given under the terms hereof
shall be sent by certified or registered mail (return receipt requested) or
delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile and shall be effective five days after being placed in
the mail, if mailed by regular United States mail, or upon receipt, if delivered
personally or by courier (including a recognized overnight delivery service) or
by facsimile, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Equipment Depot, Inc.
Attention: SearchPro Corporation,
agent for Equipment Depot, Inc. and the Shareholders
0000 Xxxx Xxxxxxx Xxxx Xxxx., #000
Xxxx Xxxxxxxxxx, Xx. 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
With copies to:
If to the Shareholders:
to the address set forth immediately below such Shareholders' name on
the signature pages of the Agreement.
With a copy to:
Telephone:
Facsimile:
Email:
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 ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN BROWARD COUNTY,
FLORIDA, WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
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THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.
e. In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.
f. This Agreement, the Money Purchase Contract, and the Equipment Purchase
Agreement (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement, the
Money Purchase Contract and the Equipment Purchase Agreement supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
g. The headings in this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this Agreement.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute 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 party hereto by facsimile transmission of a
copy of this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
j. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
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IN WITNESS WHEREOF, the Company and the undersigned Shareholders have caused
this Agreement to be duly executed as of the date first above written.
EQUIPMENT DEPOT, INC.
/s/ Xxxx X. Xxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxx
Vice-President
By:/s/ Xxxxxxx Xxxxxxxx By:/s/ Xxxxxxx Xxxxxxxx
-------------------------------- -----------------------------------
Purchaser pursuant to the EPA Purchaser pursuant to the EPA
On Alert Systems, Inc.
And issuer of the And issuer of the
Registrable Securities Registrable Securities
Xxxxxxx Xxxxxxxx, CEO Xxxxxxx Xxxxxxxx, CEO
SearchPro Corporation
/s/ Xxxxxxx Xxxxx
---------------------------------------- ----------------------------------
By: Xxxxxxx Xxxxx By: Shareholder
VP Performance Trust,
Xxxx X. Xxxxxxxxxx, Esq., Trustee.
/s/ Xxxx X. Xxxxxxxxxx
---------------------------------------- ----------------------------------
By: Xxxx X. Xxxxxxxxxx, Esq., as Trustee By: Shareholder
Lauderdale Consulting Corporation Xxxx X. Xxxxxxx, individually
/s/ Xxxxxxx Xxxxxxx /s/ Xxxx D, Xxxxxxx
---------------------------------------- ----------------------------------
By: Xxxxxxx Xxxxxxx, Dir. By: Xxxx X. Xxxxxxx
Turnaround M&A, Inc. Xxxxx X. Xxxxxxxxx, Individually
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------- ----------------------------------
By: Xxxxx X. Xxxxxxxxx, Esq., By: Xxxxx X. Xxxxxxxxx
As Receiver for Turnaround M&A, Inc.
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