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EXHIBIT 6.9
ASPEN WEST GROUP, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
effective as of February 3, 1997, by and between ASPEN WEST GROUP, INC., a
Delaware corporation (the "Corporation"), and the entities set forth on the
signature pages attached hereto, (individually, a "Holder" and collectively, the
"Holders").
RECITAL
The Holders are holders of warrants to purchase an aggregate of 650,000
shares of the Corporation's common stock, dated of even date herewith, issued by
the Corporation (the "Warrants"), pursuant to which the Corporation is obligated
to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereto
hereby agree as follows:
1. DEFINITIONS.
a. "CLOSING DATE" means the date of issuance of the
Warrants to the Holders.
b. "COMMISSION" means the Securities and Exchange Commission or
any other Federal agency at the time administering the "Securities Act."
c. "COMMON STOCK" means any and all (a) shares of common stock of
the Corporation issued upon exercise of the Warrants; (b) any common stock of
the Corporation issued as a dividend or other distribution with respect to or in
replacement of the common stock issued upon exercise of the Warrants; and (c)
any common stock issued in any combination or subdivision of the common stock
issued upon exercise of the Warrants; provided that in determining the amount of
Common Stock held by any Person, the sum of (a), (b) and (c) shall be used. Any
reference to "common stock" without initial capital letters shall mean all other
shares of the
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Corporation's common stock or other equity securities convertible into shares of
such "common stock."
d. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended or any similar Federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
e. "INITIATING HOLDERS" any holder or holders of no less than
fifty percent (50%) of the then outstanding Registrable Securities.
f. "PERSON" means any individual, corporation, trust,
partnership, association, or other entity.
g. "REGISTRABLE SECURITIES" means the Common Stock.
h. "REGISTER," "REGISTERED," AND "REGISTRATION," mean a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
i. "SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
j. "SELLER" means a holder of Registrable Securities selling such
shares.
2. REGISTRATION RIGHTS
2.1 PIGGYBACK REGISTRATION.
(a) THE CORPORATION'S OBLIGATION TO REGISTER. If the Corporation
at any time proposes to register any of its securities under the Securities Act
(other than a registration effected solely to implement an employee benefit
plan, a transaction to which Rule 145 of the Commission is applicable or any
other form or type of registration in which Registrable Securities cannot be
included pursuant to Commission regulation, rule or practice), it will give
written notice to all holders of the outstanding Registrable Securities of its
intention to make such registration. If such
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registration is proposed to be on a form which permits inclusion of the
Registrable Securities, then upon the written request of any holders of the
Registrable Securities given within thirty (30) days after transmittal by the
Corporation to the holders of such written notice (stating the intended method
and terms of disposition of such securities, including a list of the
jurisdictions in which the Corporation intends to qualify such securities), the
Corporation will, subject to the limits contained in this Section, and not more
than twice with respect to all such holders, use its best efforts to cause such
Registrable Securities of said requesting holders to be registered under the
Securities Act and qualified for sale under any state blue sky law, all to the
extent requisite to permit such sale or other disposition by such holders of the
Registrable Securities so registered.
(b) CUTBACKS. Notwithstanding any other provision of this
Section, if the underwriter managing such registration notifies the holders of
Registrable Securities in writing that market or economic conditions limit the
amount of securities which may reasonably be expected to be sold, the holders of
such Registrable Securities will be allowed to register their Registrable
Securities pro rata based on (i) the number of shares of Registrable Securities
held by such holders, and (ii) the number of shares of "Registrable Securities"
as such term is defined in the Registration Rights Agreement dated of even date
herewith, by and between the Corporation and Xxxxxx X. Xxxx (the "Xxxx Stock");
provided that the holders of Registrable Securities shall have their Registrable
Securities reduced only so long as the only other shares registered (excluding
those of the holders of Registrable Securities) are on behalf of the Corporation
and, subject to the pro rata cutbacks set forth above, the Levy Stock. After the
Corporation's initial registered public offering, said underwriter may limit the
amount of the Registrable Securities and Levy Stock to be registered to not less
than 50% of the aggregate number of shares so registered, provided that only
shares registered on
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behalf of the Corporation shall constitute the remaining shares so
registered.
2.2 FORM S-3.
(a) OBLIGATION TO REGISTER. The Corporation shall use its best
efforts to qualify for registration on Form S-3 within 18 months after the date
of this Agreement; to that end the Corporation shall, no later than the date
that is six (6) months after the date of this Agreement, use its best efforts to
file and have declared effective by the Securities and Exchange Commission a
registration statement (whether or not required by law to do so) for the
registration of its common stock under Section 12 of the Exchange Act. After the
Corporation has qualified for the use of Form S-3, the Initiating Holders of
Registrable Securities shall have the right to request a registration on Form
S-3 under this Section 2.2 (such request shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of such shares by such Person or Persons); provided that
the Corporation shall not be required to effect a registration pursuant to this
Section 2.2 unless the Person or Persons requesting registration propose to
dispose of shares of Registrable Securities which will have an aggregate
offering price (before deduction of underwriting discounts and expenses of sale)
of at least $500,000.
(b) NOTICE. The Corporation shall give written notice to all
holders of Registrable Securities of the receipt of a request for registration
pursuant to this Section 2.2 and shall permit such other holders to participate
in the registration upon their request therefor, so long as such request is
given within twenty (20) days after receipt of such notice from the Corporation.
Subject to the foregoing, the Corporation will use its best efforts to effect
promptly the registration of all shares of Registrable Securities on Form S-3 to
the extent requested by the holders thereof for purposes of disposition.
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2.3 REGISTRATION PROCEDURES. Whenever the Corporation is required by the
provisions of this Agreement to effect the registration of any of its securities
under the Securities Act, the Corporation will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such securities and use its best commercial efforts to cause
such registration statement to become and remain effective for the period
provided in this Agreement;
(b) 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 and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
whenever the seller or sellers of such securities shall desire to sell or
otherwise dispose of the same, but only to the extent provided in this
Agreement;
(c) furnish to each seller such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as such seller may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by such seller;
(d) use reasonable efforts to register or qualify the securities
covered by such registration statement under such other securities or state blue
sky laws of such jurisdictions as each seller shall reasonably request,
including doing any and all other reasonable acts and things which the
Corporation deems reasonably necessary under such securities or blue sky laws to
enable such seller to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such seller, except that the
Corporation shall not for any such purpose be required to qualify to do business
as a foreign corporation in any jurisdiction wherein it is not so qualified or
does not intend to be so
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qualified prior to the effective date of the applicable
registration statement;
(e) before filing the registration statement or prospectus or
amendments or supplements thereto, furnish to one counsel selected by a majority
of the voting interests of the holders of Registrable Securities copies of such
documents proposed to be filed which shall be subject to the reasonable approval
of such counsel;
(f) furnish to each prospective seller a signed counterpart,
addressed to the prospective seller, of (i) an opinion of counsel for the
Corporation, dated the effective date of the registration statement, and (ii) a
"comfort" letter signed by the independent public accountants who have certified
the Corporation's financial statements included in the registration statement,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants' letter) with respect to events subsequent to the date of the
financial statements, as are customarily covered (at the time of such
registration) in opinions of the Corporation's counsel and in accountants'
letters delivered to the underwriters in underwritten public offerings of
securities. Notwithstanding any other provision of this Section 2, the
Corporation shall not in any event be required to maintain the effectiveness of
any such registration statement for a period in excess of 180 days.
2.4 REGISTRATION EXPENSES. As used herein, "Registration Expenses" shall
mean all expenses incurred by the Corporation in complying with Sections 2.1 and
2.2 hereof, including, without limitation, all registration and filing fees;
printing expenses; fees and disbursements of counsel for the Corporation;
reasonable fees and disbursements of one counsel for all the selling
shareholders of the Registrable Securities (which shall not exceed Twenty-five
Thousand Dollars ($25,000) for each such registration); blue sky fees and
expenses; and the expense of any special audits
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incident to or required by any such registration (but excluding the compensation
of regular employees of the Corporation who shall be paid in any event by the
Corporation); and "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sales of Registrable Securities
thereunder. The Corporation will pay the described Registration Expenses in
connection (i) two (2) registrations pursuant to Section 2.1 and (ii) one
registration pursuant to Section 2.2. All Selling Expenses in connection with
each registration pursuant to Sections 2.1 and 2.2 shall be borne by the
Corporation and the selling shareholders pro rata in proportion to the
securities covered thereby being sold by them.
2.5 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE CORPORATION. In the event of any
registration of any of the Corporation's securities under the Securities Act
pursuant to this Section 2, the Corporation shall indemnify and hold harmless
each of the following parties as described in this Agreement: (i) the seller of
such securities; (ii) each underwriter (as defined in the Securities Act) who
makes an underwriting agreement with the Corporation or Holders pursuant to the
foregoing terms of this Agreement; (iii) each other Person who is a partner or
affiliate or agent of such seller and who participates in the offering of such
securities; and (iv) each other Person, if any, who controls (within the meaning
of the Securities Act) such seller, underwriter or participating Person against
any losses, claims, damages or liabilities (collectively the "liability"), joint
or several, to which such seller, underwriter, participating Person or
controlling Person may become subject under the Securities Act or any other
statute or at common law, if such liability (or action in respect thereof)
arises out of or is based upon (i) any alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission
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to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading. Except as otherwise provided in
paragraph (d) of this Section 2.5, the Corporation shall reimburse each such
seller, underwriter, participating Person or such controlling Person in
connection with defending any such liability. Notwithstanding anything to the
contrary herein, however, the Corporation shall not be liable to any seller,
underwriter, participating Person, or controlling Person in any such case if any
such liability arises out of or is based upon any alleged untrue statement or
alleged omission made in such registration statement, preliminary or final
prospectus, or amendment or supplement thereto (i) in reliance upon and in
conformity with information furnished to the Corporation by such Person
specifically for use in such registration statement, preliminary or final
prospectus or amendment or supplement thereto, or (ii) based on the authority of
an "expert" within the meaning of that term as defined in the Securities Act
(but only if the Corporation had no reasonable ground to believe, and did not
believe, that the statements made on the authority of such expert were untrue or
that there was an omission to state a material fact). The Corporation shall not
be required to indemnify any Person against any liability arising from (i) any
untrue or misleading statement or omission contained in any preliminary
prospectus if such deficiency is corrected in the final prospectus or (ii) for
any liability which arises out of the failure of any Person to deliver a
prospectus as required by the Securities Act. The indemnity provided for in this
Section 2.5(a) shall remain in full force and effect for the period of
limitations imposed under California law, regardless of any investigation made
by or on behalf of such seller, underwriter, participating Person or controlling
Person and shall survive transfer of such securities by such seller.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. Each
holder of any Registrable Securities shall, by
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acceptance thereof, indemnify and hold harmless each other holder of any
Registrable Securities, the Corporation, its directors and officers, each
above-described underwriter who contracts with the Corporation or its agents and
each other Person, if any, who controls the Corporation or such underwriter,
against any liability, joint or several, to which any such other holder, the
Corporation, underwriter or any such director or officer of any such Person may
become subject under the Securities Act or any other statute or at common law,
if such liability (or actions in respect thereof) arises out of or is based upon
(i) the disposition by such holder of such Registrable Securities in violation
of the provisions of this Section 2.5, (ii) any alleged untrue statement of any
material fact contained in any registration statement under which securities
were registered under the Securities Act at the request of such holder, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (iii) any alleged omission to state therein a material
fact required to be stated therein or necessary to make statement(s) therein not
misleading. Notwithstanding any other provision of this Section 2.5(b), the
indemnification rights set forth in this Section 2.5(b) shall be given in the
case of clause (ii) or (iii) only if such alleged untrue statement or alleged
omission in such registration statement, preliminary or final prospectus,
amendment or supplement thereto was made (1) in reliance upon and in conformity
with information furnished to the Corporation by such holder expressly stated
for use therein, and (2) not based on the authority of an expert as to when the
holder had no reasonable ground to believe, and did not believe, that (A) the
statements made on the authority of such expert were untrue or (B) there was an
omission to state a material fact. Such holder shall reimburse the Corporation,
such underwriter or such director, officer, other Person or other holder for any
reasonable legal fees incurred in investigating or defending any such liability;
provided, however, that no holder of Registrable Securities shall
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be required to indemnify any Person against any liability arising from any
untrue or misleading statement or omission contained in any preliminary
prospectus if such deficiency was corrected in the final prospectus or for any
liability which arises out of the failure of any Person to deliver a prospectus
as required by the Securities Act; and provided further, that the obligations of
such holder of Registrable Securities for the indemnity hereunder shall be
limited to an amount equal to the net proceeds received by such holder of
Registrable Securities upon disposition thereof, and shall not extend to any
settlement of claims related thereto without the express written consent of such
holder of Registrable Securities, which consent shall not be unreasonably
withheld.
(c) FURTHER INDEMNITY. Indemnification similar to that specified
in paragraphs (a) and (b) of this Section 2.5 shall be given by the Corporation
and each holder of any Registrable Securities (with such modifications as may be
appropriate) with respect to any required registration or other qualification of
the Common Stock under any federal or state law or regulation of governmental
authority other than the Securities Act.
(d) PROCEDURES; RIGHTS TO SEPARATE COUNSEL. Each party entitled
to indemnification under this Section 2.5 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has received written notice of any
claim as to which indemnity may be sought, and shall tender the defense of any
such claim or any litigation resulting therefrom to the Indemnifying Party,
provided that counsel for the Indemnifying Party who is conducting the defense
of such claim or litigation shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld). The failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 2.5 unless such failure to give notice
shall materially affect the Indemnifying Party in the defense of any such claim
or any such
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litigation. The Indemnified Party shall also have the right to employ separate
counsel in any such action and to participate separately in the defense thereof,
but in such circumstance the fees and expenses of such counsel shall be paid by
the Indemnified Party and not at the expense of the Indemnifying Party. However,
if the Indemnifying Party fails to assume the defense of any properly tendered
claims, then the fees and expenses of such separate counsel shall be borne by
the Indemnifying Party. Except with the consent of any Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party a release from all liability in respect of such claim
or litigation.
2.6 TERMINATION OF REGISTRATION RIGHTS. Notwithstanding the foregoing
provisions of this Agreement, the rights to registration and the designation of
Common Stock as Registrable Securities shall terminate as to any particular
securities when such securities shall have been lawfully sold by the holder
thereof to the public pursuant to a registration statement.
2.7 COMPLIANCE WITH RULE 144. With a view to making available the
benefits of certain rules and regulations of the Commission that may permit the
sale of the Registrable Securities to the public without registration, the
Corporation agrees to use its best efforts to:
(a) Make and keep public information regarding the Corporation
available as those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after ninety (90) days following the
effective date of the first registration under the Securities Act filed by the
Corporation for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and
other documents required of the Corporation under the
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Securities Act and the Exchange Act at any time after it has become
subject to such reporting requirements;
(c) So long as a Holder owns more than ten percent (10%) of any
Registrable Securities, furnish to the Holder forthwith upon written request a
written statement by the Corporation as to its compliance with the reporting
requirements of Rule 144 (at any time from and after ninety (90) days following
the effective date of the first registration statement filed by the Corporation
for an offering of its securities to the general public), and of the Securities
Act and the Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly report of
the Corporation, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without registration.
2.8 CONSENT TO BE BOUND. Each subsequent holder of Registrable
Securities obtaining rights under Section 2.10 must consent in writing to be
bound by the terms and conditions of this Agreement in order to acquire the
rights granted pursuant to this Agreement.
2.9 AMENDMENTS. The provisions of this Agreement may be amended, and the
Corporation may take any action herein prohibited or omit to perform any act
herein required to be performed by it only if the Corporation has obtained the
written consent of the holders of 51% or more of the Registrable Securities, but
any such amendment or consent shall be binding upon any Person who has not
signed such amendment.
2.10 ASSIGNABILITY OF REGISTRATION RIGHTS. Subject to Section 2.8
hereof, the registration rights set forth in this Agreement are assignable to
any assignee as to Registrable Securities conveyed in accordance herewith who
acquires no less than (a) five percent (5%) of the Corporation's then
outstanding Registrable Securities or (b) at least fifty percent (50%) of the
Registrable Securities
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originally held by such assignor. Notwithstanding the foregoing, the
registration rights set forth in this Agreement may be transferred to any
general or limited partner of a Holder or any other affiliated party of such
Holder who is a successor in interest to a Holder regardless of the percentage
of Registrable Securities so transferred.
2.11 RIGHTS WHICH MAY NOT BE GRANTED TO SUBSEQUENT INVESTORS. The
Corporation shall not grant registration rights or enter into any "registration
rights agreement" or similar agreement with any Person after the Closing Date
unless such agreement provides that the holder of such securities may not
participate in any registration requested pursuant to this Agreement without the
consent of holders of a majority of the Registrable Securities and such
registration rights are neither superior to nor in conflict with any rights
conferred under this Agreement.
2.12 INFORMATION BY HOLDER. The holder or holders of Registrable
Securities included in any registration shall furnish to the Corporation such
information regarding such holder or holders, the Registrable Securities held by
them, and the distribution proposed by such holder or holders, as the
Corporation may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Article.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto, whether so
expressed or not.
3.2 SEVERABILITY. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such
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prohibition or invalidity, without invalidating the remainder of
this Agreement.
3.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all of which counterparts when taken together, shall constitute one
and the same Agreement.
3.4 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
3.5 NOTICES. All notices, demands, consents or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been given when personally delivered or five (5) business days
after deposit in the U.S. Mail (excluding Saturday and Sunday and any legally
recognized Federal holiday) if sent by first class certified mail, return
receipt requested or the next business day if sent by facsimile (receipt
acknowledged), Express Mail, Federal Express or similar service, addressed as
follows, or to such address as any of the below named Persons shall advise the
other parties by notice sent in accordance with this Section 3.5 if any named
Person shall desire to change such address:
IF TO HOLDERS: To the Addresses on the
Corporation's Shareholders
List
WITH A COPY TO: Xxxxxx X. Xxxxxx, Esq.
Pezzola & Xxxxxx, APC
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
IF TO THE CORPORATION: Aspen West Group, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: President
WITH A COPY TO: Xxxxxx Xxxxx, Esq.
Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
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3.6 GOVERNING LAW. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of California,
applicable to contracts made and to be performed entirely within the State of
California.
3.7 LITIGATION COSTS. Subject to Section 2.5, if any legal action
or any arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of a dispute, breach or default in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
3.8 SPECIFIC PERFORMANCE. Each party's obligation under this
Agreement is unique. If any party should default in its obligations under this
Agreement, the parties each acknowledge that it may be extremely impracticable
to measure the resulting damages; accordingly, the non-defaulting party, in
addition to any other available rights or remedies, may xxx in equity for
specific performance, and upon satisfactory proof thereof, it may be entitled to
obtain such specific performance.
3.9 FINAL AGREEMENT. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes, merges, renders void and terminates all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, with respect thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"CORPORATION" "HOLDERS"
ASPEN WEST GROUP, INC. /s/ Xxxxxxx Xxxxxxxxx
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By:/s/ Xxxxxx X. Xxxx Xxxxxxx Xxxxxxxxx
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(Signature) Address:
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(Print Name and Title) -----------------------------
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/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
Address:
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SANIBEL CAPITAL CORPORATION
By: /s/
--------------------------
(Signature)
-----------------------------
(Print Name and Title)
Address:
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