EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of the 23 day of November, 2005 (the "EFFECTIVE DATE") between
Century Pacific Financial Corporation, a Delaware corporation (the "COMPANY"),
and the parties set forth on the signature page and EXHIBIT A hereto (each, a
"PURCHASER" and collectively, the "PURCHASERS").
R E C I T A L S:
A. The Purchasers have purchased shares of the Company's Preferred
Stock (as defined below) and warrants (the "INVESTOR WARRANTS") to purchase
shares of the Company's Common Stock pursuant to Subscription Agreements (each,
a "SUBSCRIPTION AGREEMENT" and collectively, the "SUBSCRIPTION AGREEMENTS") by
and between the Company and each Purchaser.
B. The Company has issued a warrant (the "SMH WARRANT" and together
with the Investor Warrants, the "WARRANTS") to purchase shares of the Company's
Common Stock to Xxxxxxx Xxxxxx Xxxxxx Inc., a Texas corporation ("SMH").
C. The Company, the Purchasers, and SMH desire to set forth the
registration rights to be granted by the Company to the Purchasers and SMH.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth herein and in
the Subscription Agreements, the parties mutually agree as follows:
A G R E E M E N T:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"APPROVED MARKET" means the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, Inc., the American Stock Exchange, Inc. or
the NASD's OTC Bulletin Board.
"BLACKOUT PERIOD" means, with respect to a registration, a period:
(a) in each case commencing on the day immediately after the
Company notifies the Holders that they are required, pursuant to
SECTION 4(f), to suspend offers and sales of Registrable Securities
during which the Company, in the good faith judgment of its Board of
Directors, determines (because of the existence of, or in anticipation
of, any acquisition, financing activity, or other transaction involving
the Company, or the unavailability for reasons beyond the Company's
control of any required financial statements, disclosure of information
which is in its best interest not to publicly disclose, or any other
event or condition of similar significance to the Company) that the
registration and distribution of the Registrable Securities to be
covered by such registration statement, if any, would be seriously
detrimental to the Company and its shareholders and ending on the
earlier of (1) the date upon which the material non-public information
commencing the Blackout Period is disclosed to the public or ceases to
be material and (2) such time as the Company notifies the selling
Holders that the Company will no longer delay such filing of the
Registration Statement, recommence taking steps to make such
Registration Statement effective, or allow sales pursuant to such
Registration Statement to resume; PROVIDED, HOWEVER, that (i) the
Company shall limit its use of Blackout Periods described in the CLAUSE
(a), in the aggregate, to 30 Trading Days in any 12-month period and
(ii) no Blackout Period pursuant to this CLAUSE (a) may commence sooner
than 60 days after the end of a prior such Blackout Period; or
(b) commencing on the day immediately after the Company
notifies the Holders that they are required pursuant to SECTION 5 to
suspend offers and sales of Registrable Securities because, with
respect to a registration statement on a form other than Form S-3, the
Company reasonably determines that, based on the advice of counsel, a
post-effective amendment to the registration statement must be filed
with the Commission in order to update the audited financial statements
in the registration statement, or the Company elects, in its
discretion, to file a post-effective amendment to such registration
statement for the purpose of converting it to a Form S-3 after such
form becomes available for use by the Company, and, in either case,
such post-effective amendment is reviewed by the Commission, and ending
at such time as the post-effective amendment is declared effective by
the Commission; PROVIDED, HOWEVER, that (i) the Company shall use its
best efforts to promptly cause such post-effective amendment to be
declared effective by the Commission and (ii) the Company may suspend
effectiveness of a registration statement for a period not to exceed 75
consecutive days, provided that the Company may not suspend its
obligation under this CLAUSE (b) for more than 90 days in the aggregate
during any 12 month period.
"BUSINESS DAY" means any day of the year, other than a Saturday,
Sunday, or other day on which the Commission is required or authorized to close.
"CLOSING DATE" means November 23, 2005, or such other time as is
mutually agreed between the Company and the Purchasers for the closing of the
sale referred to in Recital A above.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMMON STOCK" means the common stock, par value $0.001 per share, of
the Company and any and all shares of capital stock or other equity securities
of: (i) the Company which are added to or exchanged or substituted for the
Common Stock by reason of the declaration of any stock dividend or stock split,
the issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
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"FAMILY MEMBER" means (a) with respect to any individual, such
individual's spouse, any descendants (whether natural or adopted), any trust all
of the beneficial interests of which are owned by any of such individuals or by
any of such individuals together with any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited
liability company all of the equity interests of which are owned by those above
described individuals, trusts or organizations and (b) with respect to any
trust, the owners of the beneficial interests of such trust.
"FORM SB-2" means such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act subsequently
adopted by the Commission, which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the Commission.
"HOLDER" means each Purchaser, SMH, or any of such Purchaser's
respective successors and Permitted Assigns who acquire rights in accordance
with this Agreement with respect to the Registrable Securities directly or
indirectly from a Purchaser or SMH, including from any Permitted Assignee.
"INSPECTOR" means any attorney, accountant, or other agent retained by
a Purchaser for the purposes provided in SECTION 4(j).
"MAJORITY HOLDERS" means at any time Holders of a majority of the
Registrable Securities.
"OFFERING PRICE" means the Offering Price set forth in the Placement
Agent Agreement dated November 23, 2005, between the Company and SMH.
"PERMITTED ASSIGNEE" means (a) with respect to a partnership, its
partners or former partners in accordance with their partnership interests, (b)
with respect to a corporation, its shareholders in accordance with their
interest in the corporation, (c) with respect to a limited liability company,
its members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family Member of
such party, (e) an entity that is controlled by, controls, or is under common
control with a transferor, or (f) a party to this Agreement.
"PREFERRED STOCK" means the Series A Convertible Preferred Stock, par
value $0.001 per share, of the Company.
The terms "REGISTER," "REGISTERED," and "REGISTRATION" refers to 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.
"REGISTRABLE SECURITIES" means shares of Common Stock issued or
issuable to each Purchaser upon conversion of the Preferred Stock or exercise of
the Investor Warrants issued to each pursuant to the Subscription Agreements or
issued or to be issued to SMH pursuant to the SMH Warrant, EXCLUDING (i) any
Registrable Securities that have been publicly sold or may be sold immediately
without registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person in
a transaction pursuant to a registration statement filed under the Securities
Act or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act.
"REGISTRATION DEFAULT DATE" means the date which is 60 days following
the Closing Date;
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PROVIDED, HOWEVER, (i) if the Registration Statement is subject to review by the
SEC staff, the Registration Default Date shall be the date which is 150 days
following the Closing Date; (ii) if the Registration Statement is not subject to
review by the SEC staff and the 60th day following the Closing Date falls during
a Blackout Period, the Registration Default Date shall be the date immediately
following the last day of such Blackout Period, (iii) if the Registration
Statement is subject to review by the SEC staff and the Company is unable to
file necessary pre-effective amendments to the Registration Statement with the
SEC because of a Blackout Period, the Registration Default Date shall be
extended by the number of calendar days that the Company is unable to file any
such pre-effective amendment during any such Blackout Period that occurs prior
to the end of the 150-day period, and (iv) if the Registration Statement is
subject to review by the SEC staff and the Company is unable in the ordinary
course of business to comply with Rule 3-12(b) of Regulation S-X, the
Registration Default Date shall be the date ten Business Days following the date
the Company files its Annual Report on Form 10-KSB for the year ending December
31, 2005, but no later than April 14, 2006.
"REGISTRATION DEFAULT PERIOD" means the period following the
Registration Default Date during which any Registration Event occurs and is
continuing.
"REGISTRATION EVENT" means the occurrence of any of the following
events:
(a) the Company fails to file with the SEC the Registration
Statement on or before the Registration Filing Date pursuant to SECTION
3(a);
(b) the Registration Statement covering Registrable Securities
is not declared effective by the Commission on or before the
Registration Default Date;
(c) after the SEC Effective Date, sales cannot be made
pursuant to the Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company's failure
to update the Registration Statement) but except as (i) excused
pursuant to SECTION 3(a), (ii) for the reasons specified in CLAUSE (d)
or (iii) as otherwise permitted by this Agreement, including pursuant
to a Blackout Period and as provided in SECTION 5; or
(d) the Common Stock generally or the Registrable Securities
specifically are not listed or included for quotation on an Approved
Market, or trading of the Common Stock is suspended or halted on the
Approved Market, which at the time constitutes the principal market for
the Common Stock, for more than two full, consecutive Trading Days;
PROVIDED, HOWEVER, a Registration Event shall not be deemed to occur if
all or substantially all trading in equity securities (including the
Common Stock) is suspended or halted on the Approved Market for any
length of time.
"REGISTRATION STATEMENT" means the registration statement required to
be filed by the Company pursuant to SECTION 3(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"SEC EFFECTIVE DATE" means the date the Registration Statement is
declared effective by the Commission.
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"TRADING DAY" means a day on whichever (a) the national securities
exchange, (b) the Nasdaq Stock Market, or (c) such other securities market, in
any such case which at the time constitutes the principal securities market for
the Common Stock, is open for general trading of securities.
2. TERM. This Agreement shall continue in full force and effect for a
period of three (3) years from the Effective Date, unless terminated sooner
hereunder.
3. REGISTRATION.
(a) REGISTRATION ON FORM SB-2. As promptly as reasonably practicable
after the date hereof, but in any event not later than 60 days after the Closing
Date (the "REGISTRATION FILING DATE"), the Company shall file with the
Commission a shelf registration statement on Form SB-2 relating to the resale by
the Holders of all of the Registrable Securities; PROVIDED, HOWEVER, that the
Company shall not be obligated to effect any such registration, qualification,
or compliance pursuant to this SECTION 3(a), or keep such registration effective
pursuant to SECTION 4: (i) in any particular jurisdiction in which the Company
would be required to qualify to do business as a foreign corporation or as a
dealer in securities under the securities or blue sky laws of such jurisdiction
or to execute a general consent to service of process in effecting such
registration, qualification or compliance, in each case where it has not already
done so; or (ii) during any Blackout Period, in which case the Registration
Filing Date shall be extended to the date immediately following the last day of
such Blackout Period.
(b) PIGGYBACK REGISTRATION. If the Company shall determine to register
for sale for cash any of its Common Stock, for its own account or for the
account of others (other than the Holders), other than (i) a registration
relating solely to employee benefit plans or securities issued or issuable to
employees, consultants (to the extent the securities owned or to be owned by
such consultants could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8) or (ii) a registration relating solely to
a Commission Rule 145 transaction, a registration on Form S-4 in connection with
a merger, acquisition, divestiture, reorganization, or similar event, the
Company shall promptly give to the Holders written notice thereof (and in no
event shall such notice be given less than 20 calendar days prior to the filing
of such registration statement), and shall, subject to SECTION 3(c), include in
such registration (and any related qualification under blue sky laws or other
compliance) (a "PIGGYBACK REGISTRATION"), all of the Registrable Securities
specified in a written request or requests, made within 10 calendar days after
receipt of such written notice from the Company, by any Holder or Holders.
However, the Company may, without the consent of the Holders, withdraw such
registration statement prior to its becoming effective if the Company or such
other stockholders have elected to abandon the proposal to register the
securities proposed to be registered thereby.
(c) UNDERWRITING. If a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders in writing or as a part of the written notice given pursuant to SECTION
3(b). In such event the right of any Holder to registration pursuant to SECTION
3(b) shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and any other
stockholders of the Company distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company or
selling stockholders, as applicable. Notwithstanding any other provision of this
SECTION 3(c), if the underwriter or the Company determines that marketing
factors
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require a limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities from such registration and
underwriting. The Company shall so advise all Holders (except those Holders who
failed to timely elect to distribute their Registrable Securities through such
underwriting or have indicated to the Company their decision not to do so), and
the number of shares of Registrable Securities that may be included in the
registration and underwriting, if any, shall be allocated among such Holders as
follows:
(i) In the event of a Piggyback Registration that is initiated
by the Company, the number of shares that may be included in the
registration and underwriting shall be allocated first to the Company
and then, subject to obligations and commitments existing as of the
date hereof, to all selling stockholders, including the Holders, who
have requested to sell in the registration on a pro rata basis
according to the number of shares requested to be included; and
(ii) In the event of a Piggyback Registration that is
initiated by the exercise of demand registration rights by a
stockholder or stockholders of the Company (other than the Holders),
then the number of shares that may be included in the registration and
underwriting shall be allocated first to such selling stockholders who
exercised such demand and then, subject to obligations and commitments
existing as of the date hereof, to all other selling stockholders,
including the Holders, who have requested to sell in the registration,
on a pro rata basis according to the number of shares requested to be
included.
No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; PROVIDED,
HOWEVER, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities pursuant to the terms and limitations set forth herein in the same
proportion used above in determining the underwriter limitation.
(e) OTHER REGISTRATIONS. Prior to the SEC Effective Date the Company
will not, without the prior written consent of the Majority Holders, file or
request the acceleration of any other registration statement filed with the
Commission, and during any time subsequent to the SEC Effective Date when the
Registration Statement for any reason is not available for use by any Holder for
the resale of any Registrable Securities, the Company shall not, without the
prior written consent of the Majority Holders, file any other registration
statement or any amendment thereto with the Commission under the Securities Act
or request the acceleration of the effectiveness of any other registration
statement previously filed with the Commission, other than (A) any registration
statement on Form S-8 or Form S-4 and (B) any registration statement or
amendment which the Company is required to file or as to which the Company is
required to request acceleration pursuant to any obligation in effect on the
date of execution and delivery of this Agreement. Notwithstanding the foregoing,
the Holders acknowledge and agree that the Company may include shares to be
registered for resale by other stockholders of the Company in any registration
statement filed pursuant to this Agreement.
(f) FAILURE TO FILE REGISTRATION STATEMENT. If a Registration Event
occurs, then the Company will make payments to each Purchaser, as partial
liquidated damages for the minimum amount of damages to the Purchaser by reason
thereof, and not as a penalty, at a rate equal to one
6
percent (1%) of the Offering Price per share of Preferred Stock held by such
Purchaser per month, for each calendar month of the Registration Default Period
(pro rated for any period less than 30 days); PROVIDED, HOWEVER, if a
Registration Event occurs (or is continuing) on a date more than one year after
the Purchaser acquired the Registrable Securities (and thus the one year holding
period under Rule 144(d) has elapsed), liquidated damages shall be paid only
with respect to that portion of a Purchaser's Registrable Securities that cannot
then be immediately resold in reliance on Rule 144. Each such payment shall be
due and payable within five days after the end of each calendar month of the
Registration Default Period until the termination of the Registration Default
Period and within five days after such termination. Such payments shall be in
partial compensation to the Purchaser, and shall not constitute the Purchaser's
exclusive remedy for such events. The Registration Default Period shall
terminate upon (i) the filing of the Registration Statement in the case of
CLAUSE (a) of the definition of "Registration Event," (ii) the SEC Effective
Date in the case of CLAUSE (b) of the definition of "Registration Event," (iii)
the ability of the Purchaser to effect sales pursuant to the Registration
Statement in the case of CLAUSE (c) of the definition of "Registration Event,"
(iv) the listing or inclusion and/or trading of the Common Stock on an Approved
Market, as the case may be, in the case of CLAUSE (d) of the definition of
"Registration Event," and (v) in the case of the events described in CLAUSES (b)
and (C) of the definition of "Registration Event," the earlier termination of
the Registration Default Period. The amounts payable as partial liquidated
damages pursuant to this paragraph shall be payable in lawful money of the
United States. Amounts payable as partial liquidated damages to each Purchaser
hereunder with respect to each share of Registrable Securities shall cease when
the Purchaser no longer holds such share of Registrable Securities or such share
of Registrable Securities can be immediately sold by the Purchaser in reliance
on Rule 144.
4. REGISTRATION PROCEDURES. In the case of each registration,
qualification, or compliance effected by the Company pursuant to SECTION 3
hereof, the Company will keep each Holder including securities therein
reasonably advised in writing (which may include e-mail) as to the initiation of
each registration, qualification, and compliance and as to the completion
thereof. At its expense with respect to any registration statement filed
pursuant to SECTION 3, the Company will:
(a) prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on Form SB-2 or any other form
for which the Company then qualifies or which counsel for the Company shall deem
appropriate, and which form shall be available for the sale of the Registrable
Securities in accordance with the intended method(s) of distribution thereof,
and use its commercially reasonable efforts to cause such registration statement
to become and remain effective at least for a period ending with the first to
occur of (i) the sale of all Registrable Securities covered by the registration
statement, (ii) the availability under Rule 144 for the Holder to immediately,
freely resell without restriction all Registrable Securities covered by the
registration statement, and (iii) one year after a registration statement filed
pursuant to SECTION 3(a) is declared effective by the Commission (in either
case, the "EFFECTIVENESS PERIOD"); PROVIDED, HOWEVER, if at the end of such one
year period, any Holder is not able to immediately, freely resell all
Registrable Securities that it owns, the Effectiveness Period shall continue
until terminated pursuant to CLAUSE (i) or (ii); provided that no later than two
business days before filing with the Commission a registration statement or
prospectus or any amendments or supplements thereto, the Company shall (i)
furnish to each Holder a copy of the "Plan of Distribution" and "Selling
Shareholder" portions of the registration statement and the other portions of
such documents proposed to be filed that the Company considers not to contain
material, non-public information (excluding any exhibits other than applicable
underwriting documents), in substantially the form proposed to be filed and (ii)
notify each Holder of Registrable Securities covered by such registration
statement of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;
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(b) if a registration statement is subject to review by the Commission,
promptly respond to all comments and diligently pursue resolution of any
comments to the satisfaction of the Commission;
(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
during the Effectiveness Period (but in any event at least until expiration of
the 90-day period referred to in Section 4(3) of the Securities Act and Rule
174, or any successor thereto, thereunder, if applicable), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended method(s) of disposition by the sellers thereof set
forth in such registration statement;
(d) furnish, without charge, to each Holder of Registrable Securities
covered by such registration statement (i) a reasonable number of copies of such
registration statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as such Holder
may request, (ii) such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 under the Securities Act) as such Holders may
request, in conformity with the requirements of the Securities Act, and (iii)
such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder,
but only during the Effectiveness Period;
(e) use its commercially reasonable best efforts to register or qualify
such Registrable Securities under such other applicable securities or blue sky
laws of such jurisdictions as any Holder of Registrable Securities covered by
such registration statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be made by the time
the applicable registration statement is deemed effective by the Commission) and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; PROVIDED that
the Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(f) as promptly as practicable after becoming aware of such event,
notify each Holder of such Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event which comes to the Company's attention if as a result of
such event the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and the Company shall promptly prepare and furnish to such Holder a supplement
or amendment to such prospectus (or prepare and file appropriate reports under
the Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of a
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;
(g) comply, and continue to comply during the period that such
registration statement is effective under the Securities Act, in all material
respects with the Securities Act and the Exchange Act
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and with all applicable rules and regulations of the Commission with respect to
the disposition of all securities covered by such registration statement, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12) months, but not
more than eighteen (18) months, beginning with the first full calendar month
after the SEC Effective Date, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(h) as promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities being offered or sold pursuant to
the Registration Statement of the issuance by the Commission of any stop order
or other suspension of effectiveness of the Registration Statement at the
earliest possible time;
(i) permit the Holders of Registrable Securities being included in the
Registration Statement and their legal counsel, at such Holders' sole cost and
expense (except as otherwise specifically provided in SECTION 6) to review and
have a reasonable opportunity to comment on the Registration Statement and all
amendments and supplements thereto at least two Business Days prior to their
filing with the Commission and shall not file any such document to which the
Majority Holders reasonably object;
(j) make available for inspection by any Holder and any Inspector
retained by such Holder, at such Holder's sole expense, all Records as shall be
reasonably necessary to enable such Holder to exercise its due diligence
responsibility, and cause the Company's officers, directors, and employees to
supply all information which such Holder or any Inspector may reasonably request
for purposes of such due diligence; PROVIDED, HOWEVER, that such Holder shall
hold in confidence and shall not make any disclosure of any record or other
information which the Company determines in good faith to be confidential, and
of which determination such Holder is so notified at the time such Holder
receives such information, unless (i) the disclosure of such record is necessary
to avoid or correct a misstatement or omission in the Registration Statement and
a reasonable time prior to such disclosure the Holder shall have informed the
Company of the need to so correct such misstatement or omission and the Company
shall have failed to correct such misstatement of omission, (ii) the release of
such record is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction or (iii) the information in such
record has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such records to any Inspector until
and unless such Inspector shall have entered into a confidentiality agreement
with the Company with respect thereto, substantially in the form of this SECTION
4(j), which agreement shall permit such Inspector to disclose records to the
Holder who has retained such Inspector. Each Holder agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the records deemed confidential. The Company shall hold in confidence
and shall not make any disclosure of information concerning a Holder provided to
the Company pursuant to this Agreement unless (i) disclosure of such information
is necessary to comply with federal or state securities laws, (ii) disclosure of
such information to the Staff of the Division of Corporation Finance is
necessary to respond to comments raised by the Staff in its review of the
Registration Statement, (iii) disclosure of such information is necessary to
avoid or correct a misstatement or omission in the Registration Statement, (iv)
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (v) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees that
it shall, upon learning that disclosure of such information concerning a Holder
is
9
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Holder and allow such Holder, at
such Holder's expense, to undertake appropriate action to prevent disclosure of,
or to obtain a protective order for, such information;
(k) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement to be quoted on the OTC Bulletin Board or
such other principal securities market on which securities of the same class or
series issued by the Company are then listed or traded;
(l) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;
(m) cooperate with the Holders of Registrable Securities being offered
pursuant to the Registration Statement to issue and deliver certificates (not
bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement within five Trading Days after
delivery of certificates to the Company and enable such certificates to be in
such denominations or amounts as the Holders may reasonably request and
registered in such names as the Holders may request;
(n) during the Effectiveness Period, refrain from bidding for or
purchasing any Common Stock or any right to purchase Common Stock or attempting
to induce any Person to purchase any such security or right if such bid,
purchase or attempt would in any way limit the right of the Holders to sell
Registrable Securities by reason of the limitations set forth in Regulation M
under the 1934 Act; and
(o) take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to
the Registration Statement.
5. SUSPENSION OF OFFERS AND SALES. Each Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in SECTION 4(f) hereof or of the
commencement of a Blackout Period, such Holder shall discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by SECTION 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company's expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in SECTION
4(a)(iii) hereof shall be extended by the greater of (i) ten business days or
(ii) the number of days during the period from and including the date of the
giving of such notice pursuant to SECTION 4(f) hereof to and including the date
when each Holder of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by SECTION 4(f) hereof.
6. REGISTRATION EXPENSES. The Company shall pay all expenses in
connection with any registration, including, without limitation, all
registration, filing, stock exchange fees, printing expenses, all fees and
expenses of complying with securities or blue sky laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided that, in any underwritten registration, each party shall pay for its
own underwriting discounts and commissions and transfer taxes. Except as
provided above in this SECTION 6 and SECTION 9, the Company shall not be
10
responsible for the expenses of any attorney or other advisor employed by a
Holder of Registrable Securities.
7. ASSIGNMENT OF RIGHTS. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
PROVIDED, HOWEVER, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee as long as (a) such transfer
or assignment is effected in accordance with applicable securities laws; (b)
such transferee or assignee agrees in writing to become subject to the terms of
this Agreement; and (c) the Company is given written notice by such Holder of
such transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned.
8. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing.
9. INDEMNIFICATION.
(a) In the event of the offer and sale of Registrable Securities held
by Holders under the Securities Act, the Company shall, and hereby does,
indemnify and hold harmless, to the fullest extent permitted by law, each
Holder, its directors, officers, partners, each other person who participates as
an underwriter in the offering or sale of such securities, and each other
person, if any, who controls or is under common control with such Holder or any
such underwriter within the meaning of Section 15 of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, and expenses to
which the Holder or any such director, officer, partner or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, 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 under which such shares
were registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein 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,
and the Company shall reimburse the Holder, and each such director, officer,
partner, underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating, defending or
settling any such loss, claim, damage, liability, action or proceeding; provided
that the Company shall not be liable in any such case (i) to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf of
such Holder specifically stating that it is for use in the preparation thereof
or (ii) if the person asserting any such loss, claim, damage, liability (or
action or proceeding in respect thereof) who purchased the Registrable
Securities that are the subject thereof did not receive a copy of an amended
preliminary prospectus or the final prospectus (or the final
11
prospectus as amended or supplemented) at or prior to the written confirmation
of the sale of such Registrable Securities to such person because of the failure
of such Holder or underwriter to so provide such amended preliminary or final
prospectus and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact made in such preliminary prospectus was
corrected in the amended preliminary or final prospectus (or the final
prospectus as amended or supplemented). Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Holders, or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder.
(b) As a condition to including any Registrable Securities to be
offered by a Holder in any registration statement filed pursuant to this
Agreement, each such Holder agrees to be bound by the terms of this SECTION 9
and to indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director or officer or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with written information about such Holder as a Holder of the
Company furnished to the Company, and such Holder shall reimburse the Company,
and each such director, officer, and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating,
defending, or settling and such loss, claim, damage, liability, action, or
proceeding; PROVIDED, HOWEVER, that such indemnity agreement found in this
SECTION 9(b) shall in no event exceed the gross proceeds from the offering
received by such Holder. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any such
director, officer or controlling person and shall survive the transfer by any
Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
SECTION 9(a) or (b) hereof (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under SECTION 9(a) or (b) hereof, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in the reasonable
judgment of counsel to such indemnified party a conflict of interest between
such indemnified and indemnifying parties may exist or the indemnified party may
have defenses not available to the indemnifying party in respect of such claim,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, 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
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after the
assumption of the defenses thereof or the indemnifying party fails to defend
such claim in a diligent manner, other than reasonable costs of investigation.
Neither an indemnified nor an indemnifying party shall be liable for any
settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement, which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. Notwithstanding anything to the contrary set forth herein, and
without limiting
12
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a claim.
(d) In the event that an indemnifying party does or is not permitted to assume
the defense of an action pursuant to SECTION 9(c) or in the case of the expense
reimbursement obligation set forth in SECTION 9(a) and (b), the indemnification
required by SECTION 9(a) and (b) hereof shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are incurred.
(e) If the indemnification provided for in this SECTION 9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party as
a result of such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by CLAUSE (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
(f) OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding subsections of this SECTION 9 (with appropriate modifications)
shall be given by the Company and each Holder of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
10. RULE 144. For a period of at least 24 months following the Closing
Date, the Company will use its commercially reasonable best efforts (a) to
timely file all reports required to be filed by the Company after the date
hereof under the Securities Act and the Exchange Act (including the reports
pursuant to Section 13(a) or 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144) and the rules and regulations adopted by the
Commission thereunder), (b) if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell shares of Common Stock under Rule 144, and
(c) to take such further action as any holder of shares of Common Stock may
reasonably request, all to the extent required from time to time to enable the
Purchasers to sell shares of Common Stock without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144,
including causing its attorneys to issue and deliver any appropriate legal
opinion required to permit a Purchaser to sell shares of Common Stock under Rule
144 upon receipt of appropriate documentation relating to such sale.
11. INDEPENDENT NATURE OF EACH PURCHASER'S OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the
13
obligations of any other Purchaser under this Agreement. The decision of each
Purchaser to purchase Preferred Stock and Warrants and enter into this Agreement
has been made by each Purchaser independently of any other Purchaser. Nothing
contained herein and no action taken by any Purchaser pursuant hereto, shall be
deemed to constitute such Purchasers as a partnership, an association, a joint
venture, or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement. Each Purchaser
acknowledges that no other Purchaser has acted as agent for the Purchaser in
connection with making its investment in Preferred Stock and that no other
Purchaser will be acting as agent of the Purchaser in connection with monitoring
its investment in the Preferred Stock or enforcing its rights under this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
12. MISCELLANEOUS
(a) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and the United States of
America, both substantive and remedial. Any judicial proceeding brought against
either of the parties to this agreement or any dispute arising out of this
Agreement or any matter related hereto shall be brought in the courts of the
State of Texas, Xxxxxx County, or in the United States District Court for the
Southern District of Texas and, by its execution and delivery of this agreement,
each party to this Agreement accepts the jurisdiction of such courts. The
foregoing consent to jurisdiction shall not be deemed to confer rights on any
person other than the parties to this Agreement.
(b) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, Permitted Assigns, executors and administrators of the parties
hereto. In the event the Company merges with, or is otherwise acquired by, a
direct or indirect subsidiary of a publicly traded company, the Company shall
condition the merger or acquisition on the assumption by such parent company of
the Company's obligations under this Agreement.
(c) ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
(d) NOTICES, ETC. All notices or other communications which are
required or permitted under this Agreement shall be in writing and sufficient if
delivered by hand, by facsimile transmission, by registered or certified mail,
postage pre-paid, by electronic mail, or by courier or overnight carrier, to the
persons at the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered as of the date
so delivered:
If to the Company:
Century Pacific Financial Corporation
c/o Versatile Entertainment, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 9001
Attention: Xxxxxx Xxxx
Facsimile: (000) 000-0000
14
If to the Purchasers: To each Purchaser at the address
set forth on Exhibit A
with a copy to: Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
e-mail: xxx.xxxxxx@xxxxxx.xxx
or at such other address as any party shall have furnished to the other parties
in writing.
(e) DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any Holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such Holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
(g) SEVERABILITY. In the case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(h) AMENDMENTS. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the holders of an 80% majority of the number of shares of
Registrable Securities outstanding as of the date of such amendment or waiver.
The Purchasers acknowledge that by the operation of this SECTION 12(h), the
holders of an 80% majority of the outstanding Registrable Securities may have
the right and power to diminish or eliminate all rights of the Purchasers under
this Agreement.
(i) LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of at least a majority of the Registrable Securities then outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder.
[Signatures on following page]
15
This Registration Rights Agreement is hereby executed as of the date
first above written.
COMPANY:
CENTURY PACIFIC FINANCIAL CORPORATION
By:
---------------------------------
Name:_______________________________
Its:________________________________
PURCHASER:
------------------------------------
(PRINT NAME)
By:_________________________________
Name:_______________________________
Its:________________________________
16
EXHIBIT A
PURCHASER INFORMATION
NAME ADDRESS NUMBER OF SHARES
---- ------- ----------------
17
