Exhibit 10.15
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March ____,
1998, by and among Eat At Joe's Ltd., a Delaware corporation, with headquarters
at Xxxxx 000, 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Company"),
and the undersigned buyer (the "Buyer" ).
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties of even date herewith (the "Securities Purchase Agreement"), the Company
has agreed, upon the terms and subject to the conditions of the Securities
Purchase Agreement, (i) to issue and sell to the Buyer's shares of the Company's
Series A Preferred Stock (the "Preferred Stock"), which will be convertible into
shares of the Company's common stock, $.001 par value per share (the "Common
Stock") (as converted, the "Conversion Shares") in accordance with the terms of
the Preferred Stock; and
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, 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 the Buyers hereby
agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "Investor" means the Buyer and any transferee or assignee thereof
to whom the Buyer assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more
Registration Statements in compliance with the 1933 Act and
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 such
Registration Statement(s) by the United States Securities and
Exchange Commission (the "SEC").
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d. Registrable Securities" means the Conversion Shares issued or
issuable upon conversion of the Preferred Stock and any shares of
capital stock issued or issuable with respect to the Conversion
Shares or the Preferred Stock as a result of any stock split,
stock dividend, recapitalization, exchange or similar event.
e."Registration Statement" means a registration statement of the
Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set for-the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, on or
prior to forty-five (45) days after the date of issuance of any
Preferred Stock (the "Filing Deadline"), file with the SEC a
Registration Statement or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for such
a registration, on such other form as is available for such a
registration, subject to the consent of each Buyer and the
provisions of Section 2(e), which consent will not be
unreasonably withheld), covering the resale of all of the
Registrable Securities, which Registration Statement(s) shall
state that, in accordance with Rule 416 promulgated under the
1933 Act, such Registration Statement(s) also covers such
indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of the Preferred Stock (i) to
prevent dilution resulting from stock splits, stock dividends or
similar transactions and (ii) by reason of changes in the
Conversion Price or Conversion Rate of the Preferred Stock in
accordance with the terms thereof Such Registration Statement
shall initially register for resale at least _________ shares of
Common Stock, subject to adjustment as provided in Section 3(b),
and such registered shares of Common Stock shall be allocated
among the Investors pro rata based on the total number of
Registrable Securities issued or issuable as of each date that a
Registration Statement, as amended, relating to the resale of the
Registrable Securities is declared effective by the SEC. The
Company shall use its best efforts to have the Registration
Statement declared effective by the SEC within ninety (90) days
after the issuance of the Preferred Stock (the "Registration
Deadline"). The Company shall permit the registration statement
to become effective within five (5) business days after receipt
of a "no review" notice from the SEC. In the event that the
Registration Statement is not filed by the Company with the SEC
by the Filing Deadline, then the Applicable Discount (as defined
in the Certificate of Designations) shall be reduced by (i) an
additional 2% for each 30 days from the Filing Deadline for which
the Registration is not filed by the Company with the SEC. In the
event that the Registration Statement is not declared effective
by the SEC by the Registration Deadline then the Conversion
Percentage to be used in determining the Conversion Price (as
defined in the Certificate of Designations, Preferences, and
Rights filed by the Company on or before the date hereof in
connection herewith ("Certificate of Designations")shall be
reduced by (i) an
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additional 3% if the Registration Statement is not declared
effective by the SEC within thirty (30) days following the
Registration Deadline, or (ii) an additional 6% if the
Registration Statement is not declared effective by the SEC
within sixty (60) days of the Registration Deadline.
b. Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) involves an underwritten
offering, the Buyers shall have the right to select one legal
counsel and an investment banker or bankers and manager or
managers to administer their interest in the offering, which
investment banker or bankers or manager or managers shall be
reasonably satisfactory to the Company.
c. Piggy-Back Registrations. If at any time prior to the expiration
of the Registration Period (as hereinafter defined) the Company
proposes 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 securities (other than on Form S-4 or
Form S-8 or their then equivalents relating to 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 employee benefit plans) the Company shall
promptly send to each Investor who is entitled to registration
rights under this Section 2(c) written notice of the Company's
intention to file a Registration Statement and of such Investor's
rights under this Section 2(c) and, if within twenty (20) days
after receipt of such notice, such Investor shall so request in
writing, the Company shall include in such Registration Statement
all or any part of the Registrable Securities such Investor
requests to be registered, subject to the priorities set forth in
Section 2(d) below. No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit
any registration required under Section 2(a). The obligations of
the Company under this Section 2(c) may be waived by Investors
holding a majority of the Registrable Securities. If an offering
in connection with which an Investor is entitled to registration
under this Section 2(c) is an underwritten offering, then each
Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an
underwritten offering using the same underwriter or underwriters
and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in
such underwritten offering.
d. Priority in Piggy-Back Registration Rights in connection with
Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the
number of shares of Common Stock which may be included in the
Registration Statement is necessary to facilitate and not
adversely affect the proposed offering, then the Company shall
include in such registration: (1) first, all securities the
Company proposes to sell for its own account, (2) second, up to
the full number of securities proposed to be registered for the
account of the holders of securities entitled to inclusion of
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their securities in the Registration Statement by reason of
demand registration rights, and (3) third, the securities
requested to be registered by the Investors and other holders of
securities entitled to participate in the registration, drawn
from them pro rata based on the number each has requested to be
included in such registration.
e. Eligibility for Form S-3. The Company represents, warrants
covenants that it has filed and shall file all reports required
to be filed by the Company with the SEC in a timely manner so as
to obtain and maintain such eligibility for the use of Form S-3.
In the event that Form S-3 is not available for sale by the
Investors of the Registrable Securities, then (i) the Company,
with the consent of each Investor pursuant to Section 2(a), shall
register the sale of the Registrable Securities on another
appropriate form, such as Form SB-2 and (ii) the Company shall
undertake to register the Registrable Securities on Form S-3 as
soon as such form is available.
f. Regulation S Option. If the Registration Statement is not
declared effective by the Registration Deadline, the Investor at
its sole election may elect and the Company will consent to treat
the issuance by the Company to the Buyers of the Preferred Stock
as made in reliance upon an exemption from registration afforded
by Regulation S promulgated under the 1933 Act (the "Regulation S
Election"). In such case, any Applicable Penalty discount then in
effect shall apply.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities
(on or prior to the forty-fifth (45th) day following the date of
issuance of any Preferred Stock, for the registration of
Registrable Securities pursuant to Section 2(a)) and use its best
efforts to cause such Registration Statement(s) relating to
Registrable Securities to become effective as soon as possible
after such filing (by the ninetieth (90th) day following the
issuance of the relevant Preferred Stock for the registration of
Registrable Securities pursuant to Section 2(a), and keep the
Registration Statement(s) effective pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the Investors
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 (A) the Investors
shall have sold all the Registrable Securities and (B) none of
the Preferred Stock is outstanding (the "Registration Period"),
which Registration Statement(s) (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
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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 prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the
Registration Statement(s) and the prospectus(es) used in
connection with the Registration Statement(s), which
prospectus(es) are to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep the Registration
Statement(s) 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
Statement(s) until such time as all of such Registrable
Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof
as set forth in the Registration Statement(s). In the event the
number of shares available under a Registration Statement filed
pursuant to this Agreement is insufficient to cover all of the
Registrable Securities, the Company shall amend the Registration
Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover
all of the Registrable Securities, in each case, as soon as
practicable, but in any event within fifteen (15) days after the
necessity therefor arises (based on the market price of the
Common Stock and other relevant factors on which the Company
reasonably elects to rely). The Company shall use its best
efforts to cause such amendment and/or new Registration Statement
to become effective as soon as practicable following the filing
thereof. For purposes of the foregoing provision, the number of
shares available under a Registration Statement shall be deemed
"insufficient to cover all of the Registrable Securities" if at
any time the number of Registrable Securities issued or issuable
upon conversion of the Preferred Stock is greater than the
quotient determined by dividing (i) the number of shares of
Common Stock available for resale under such Registration
Statement by (ii) 1.5; provided that in the case of the initial
registration of the Registrable Securities pursuant to Section
2(a), the Company shall be required to register at least _______
shares of Common Stock for resale. For purposes of the
calculation set forth in the foregoing sentence, any restrictions
on the convertibility of the Preferred Stock shall be disregarded
and such calculation shall assume that the Preferred Stock are
then convertible into shares of Common Stock at the then
prevailing Conversion Rate (as defined in the Preferred Stock).
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement(s) and its
legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the
Registration Statement and any amendment thereto, including
financial statements and schedules, all documents incorporated
therein by reference and all exhibits, the prospectus(es)
included in such Registration Statement(s) (including each
preliminary prospectus ) and, with regards to the Registration
Statement, any correspondence by or on behalf of the Company to
the SEC or the staff of the SEC and any correspondence from the
SEC or the staff of the SEC to the Company or its
representatives, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and
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supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents,
including any preliminary prospectus, as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration
Statement(s) under such other securities or "blue sky" laws of
such jurisdictions in the United States as any Investor
reasonably requests, (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, and (iv) take all other actions reasonably necessary or
advisable to quality 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)
qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, or
(c) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Investor who
holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in
the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.
e. In the event Investors who hold a majority of the Registrable
Securities being offered in the offering select underwriters for
the offering, the Company shall enter into and perform its
obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the
underwriters of such offering.
f. As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, and promptly prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or
omission, and deliver ten (10) copies of such supplement or
amendment to each Investor (or such other number of copies as
such Investor may reasonably request). The Company shall also
promptly notify each Investor in writing (i) when a prospectus or
any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective
amendment has become effective (notification of such
effectiveness shall be delivered to each Investor by facsimile on
the same day of such effectiveness and by
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overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate.
g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of
any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible
moment and to notify each Investor who holds Registrable
Securities being sold (and, in the event of an underwritten
offering, the managing underwriters) of the issuance of such
order and the resolution thereof or its receipt of actual notice
of the initiation or threat of any proceeding for such purpose.
h. The Company shall permit each Investor a single firm of counsel
or such other counsel as thereafter designated as selling
stockholders' counsel by the Investors who hold a majority of the
Registrable Securities being sold, to review and comment upon the
Registration Statement(s) and all amendments and supplements
thereto at least seven (7) days prior to their filing with the
SEC, and not file any document in a form to which such counsel
reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement(s)
or any amendment or supplement thereto without the prior approval
of such counsel, which consent shall not be unreasonably
withheld.
i. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on
the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration
Statement (i) if required by an underwriter, a letter, dated such
date, from the Company's independent certified public accountants
in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, and (ii) an
opinion, dated as of such date, of counsel representing the
Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten
public offering, addressed to the underwriters and the Investors.
j. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys
and one firm of accountants or other agents retained by the
Investors, and (iv) one firm of attorneys retained by all such
underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "Records"), as
shall be reasonably deemed necessary by each Inspector to enable
each Inspector to exercise its due diligence responsibility, and
cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request for
purposes of such due diligence provided, however, that each
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Inspector shall hold in strict confidence and shall not make any
disclosure (except to an Investor) or use of any Record or other
information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933
Act, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or
government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public
other than by disclosure in violation of this or any other
agreement. Each Investor 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 its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records
deemed confidential.
k. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company
unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of
competent jurisdiction, or (iv) 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 an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor,
at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
l. The Company shall use its best efforts either to (i) cause all
the Registrable Securities covered by a Registration Statement to
be listed on each national 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,
(ii) to secure designation and quotation of all the Registrable
Securities covered by the Registration Statement on the Nasdaq
National Market System, (iii) if, despite the Company's best
efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii) to
secure the inclusion for quotation on the Nasdaq SmallCap Market
for such Registrable Securities or, (iv) if, despite the
Company's best efforts to satisfy the preceding clause (iii), the
Company is unsuccessful in satisfying the preceding clause (iii),
to secure the inclusion for quotation on the over-the-counter
market for such Registrable Securities, and, without limiting the
generality of the foregoing, in the case of clause (iii) or (iv),
to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such
with
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respect to such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation
under this Section 3(l).
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent
applicable, any managing underwriter or underwriters, to
facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts,
as the case may be, as the managing underwriter or underwriters,
if any, or, if there is no managing underwriter or underwriters,
the Investors may reasonably request and registered in such names
as the managing underwriter or underwriters, if any, or the
Investors may request. Not later than the date on which any
Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to
its transfer agent instructions, accompanied by any reasonably
required opinion of counsel, that permit sales of unlegended
securities in a timely fashion that complies with then mandated
securities settlement procedures for regular way market
transactions.
n. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
o. The Company shall provide a transfer agent and registrar of all
such Registrable Securities not later than the effective date of
such Registration Statement.
p. If requested by the managing underwriters or an Investor, the
Company shall immediately incorporate in a prospectus supplement
or post-effective amendment such information as the managing
underwriters and the Investors agree should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten (or best
efforts underwritten) offering of the Registrable Securities to
be sold in such offering; make all required filings of such
prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by a
shareholder or any underwriter of such Registrable Securities.
q. The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition
of such Registrable Securities.
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r. The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection
with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be 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.
b. Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and
filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities
from the Registration Statement.
c. In the event Investors holding a majority of the Registrable
Securities being registered determine to engage the services of
an underwriter, each Investor agrees to enter into and perform
such Investor's obligations under an underwriting agreement, in
usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions
as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor
notifies the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from the
Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of the
copies of the supplemented or amended prospectus contemplated by
Section 3(g) or the first sentence of 3(f) and, if so directed by
the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy all copies in such Investor's
possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
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e. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting
arrangements approved by the Investors entitled hereunder to
approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, 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.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company and fees and disbursements of one counsel for the
Investors, shall be borne by the Company.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor
who holds such Registrable Securities, the directors, officers,
partners, employees, agents and each Person, if any, who controls
any Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and any
underwriter (as defined in the 0000 Xxx) for the Investors, and
the directors and officers of, and each Person, if any, who
controls, any such underwriter within the meaning of the 1933 Act
or the 1934 Act (each, an "Indemnified Person"), against any
losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to
which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or
in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any
jurisdiction in which Registrable Securities are offered ("Blue
Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
the statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of
11
a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to
the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6(d) with respect to the number
of legal counsel, the Company shall reimburse the Investors and
each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees
or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to
a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was
timely made available by the Company pursuant to Section 3(c);
(ii) with respect to any preliminary prospectus, shall not inure
to the benefit of any such person from whom the person asserting
any such Claim purchased the Registrable Securities that are the
subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or mission of material fact
contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus
was timely made available by the Company pursuant to Section
3(c), and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise
to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such
Claim is based on a failure of the Investor to deliver or to
cause to be delivered the prospectus made available by the
Company (i) and (iv) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not
be unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer
of the Registrable Securities by the Investors pursuant to
Section 9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally
and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a),
the Company, each of its directors, each of its officers who
signs the Registration Statement, each Person, if any, who
controls the Company within the meaning of the 1933 Act or the
1934 Act (collectively and together with an Indemnified Person,
an "Indemnified Party"), against any Claim or Indemnified Damages
to which any of them may become subject, under the 1933
12
Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation,
in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly
for use in connection with such Registration Statement; and,
subject to Section 6(d), such Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and
Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any
distribution, to the same extent as provided above, with respect
to information such persons so furnished in writing expressly for
inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver
to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the
Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the
fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The
Company shall pay reasonable fees for only one separate legal
counsel for the Investors, and such legal counsel shall be
selected by the
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Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the
Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with
any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party
all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim. The
indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status
of the defense or any settlement negotiations with respect
thereto. No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its written
consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim
or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to
the matter for which indemnification has been made. The failure
to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in
its ability to defend such action.
e. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others,
and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable
14
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors 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 investors 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
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934
Act so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit the
Company's obligations under Section 4(c) of the Securities
Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a
copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to
permit the investors to sell such securities pursuant to Rule 144
without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant to
this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement; (vi) such transferee shall be an "accredited investor" as that term
is defined in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii)
in the event the
15
assignment occurs subsequent to the date of effectiveness of the Registration
Statement required to be filed pursuant to Section 2(a), the transferee agrees
to pay all reasonable expenses of amending or supplementing such Registration
Statement to reflect such assignment.
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 the written consent of the Company and Investors
who hold two-thirds of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable
Securities.
b. Any notices consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile, provided a copy is mailed by U.S. certified mail,
return receipt requested; (iii) three (3) days after being sent
by U.S. certified mail, return receipt requested, or (d) one (1)
day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company: Eat At Joe's Ltd.
Suite 118
670 White Plains Road
Scarsdale, New York 105883
Facsimile: (000) 000-0000
With a copy to: Xxxxx Xxxxxx, Esq.
Xxxxx Xxxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
16
If to a Buyer, to its address and facsimile number on the
Schedule of Buyers, with copies to such Buyer's counsel as set
forth on the Schedule of Buyers. Each party shall provide five
(5) days' prior written notice to the other party of any change
in address or facsimile number.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware without regard to the
principles of conflict of laws. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision
of this Agreement in any other jurisdiction.
e. This Agreement and the Securities Purchase Agreement 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 and the
Securities Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement. 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.
17
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
EAT AT JOE'S LTD. ___________________________________
By: _____________________________ By: _______________________________
Name: Xxxxxx Xxxxx Name: _____________________________
Its: Chairman of the Board, Chief Its:
Executive Officer, and Chief
Financial Officer
18
SCHEDULE OF BUYERS
Buyer Address
Buyer Name and Facsimile Number
