REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
as of May 13, 1999, by and among eCom xXxx.xxx, Inc., a corporation duly
incorporated and existing under the laws of the State of Florida (the
"Company") and the subscriber as named on the signature page hereto
(hereinafter referred to as "Subscriber").
RECITALS:
WHEREAS, pursuant to the Company's offering ("Offering") of up to
Thirty Million Dollars ($30,000,000), excluding any funds paid upon
exercise of the Warrants, of Common Stock of the Company pursuant to that
certain Investment Agreement of even date herewith (the "Investment
Agreement") between the Company and the Subscriber, the Company has agreed
to sell and the Subscriber has agreed to purchase, from time to time as
provided in the Investment Agreement, shares of the Company's Common Stock
for a maximum aggregate offering amount of Thirty Million Dollars
($30,000,000);
WHEREAS, pursuant to the terms of the Investment Agreement, the
Company has agreed to issue to the Subscriber, from time to time,
Commitment Warrants and Purchase Warrants, each as defined in the
Investment Agreement, to purchase a number of shares of Common Stock,
exercisable for five (5) years from their respective dates of issuance
(collectively, the "Subscriber Warrants" or the "Warrants"); and
WHEREAS, pursuant to the terms of the Investment Agreement, the
Company has agreed to provide the Subscriber with certain registration
rights with respect to the Common Stock to be issued in the Offering and
the Common Stock issuable upon exercise of the Subscriber Warrants as set
forth in this Registration Rights Agreement.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Certain Definitions. As used in this Agreement (including the
Recitals above), the following terms shall have the following meanings
(such meanings to be equally applicable to both singular and plural forms
of the terms defined):
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Additional Registration Statement" shall have the meaning set
forth in Section 3(b).
"Amended Registration Statement" shall have the meaning set forth
in Section 3(b).
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"Business Day" shall have the meaning set forth in the Investment
Agreement.
"Closing Bid Price" shall have the meaning set forth in the
Investment Agreement.
"Common Stock" shall mean the common stock, par value $0.0001, of
the Company.
"Due Date" shall mean the date that is one hundred twenty (120)
days after the date the of this Agreement.
"Effective Date" shall have the meaning set forth in Section 2.4.
"Filing Date" shall mean the date that is forty five (45) days
after the date hereof.
"Holder" shall mean Subscriber, and any other person or entity
owning or having the right to acquire Registrable Securities or any
permitted assignee thereof;
"Piggyback Registration" and "Piggyback Registration Statement"
shall have the meaning set forth in Section 4.
"Put" shall have the meaning as set forth in the Investment
Agreement.
"Register," "Registered," and "Registration" shall mean and refer
to a registration effected by preparing and filing a registration statement
or similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and pursuant to Rule 415 under the Act or any
successor rule, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" shall have the meaning set forth in
Section 2.1.
"Registration Statement" shall have the meaning set forth in
Section 2.2.
"Rule 144" shall mean Rule 144, as amended, promulgated under the
Act.
"Subscriber" shall have the meaning set forth in the preamble to
this Agreement.
"Subscriber Warrants" shall have the meaning set forth in the
above Recitals.
"Investment Agreement" shall have the meaning set forth in the
Recitals hereto.
"Supplemental Registration Statement" shall have the meaning set
forth in Section 3(b).
"Warrants" shall have the meaning set forth in the above
Recitals.
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"Warrant Shares" shall mean shares of Common Stock issuable upon
exercise of any Warrant.
2. Required Registration.
2.1 Registrable Securities. "Registrable Securities" shall mean
those shares of the Common Stock of the Company together with any capital
stock issued in replacement of, in exchange for or otherwise in respect of
such Common Stock, that are: (i) issuable or issued to the Subscriber
pursuant to the Investment Agreement or in this Agreement, and (ii)
issuable or issued upon exercise of the Subscriber Warrants; provided,
however, that notwithstanding the above, the following shall not be
considered Registrable Securities:
(a) any Common Stock which would otherwise be deemed to be
Registrable Securities, if and to the extent that those shares of Common
Stock may be resold in a public transaction without volume limitations or
other material restrictions without registration under the Act, including
without limitation, pursuant to Rule 144 under the Act; and
(b) any shares of Common Stock which have been sold in a
private transaction in which the transferor's rights under this Agreement
are not assigned.
2.2 Filing of Initial Registration Statement. The Company
shall, by the Filing Date, file a registration statement ("Registration
Statement") on Form S-1 (or other suitable form, at the Company's
discretion, but subject to the reasonable approval of Subscriber), covering
the resale of a number of shares of Common Stock as Registrable Securities
equal to at least Four Million (4,000,000) shares of Common Stock and shall
cover, to the extent allowed by applicable law, such indeterminate number
of additional shares of Common Stock that may be issued or become issuable
as Registrable Securities by the Company pursuant to Rule 416 of the Act.
2.3 [Intentionally Left Blank].
2.4 Registration Effective Date. The Company shall use its best
efforts to have the Registration Statement declared effective by the SEC
(the date of such effectiveness is referred to herein as the "Effective
Date") by the Due Date.
2.5 [Intentionally Left Blank].
2.6 [Intentionally Left Blank].
2.7 Shelf Registration. The Registration Statement shall be
prepared as a "shelf" registration statement under Rule 415, and shall be
maintained effective until all Registrable Securities are resold pursuant
to such Registration Statement.
2.8 Supplemental Registration Statement. Anytime the
Registration Statement does not cover a sufficient number of shares of
Common Stock to cover all outstanding Registrable Securities, the Company
shall promptly prepare and file with the SEC such Supplemental Registration
Statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the Act with
respect to the disposition of all such Registrable Securities and shall use
its best efforts to cause such Supplemental Registration Statement to be
declared effective as soon as possible.
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3. Obligations of the Company. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the
Company shall, as expeditiously and reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a Registration Statement with respect to such Registrable
Securities and use its best efforts to cause such Registration Statement to
become effective and to remain effective until all Registrable Securities
are resold pursuant to such Registration Statement.
(b) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement ("Amended Registration
Statement") or prepare and file any additional registration statement
("Additional Registration Statement," together with the Amended
Registration Statement, "Supplemental Registration Statements") as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such Supplemental Registration
Statements or such prior registration statement and to cover the resale of
all Registrable Securities.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or Blue
Sky laws of the jurisdictions in which the Holders are located, of such
other jurisdictions as shall be reasonably requested by the Holders of the
Registrable Securities covered by such Registration Statement and of all
other jurisdictions where legally required, provided that the Company shall
not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process
in any such states or jurisdictions.
(e) [Intentionally Omitted].
(f) As promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities of the happening of any
event of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement
or omission, and deliver a number of copies of such supplement or amendment
to each Holder as such Holder may reasonably request.
(g) Provide Holders with notice of the date that a Registration
Statement or any Supplemental Registration Statement registering the resale
of the Registrable Securities is declared effective by the SEC, and the
date or dates when the Registration Statement is no longer effective.
(h) Provide Holders and their representatives the opportunity
and a reasonable amount of time, based upon reasonable notice delivered by
the Company, to conduct a reasonable due diligence inquiry of Company's
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pertinent financial and other records and make available its officers and
directors for questions regarding such information as it relates to
information contained in the Registration Statement.
(i) Provide Holders and their representatives the opportunity to
review the Registration Statement and all amendments or supplements thereto
prior to their filing with the SEC by giving the Holder at least five (5)
business days advance written prior to such filing.
(j) Provide each Holder with prompt notice of the issuance by
the SEC or any state securities commission or agency of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceeding for such purpose. The Company shall use its
best efforts to prevent the issuance of any stop order and, if any is
issued, to obtain the removal thereof at the earliest possible date.
(k) Use its best efforts to list the Registrable Securities
covered by the Registration Statement with all securities exchanges or
markets on which the Common Stock is then listed and prepare and file any
required filing with the NASD, American Stock Exchange, NYSE and any other
exchange or market on which the Common Stock is listed.
4. Piggyback Registration. If anytime prior to the date that the
Registration Statement is declared effective or during any Ineffective
Period (as defined in the Investment Agreement)(but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the
Holders) any of its Common Stock under the Act (other than a registration
relating solely for the sale of securities to participants in a Company
stock plan or a registration on Form S-4 promulgated under the Act or any
successor or similar form registering stock issuable upon a
reclassification, upon a business combination involving an exchange of
securities or upon an exchange offer for securities of the issuer or
another entity), the Company shall, at such time, promptly give each Holder
written notice of such registration (a "Piggyback Registration Statement").
Upon the written request of each Holder given by fax within ten (10) days
after mailing of such notice by the Company, the Company shall cause to be
included in such registration statement under the Act all of the
Registrable Securities that each such Holder has requested to be registered
("Piggyback Registration") to the extent such inclusion does not violate
the registration rights of any other security holder of the company granted
prior to the date hereof; provided, however, that nothing herein shall
prevent the Company from withdrawing or abandoning such registration
statement prior to its effectiveness.
5. Limitation on Obligations to Register under a Piggyback
Registration. In the case of a Piggyback Registration pursuant to an
underwritten public offering by the Company, if the managing underwriter
determines and advises in writing that the inclusion in the registration
statement of all Registrable Securities proposed to be included would
interfere with the successful marketing of the securities proposed to be
registered by the Company, then the number of such Registrable Securities
to be included in the Piggyback Registration Statement, to the extent such
Registrable Securities may be included in such Piggyback Registration
Statement, shall be allocated among all Holders who had requested Piggyback
Registration pursuant to the terms hereof, in the proportion that the
number of Registrable Securities which each such Holder seeks to register
bears to the total number of Registrable Securities sought to be included
by all Holders. If required by the managing underwriter of such an
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underwritten public offering, the Holders shall enter into a reasonable
agreement limiting the number of Registrable Securities to be included in
such Piggyback Registration Statement and the terms, if any, regarding the
future sale of such Registrable Securities.
6. Dispute as to Registrable Securities. In the event the Company
believes that shares sought to be registered under Section 2 or Section 4
by Holders do not constitute "Registrable Securities" by virtue of Section
2.1 of this Agreement, and the status of those shares as Registrable
Securities is disputed, the Company shall provide, at its expense, an
Opinion of Counsel, reasonably acceptable to the Holders of the Securities
at issue (and satisfactory to the Company's transfer agent to permit the
sale and transfer), that those securities may be sold immediately, without
volume limitation or other material restrictions, without registration
under the Act, by virtue of Rule 144 or similar provisions.
7. Furnish Information. At the Company's request, each Holder shall
furnish to the Company such information, representations and certificates
regarding Holder, the Registrable Securities held by it, and the intended
method of disposition of such securities to the extent required to effect
the registration of its Registrable Securities or to determine that
registration is not required pursuant to Rule 144 or other applicable
provision of the Act. The Company shall include all information provided
by such Holder pursuant hereto in the Registration Statement, substantially
in the form supplied, except to the extent such information is not
permitted by law.
8. Expenses. All expenses, other than commissions and fees and
expenses of counsel to the selling Holders, incurred in connection with
registrations, filings or qualifications pursuant hereto, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, shall be borne by the Company.
9. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers, directors, partners, legal
counsel, and accountants of each Holder, and each person, if any, who
controls such Holder within the meaning of Section 15 of the Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements or omissions: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto, or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, and the Company
will reimburse each such Holder, officer or director, or controlling person
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
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withheld), nor shall the Company be liable in any such case for any such
loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by any such Holder, officer, director, or
controlling person; provided however, that the above shall not relieve the
Company from an other liabilities which it might otherwise have.
To the extent permitted by law, the Investor will indemnify and hold
harmless the Company, the officers and directors of the Company, against
any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements or omissions any untrue statement or alleged untrue
statement of a material fact that is provided, in writing to the Company
and is contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, and the Investor will reimburse the Company, officer
or director for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
contained in this subsection 9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Investor (which consent
shall not be unreasonably withheld).
(b) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 9,
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, the defense thereof
with counsel mutually satisfactory to the parties; provided, however, that
an indemnified party shall have the right to retain its own counsel, with
the reasonably incurred fees and expenses of one such counsel to be paid by
the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential conflicting interests between such indemnified party
and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 9.
(c) In the event that the indemnity provided in paragraph (a) of
this Section 9 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree to
contribute to the aggregate claims, losses, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company and one or more of the Holders may be subject in such proportion as
is appropriate to reflect the relative fault of the Company and the Holders
in connection with the statements or omissions which resulted in such
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Losses. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or by the Holders. The Company and the Holders agree that it would
not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 9, each
person who controls a Holder of Registrable Securities within the meaning
of either the Securities Act or the Exchange Act and each director,
officer, partner, employee and agent of a Holder shall have the same rights
to contribution as such holder, and each person who controls the Company
within the meaning of either the Act or the Exchange Act and each director
and officer of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of
this paragraph (c).
(d) The obligations of the Company and Holders under this
Section 9 shall survive the resale, if any, of the Common Stock, the
completion of any offering of Registrable Securities in a Registration
Statement under this Agreement, and otherwise.
10. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144; and
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Act and
the 1934 Act.
11. Amendment of Registration Rights Agreement. Any provision 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 the
written consent of each Holder affected thereby. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each
Holder, each future Holder, and the Company.
12. Notices. All notices required or permitted under this Agreement
shall be made in writing signed by the party making the same, shall specify
the section under this Agreement pursuant to which it is given, and shall
be addressed if to (i) the Company at: eCom xXxx.xxx, Inc.; Attn: Xxxxx
Xxxxxx, Chief Executive Officer; 0000 Xxxxxxxx Xxxxx, Xxxxx X0; Xxxxxxx
Xxxxx, XX 00000; Telephone (000) 000-0000, ext. 104, Facsimile (561) 841-
7422 (or at such other location as directed by the Company in writing) and
(ii) the Holders at their respective last address as the party as shown on
the records of the Company. Any notice, except as otherwise provided in
this Agreement, shall be made by fax and shall be deemed given at the time
of transmission of the fax.
13. Termination. This Agreement shall terminate on the date all
Registrable Securities cease to exist (as that term is defined in Section
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2.1 hereof); but without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination, or (ii) other indemnification obligations under this
Agreement.
14. Assignment. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this
Agreement by the Company or any Holder, respectively, shall be made without
the prior written consent of the majority in interest of the Holders or the
Company, respectively; provided that the rights of a Holder may be
transferred to a subsequent holder of the Holder's Registrable Securities
(provided such transferee shall provide to the Company, together with or
prior to such transferee's request to have such Registrable Securities
included in a Registration, a writing executed by such transferee agreeing
to be bound as a Holder by the terms of this Agreement), and the Company
hereby agrees to file an amended registration statement including such
transferee or a selling security holder thereunder; and provided further
that the Company may transfer its rights and obligations under this
Agreement to a purchaser of all or a substantial portion of its business if
the obligations of the Company under this Agreement are assumed in
connection with such transfer, either by merger or other operation of law
(which may include without limitation a transaction whereby the Registrable
Securities are converted into securities of the successor in interest) or
by specific assumption executed by the transferee.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida applicable to
agreements made in and wholly to be performed in that jurisdiction, except
for matters arising under the Act or the Securities Exchange Act of 1934,
which matters shall be construed and interpreted in accordance with such
laws.
16. Execution in Counterparts Permitted. 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 (1) instrument.
17. Specific Performance. The Holder shall be entitled to the remedy
of specific performance in the event of the Company's breach of this
Agreement, the parties agreeing that a remedy at law would be inadequate.
18. Indemnity. Each party shall indemnify each other party against
any and all claims, damages (including reasonable attorney's fees), and
expenses arising out of the first party's breach of any of the terms of
this Agreement.
19. Entire Agreement; Written Amendments Required. This Agreement,
including the Exhibits attached hereto, the Investment Agreement, the
Common Stock certificates, and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof and thereof, and no party
shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth
herein or therein. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this 13 day of May, 1999.
eCom xXxx.Xxx, Inc.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, CEO
Address: eCom xXxx.xxx, Inc.
Attn: Xxxxx Xxxxxx, Chief Executive Officer
0000 Xxxxxxxx Xxxxx, Xxxxx X0
Xxxxxxx Xxxxx, XX 00000
Telephone (000) 000-0000, ext. 104
Facsimile (000) 000-0000
SUBSCRIBER:
XXXXXX PRIVATE EQUITY, LLC.
By: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, Manager
Address: 0000 Xxxxxxx Xxxxxx Xxxx
Xxxx. 000, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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