REGISTRATION RIGHTS AGREEMENT
Exhibit
4.9
REGISTRATION
RIGHTS AGREEMENT (this "Agreement"), dated as of July 14, 2006, by and between
OMNI U.S.A., INC., a Nevada corporation (the "Company"), and the Potawatomi
Business Development Corp., (the “Buyer”).
WHEREAS:
A.
In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities Purchase Agreement"), the Company
has agreed, upon the terms and subject to the conditions contained therein,
to
issue and sell to the Buyer (i) convertible debentures (the "Debentures") that
are convertible into shares of the Company's common stock, par value $0.004995
per share (the "Common Stock"), upon the terms and subject to the limitations
and conditions set forth in such Debentures and (ii) warrants (the "Warrants")
to purchase 2,000,000 shares of Common Stock, upon the terms and conditions
and
subject to the limitations and conditions set forth in the Warrants dated July
14, 2006; and
B.
To
induce the Buyer 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 Buyer hereby agree as
follows:
1.
DEFINITIONS.
a.
As
used in this Agreement, the following terms shall have the following
meanings:
(i)
"BUYER" means Xxxxx Xxxxx, Chief Executive Officer Potawatomi Business
Development Corp., and any transferee or assignee who agrees to become bound
by
the provisions of this Agreement in accordance with Section 9
hereof.
(ii)
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected
by
preparing and filing a Registration Statement or 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 by
the
United States Securities and Exchange Commission (the "SEC").
(iii)
"REGISTRABLE SECURITIES" means (a) the shares of Common Stock (the "Conversion
Shares") issued or issuable upon conversion of or otherwise pursuant to the
Debentures (including, without limitation, any shares issued or issuable
pursuant to Sections 1.3 and 1.4 of the Debentures and Section 2 herein) (b)
any
shares of Common Stock (the "Warrant Shares") issued or issuable upon exercise
of or otherwise pursuant to the Warrants and (c) any shares of capital stock
issued or issuable as a dividend on or in exchange for or otherwise with respect
to any of the foregoing.
(iv)
"REGISTRATION STATEMENT(S)" means a registration statement(s) of the Company
under the 1933 Act.
1
b.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
2.
REGISTRATION.
A.
MANDATORY REGISTRATION. The Company shall prepare, and, on or prior to January
1, 2007 (the "FILING DATE") file with the SEC a Registration Statement on Form
SB-2 (or, if Form SB-2 is not then available, on such form of Registration
Statement as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Buyer, which consent will not be
unreasonably withheld) covering the resale of the Registrable Securities, which
Registration Statement, to the extent allowable under the 1933 Act and the
rules
and regulations promulgated thereunder (including Rule 416), shall state that
such Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of or otherwise
pursuant to the Debentures and exercise of or otherwise pursuant to the Warrants
to prevent dilution resulting from stock splits, stock dividends or similar
transactions. The number of shares of Common Stock initially included in such
Registration Statement shall be no less than the aggregate number of Conversion
Shares that are then issuable upon conversion of or otherwise pursuant to the
Debentures (based on the Conversion Price (as defined in the Debentures) then
in
effect) and the aggregate number of Warrant Shares that are then issuable upon
exercise of or otherwise pursuant to the Warrants, without regard to any
limitation on the Buyer's ability to convert the Debentures or exercise the
Warrants. The Company acknowledges that the number of shares initially included
in the Registration Statement represents a good faith estimate of the maximum
number of shares issuable upon conversion of or otherwise pursuant to the
Debentures and exercise of or otherwise pursuant to the Warrants. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to (and
subject to the approval of) the Buyer and its counsel prior to its filing or
other submission.
B.
[INTENTIONALLY OMITTED].
C.
PAYMENTS BY THE COMPANY. The Company shall use its best efforts to obtain
effectiveness of the Registration Statement as soon as practicable, but in
any
event not later than March 1, 2007 (the "REGISTRATION DEADLINE"). If (i) the
Registration Statement covering the Registrable Securities required to be filed
by the Company pursuant to Section 2(a) hereof is not declared effective by
the
SEC by the Registration Deadline, or (ii) after the Registration Statement
has
been declared effective by the SEC, sales of all of the Registrable Securities
cannot be made pursuant to the Registration Statement, or (iii) the Common
Stock
is not listed or included for quotation on the Over the Counter Electronic
Bulletin Board (the "OTC-BB"), the Nasdaq National Market ("NNM"), the Nasdaq
Small Cap Market ("NASDAQ SMALL CAP"), the New York Stock Exchange (the "NYSE")
or the American Stock Exchange (the "AMEX"), then the Company will make payments
to the Buyer in such amounts and at such times as shall be determined pursuant
to this Section 2(c) as partial relief for the damages to the Buyer by reason
of
any such delay in or reduction of its ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law
or
in equity). The Company shall pay to each holder of the Debentures or
Registrable Securities an amount equal to the then outstanding principal amount
of the Debentures (and, in the case of holders of Registrable Securities, the
principal amount of Debentures from which such Registrable Securities were
converted or the aggregate exercise price paid for such Registrable Securities
upon exercise of the Warrants) ("OUTSTANDING PRINCIPAL AMOUNT") multiplied
by
the Applicable Percentage (as defined below) times the number of months
(prorated for partial months) after the Registration Deadline and prior to
the
date the Registration Statement is declared effective by the SEC;
The
term
"APPLICABLE PERCENTAGE" means 2.0 hundredths (.02). (For example, if the
Registration Statement becomes effective one (1) month after the Registration
Deadline, the Company would pay $20,000 for each $1,000,000 of Outstanding
Principal Amount. If thereafter, sales of all of the Registrable Securities
could not be made pursuant to the Registration Statement for an additional
period of one (1) month, the Company would pay an additional $20,000 for each
$1,000,000 Outstanding Principal Amount. Such amounts shall be paid in cash
within five (5) days after the end of each period that gives rise to such
obligation, PROVIDED that, if any such period extends for more than thirty
(30)
days, interim payments shall be made for each such thirty (30) day
period,
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PROVIDED,
FURTHER, that, if such amounts are not paid within the period specified, at
the
Buyer's option, such amounts may be added to the Conversion Amount (as defined
in the Debentures) of the Debentures and thereafter be convertible into Common
Stock at the "CONVERSION PRICE" (as defined in the Debentures) in accordance
with the terms of the Debentures. Any shares of Common Stock issued upon
conversion of such amounts shall be Registrable Securities. Nothing herein
shall
limit the Buyer's right to pursue damages for the failure to timely obtain
effectiveness of the Registration Statement by the Registration Deadline or
to
thereafter maintain the effectiveness of the Registration Statement as required
pursuant to this Agreement or to maintain the listing of the Common
Stock;
D.
PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration of the
Registration Period (as hereinafter defined) the Company shall determine to
file
with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its equity
securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company
shall
send to Buyer written notice of such determination and, if within fifteen (15)
days after the effective date of such notice, the Buyer shall so request in
writing, the Company shall include in such Registration Statement all or any
part of the Registrable Securities the Buyer requests to be registered, except
that if, in connection with any underwritten public offering for the account
of
the Company, the managing underwriter(s) thereof shall impose a limitation
on
the number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then
the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which the Buyer
has requested inclusion hereunder as the underwriter shall permit;
PROVIDED,
HOWEVER, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled by contract to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with the
Registrable Securities; and
PROVIDED,
FURTHER, HOWEVER, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the contractual right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights. No right to registration of Registrable
Securities under this Section 2(d) shall be construed to limit any registration
required under Section 2(a) hereof. If an offering in connection with which
the
Buyer is entitled to registration under this Section 2(d) is an underwritten
offering, then the Buyer 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. Notwithstanding anything to the contrary set forth
herein, the registration rights of the Buyer pursuant to this Section 2(d)
shall
only be available in the event the Company fails to timely file, obtain
effectiveness or maintain effectiveness of any Registration Statement to be
filed pursuant to Section 2(a) in accordance with the terms of this
Agreement.
E.
ELIGIBILITY FOR FORM SB-2. The Company represents and warrants that it meets
the
registrant eligibility and transaction requirements for the use of Form SB-2
for
registration of the sale by the Buyer of the Registrable Securities and the
Company shall file all reports required to be filed by the Company with the
SEC
in a timely manner so as to maintain such eligibility for the use of Form
SB-2.
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3.
OBLIGATIONS OF THE COMPANY. In connection with the registration of the
Registrable Securities, the Company shall have the following
obligations:
a.
The
Company shall prepare promptly, and file with the SEC as soon as practicable
after the date of the Closing under the Securities Purchase Agreement (the
"CLOSING DATE") (but no later than the Filing Date), a Registration Statement
with respect to the number of Registrable Securities provided in Section 2(a),
and thereafter use its best efforts to cause such Registration Statement
relating to Registrable Securities to become effective as soon as possible
after
such filing (but in no event later than the Registration Deadline), and keep
the
Registration Statement effective pursuant to Rule 415 at all times until such
date as is the earlier of (i) the date on which all of the Registrable
Securities have been sold and (ii) the date on which the Registrable Securities
(in the opinion of counsel to the Buyer) may be immediately sold to the public
without registration or restriction (including without limitation as to volume
by each holder thereof) under the 1933 Act (the "REGISTRATION PERIOD"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or
necessary to make the statements therein not misleading.
b.
The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statements and
the prospectus used in connection with the Registration Statements as may be
necessary to keep the Registration Statements effective at all times during
the
Registration Period, and, during such period, comply with the provisions of
the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by the Registration Statements until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statements. In the event that on any Trading Day (as defined in
the
Debentures) (the "REGISTRATION TRIGGER DATE") the number of shares available
under a Registration Statement filed pursuant to this Agreement is insufficient
to cover all of the Registrable Securities issued or issuable upon conversion
of
or otherwise pursuant to the Debentures (based on the Conversion Price (as
defined in the Debentures) then in effect) and exercise of or otherwise pursuant
to the Warrants, in each case without giving effect to any limitations on the
Buyer's ability to convert the Debentures or exercise the Warrants, the Company
shall amend the Registration Statement, or file a new Registration Statement
(on
the short form available therefore, if applicable), or both, so as to cover
one
hundred percent (100%) of all of the Registrable Securities so issued or
issuable (without giving effect to any limitations on conversion contained
in
the Debentures or exercise contained in the Warrants) as of the Registration
Trigger Date, in each case, as soon as practicable, but in any event within
twenty (20) business days after the necessity therefore arises (based on the
market price of the Common Stock and other relevant factors on which the Company
reasonably elects to rely), provided, however that the Company shall have a
sufficient number of authorized and unissued shares. In the event the Company
does not have a sufficient number of authorized and unissued shares, the Company
shall use its best efforts to obtain all necessary shareholder approvals and
to
make all necessary filings to increase its authorized shares as promptly as
practicable and, within twenty (20) business days after the necessary increase
in its authorized shares shall become effective, amend the Registration
Statement or file a new Registration Statement as set forth above. 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, but in any event within sixty (60) days of the Registration Trigger
Date or as promptly as practicable in the event the Company is required to
increase its authorized shares. The provisions of Section 2(c) above shall
be
applicable with respect to the Company's obligations under this Section
3(b).
c.
The
Company shall furnish to the Buyer and its legal counsel (i) promptly after
the
same is prepared and publicly distributed, filed with the SEC, or received
by
the Company, one copy of each Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto, and, in the case of the Registration Statement referred to in Section
2(a), each letter written by or on behalf of the Company to the SEC or the
staff
of the SEC, and each item of correspondence from the SEC or the staff of the
SEC, in each case relating to such Registration Statement (other than any
portion of any thereof which contains information for which the Company has
sought confidential treatment), and (ii) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as the Buyer may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by the Buyer.
The
Company will immediately notify the Buyer by facsimile of the effectiveness
of
each Registration Statement or any post-effective amendment. The Company will
promptly respond to any and all comments received from the SEC, with a view
towards causing each Registration Statement or any amendment thereto to be
declared effective by the SEC as soon as practicable and shall file an
acceleration request as soon as practicable, but no later than three (3)
business days (the "ACCELERATION REQUEST DEADLINE"), following the resolution
or
clearance of all SEC comments or, if applicable, following notification by
the
SEC that any such Registration Statement or any amendment thereto will not
be
subject to review.
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d.
The
Company shall use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statements under such other securities
or
"blue sky" laws of such jurisdictions in the United States as the Buyer, (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 qualify the Registrable Securities for sale in such
jurisdictions;
e.
[INTENTIONALLY OMITTED]
f.
As
promptly as practicable after becoming aware of such event, the Company shall
notify the Buyer of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in any 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 not misleading, and use its best efforts promptly
to
prepare a supplement or amendment to any Registration Statement to correct
such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to the Buyer as the Buyer may reasonably request;
provided that, for not more than twenty (20) consecutive days (or a total of
not
more than sixty (60) days in any twelve (12) month period), the Company may
delay the disclosure of material non-public information concerning the Company
(as well as prospectus or Registration Statement updating) the disclosure of
which at the time is not, in the good faith opinion of the Company, in the
best
interests of the Company (an "ALLOWED DELAY"); provided, further, that the
Company shall promptly (i) notify the Buyer in writing of the existence of
(but
in no event, without the prior written consent of the Buyer, shall the Company
disclose to the Buyer any of the facts or circumstances regarding) material
non-public information giving rise to an Allowed Delay and (ii) advise the
Buyer
in writing to cease all sales under such Registration Statement until the end
of
the Allowed Delay, provided the above actions are consistent with the
requirements of the 1933 Act and/or 1934 Act or other applicable law. Upon
expiration of the Allowed Delay, the Company shall again be bound by the first
sentence of this Section 3(f) with respect to the information giving rise
thereto.
g.
The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of any Registration Statement, and, if such
an
order is issued, to obtain the withdrawal of such order at the earliest possible
moment and to notify the Buyer who holds Registrable Securities being sold
(or,
in the event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof.
h.
The
Company shall permit a single firm of counsel designated by the Buyer to review
such Registration Statement and all amendments and supplements thereto (as
well
as all requests for acceleration or effectiveness thereof) a reasonable period
of time prior to their filing with the SEC (not less than three (3) business
days but not more then five (5) business days) and not file any document in
a
form to which such counsel reasonably objects and will not request acceleration
of such Registration Statement without prior notice to such
counsel.
5
i.
The
Company shall make generally available to its security holders as soon as
practicable, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of
Rule 158 under the 0000 Xxx) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement.
j.
At the
request of the Buyer participating in an underwritten offering pursuant to
Section 2(d), the Company shall furnish, on the date that Registrable Securities
are delivered to an underwriter for sale in connection with any Registration
Statement pursuant to Section 2(d), (i) an opinion, dated as of such date,
from
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, if any, and the Buyer and (ii) 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, if any, and the Buyer.
k.
The
Company shall make available for inspection by (i) the Buyer, and (ii) one
firm
of attorneys and one firm of accountants or other agents retained by the Buyer
(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 Inspector shall hold in confidence and shall not make any
disclosure (except to the Buyer) 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, (b) the release of such Records is ordered pursuant to a subpoena
or
other 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. 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
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this Section
3(k). The Buyer 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. Nothing herein (or in any other confidentiality agreement between
the Company and the Buyer) shall be deemed to limit the Buyer's ability to
sell
Registrable Securities in a manner which is otherwise consistent with applicable
laws and regulations.
l.
The
Company shall hold in confidence and not make any disclosure of information
concerning the Buyer 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 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 the Buyer is sought
in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Buyer prior to making such disclosure, and
allow the Buyer, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such
information.
m.
The
Company shall use its best efforts to (i) cause all the Registrable Securities
covered by the 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, or (ii) to the extent the securities
of the same class or series are not then listed on a national securities
exchange, secure the designation and quotation, of all the Registrable
Securities covered by the Registration Statement on the NNM or, if not eligible
for the NNM on the Nasdaq Small Cap or, if not eligible for the Nasdaq Small
Cap, on the Over the Counter electronic bulletin board and, without limiting
the
generality of the foregoing, to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. ("NASD")
as
such with respect to such Registrable Securities.
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n.
The
Company shall provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of
the
Registration Statement.
o.
The
Company shall cooperate with the Buyer who holds Registrable Securities being
offered and the managing underwriter or underwriters, if any, to facilitate
the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to such
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 the Buyer may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or the Buyer may request, and,
within three (3) business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver,
to
the transfer agent for the Registrable Securities (with copies to the Buyer)
an
appropriate instruction and an opinion of such counsel in the form required
by
the transfer agent in order to issue the Registrable Securities free of
restrictive legends.
p.
At the
request of the holders of a majority-in-interest of the Registrable Securities,
the Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
any
prospectus used in connection with the Registration Statement as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
q.
The
Company shall not, and shall not agree to, allow the holders of any securities
of the Company to include any of their securities in any Registration Statement
under Section 2(a) hereof or any amendment or supplement thereto under Section
3(b) hereof without the consent of the holders of a majority-in-interest of
the
Registrable Securities. In addition, the Company shall not offer any securities
for its own account or the account of others in any Registration Statement
under
Section 2(a) hereof or any amendment or supplement thereto under Section 3(b)
hereof without the consent of the holders of a majority-in-interest of the
Registrable Securities.
r.
The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Buyer of Registrable Securities pursuant to a
Registration Statement.
s.
The
Company shall comply with all applicable laws related to a Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including
without limitation the 1933 Act and the 1934 Act and the rules and regulations
promulgated by the SEC).
4.
OBLIGATIONS OF THE BUYER. In connection with the registration of the Registrable
Securities, the Buyer shall have the following obligations:
a.
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 the Buyer that the Buyer 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. At least three (3) business days prior to the
first anticipated filing date of the Registration Statement, the Company shall
notify the Buyer of the information the Company requires from each the
Buyer.
7
b.
The
Buyer, by the Buyer'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 Statements hereunder, unless
the Buyer has notified the Company in writing of the Buyer's election to exclude
all of the Buyer's Registrable Securities from the Registration
Statements.
c.
In the
event of an underwritten offering pursuant to Section 2(d) in which any
Registrable Securities are to be included, the Buyer agrees to enter into and
perform the Buyer'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 the Buyer
has
notified the Company in writing of the Buyer's election to exclude all of the
Buyer's Registrable Securities from such Registration Statement.
d.
The
Buyer agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(f) or 3(g), the Buyer will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until the Buyer's
receipt of the copies of the supplemented or amended prospectus contemplated
by
Section 3(f) or 3(g) and, if so directed by the Company, the Buyer shall deliver
to the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in the Buyer's possession,
of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
e.
No
Buyer may participate in any underwritten registration hereunder unless the
Buyer (i) agrees to sell the Buyer's Registrable Securities on the basis
provided in any underwriting arrangements in usual and customary form entered
into by the Company, (ii) completes and executes all questionnaires, powers
of
attorney, 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 and any
expenses in excess of those payable by the Company pursuant to Section 5
below.
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 qualification fees, printers and accounting fees,
the
fees and disbursements of counsel for the Company, and the reasonable fees
and
disbursements of one counsel selected by the Buyer pursuant to Sections 2(b)
and
3(h) hereof shall be borne by the Company.
8
6.
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, hold harmless and defend
(i) the Buyer, (ii) the directors, officers, partners, managers, members,
employees, agents and each person who controls any Buyer within the meaning
of
the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
ACT"), if any, (iii) any underwriter (as defined in the 0000 Xxx) for the Buyer
in connection with an underwritten offering pursuant to Section 2(d) hereof,
and
(iv) the directors, officers, partners, employees and each person who controls
any such underwriter within the meaning of the 1933 Act or the 1934 Act, if
any
(each, an "INDEMNIFIED PERSON"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "CLAIMS") to which any
of
the may become subject insofar as such Claims arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material fact in
a
Registration Statement or the omission or alleged omission to state therein
a
material fact required to be stated or necessary to make the statements therein
not misleading; (ii) any untrue statement or alleged untrue statement of 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 (the matters in the foregoing clauses
(i)
through (iii) being, collectively, "VIOLATIONS"). Subject to the restrictions
set forth in Section 6(c) with respect to the number of legal counsel, the
Company shall reimburse the Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable 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 such Registration
Statement or any such amendment thereof or supplement thereto; (ii) 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; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person 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,
such corrected prospectus was timely made available by the Company pursuant
to
Section 3(c) hereof, 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. 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 Buyer pursuant to Section 9.
b.
[Intentionally Omitted].
c.
Promptly after receipt by an Indemnified Person under this Section 6 of notice
of the commencement of any action (including any governmental action), such
Indemnified Person shall, if Claim in respect thereof is to be made against
any
Indemnified Person or the Company under this Section 6, deliver to the Company
a
written notice of the commencement thereof, and the Company shall have the
right
to participate in, and, to the extent the Company so desires, to assume control
of the defense thereof with counsel mutually satisfactory to the Company and
the
Indemnified Person, as the case may be.
PROVIDED,
HOWEVER, that an Indemnified Person shall have the right to retain its own
counsel with the fees and expenses to be paid by the Company, if, in the
reasonable opinion of counsel retained by the Company, the representation by
such counsel of the Indemnified Person and the Company would be inappropriate
due to actual or potential differing interests between such Indemnified Person
and any other party represented by such counsel in such proceeding. The Company
shall pay for only one separate legal counsel for the Indemnified Persons,
and
such legal counsel shall be selected by Buyer, if the Buyer is entitled to
indemnification hereunder. The failure to deliver written notice to the Company
within a reasonable time of the commencement of any such action shall not
relieve the Company of any liability to the Indemnified Person under this
Section 6, except to the extent that the Company is actually prejudiced in
its
ability to defend such action. 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 such expense, loss, damage or liability is
incurred and is due and payable.
7.
CONTRIBUTION. To the extent any indemnification by the Company is prohibited
or
limited by law, the Company 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.
9
8.
REPORTS UNDER THE 1934 ACT. With a view to making available to the Buyer the
benefits of Rule144 promulgated under the 1933 Act or any other similar rule
or
regulation of the SEC that may at any time permit the Buyer 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 the Buyer so long as the Buyer 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 Buyers to sell such securities
pursuant to Rule 144 without registration.
9.
ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be
automatically assignable by the Buyers to any transferee of all or any portion
of Registrable Securities if: (i) the Buyer 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) 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, and (v) such
transfer shall have been made in accordance with the applicable requirements
of
the Securities Purchase Agreement.
10.
AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with written consent
of the Company, the Buyer (to the extent such Buyer still owns Registrable
Securities) and Buyers who hold a majority interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section
10
shall be binding upon the Buyer 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 required or permitted to be given under the terms hereof shall be sent
by certified or registered mail (return receipt requested) or delivered
personally or by courier (including a recognized overnight delivery service)
or
by facsimile and shall be effective five days after being placed in the mail,
if
mailed by regular United States mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for such
communications shall be:
10
If
to the
Company: To the address set forth immediately below such Company's
name on the signature pages hereto.
With
copy
to:
Xxxxx
Xxxxxxxx, Esq.
XXXX
& XXXXX PC
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000-0000
Tel
(000)
000-0000
Fax
(000)
000-0000
If
to a
Buyer: To the address set forth immediately below such Buyer's name on the
signature pages hereto.
Each
party shall provide notice to the other party of any change in
address.
c.
Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.
d.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of California. Any controversy or claim arising out of or
related to this Debenture or the breach thereof, shall be settled by binding
arbitration in San Diego, CA in accordance with the Expedited Procedures (Rules
53-57) of the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). A proceeding shall be commenced upon written demand by
Company or the Buyer to the other. The arbitrator(s) shall enter a judgment
by
default against any party, which fails or refuses to appear in any properly
noticed arbitration proceeding. The proceeding shall be conducted by one (1)
arbitrator, unless the amount alleged to be in dispute exceeds two hundred
fifty
thousand dollars ($250,000), in which case three (3) arbitrators shall preside.
The arbitrator(s) will be chosen by the parties from a list provided by the
AAA,
and if they are unable to agree within ten (10) days, the AAA shall select
the
arbitrator(s). The arbitrators must be experts in securities law and financial
transactions. The arbitrators shall assess costs and expenses of the
arbitration, including all attorneys' and experts' fees, as the arbitrators
believe is appropriate in light of the merits of the parties' respective
positions in the issues in dispute. Each party submits irrevocably to the
jurisdiction of any state court sitting in San Diego, CA or to the United States
District Court sitting in California for purposes of enforcement of any
discovery order, judgment or award in connection with such arbitration. The
award of the arbitrator(s) shall be final and binding upon the parties and
may
be enforced in any court having jurisdiction. The arbitration shall be held
in
such place as set by the arbitrator(s) in accordance with Rule 55. With respect
to any arbitration proceeding in accordance with this section, the prevailing
party's reasonable attorney's fees and expenses shall be borne by the
non-prevailing party.
Although
the parties, as expressed above, agree that all claims, including claims that
are equitable in nature, for example specific performance, shall initially
be
prosecuted in the binding arbitration procedure outlined above, if the
arbitration panel dismisses or otherwise fails to entertain any or all of the
equitable claims asserted by reason of the fact that it lacks jurisdiction,
power and/or authority to consider such claims and/or direct the remedy
requested, then, in only that event, will the parties have the right to initiate
litigation respecting such equitable claims or remedies. The forum for such
equitable relief shall be in either a state or federal court sitting in San
Diego, CA. Each party waives any right to a trial by jury, assuming such right
exists in an equitable proceeding, and irrevocably submits to the jurisdiction
of said California court. California law shall govern both the proceeding as
well as the interpretation and construction of this Agreement and the
transaction as a whole.
e.
This
Agreement and the Securities Purchase Agreement (including all schedules and
exhibits thereto) constitute the entire agreement among the parties hereto
with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to
herein and therein. This Agreement and the Securities Purchase Agreement
supersede all prior agreements and understandings among the parties hereto
with
respect to the subject matter hereof and thereof.
11
f.
Subject to the requirements of Section 9 hereof, this Agreement shall inure
to
the benefit of and be binding upon the 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 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.
j.
Except
as otherwise provided herein, all consents and other determinations to be made
by the Buyer pursuant to this Agreement shall be made by Buyers holding a
majority of the Registrable Securities, determined as if the all of the
Debentures then outstanding have been converted into Registrable
Securities.
k.
The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for breach of its obligations hereunder will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of any
of
the provisions hereunder, that the Buyer shall be entitled, in addition to
all
other available remedies in law or in equity, to an injunction or injunctions
to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being
required.
l.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
m.
In the
event that any provision of this Agreement is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
n.
The
initial number of Registrable Securities included in any Registration Statement
and each increase to the number of Registrable Securities included therein
shall
be allocated pro rata among the Buyers based on the number of Registrable
Securities held by the Buyer at the time of such establishment or increase,
as
the case may be. In the event an Buyer shall sell or otherwise transfer any
of
such holder's Registrable Securities, each transferee shall be allocated a
pro
rata portion of the number of Registrable Securities included in a Registration
Statement for such transferor. Any shares of Common Stock included on a
Registration Statement and which remain allocated to any person or entity which
does not hold any Registrable Securities shall be allocated to the remaining
Buyers, pro rata based on the number of shares of Registrable Securities then
held by the Buyers. For the avoidance of doubt, the number of Registrable
Securities held by a Buyer shall be determined as if all the Debentures and
Warrants then outstanding and held by the Buyer were converted into or exercised
for Registrable Securities.
12
o.
There
shall be no oral modifications or amendments to this Agreement. This Agreement
may be modified or amended only in writing.
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
Agreement to be duly executed as of the 14th day of July 2006.
|
OMNI
U.S.A., INC., the Company
|
Potawatomi
Business Development Corp., the Buyer
|
|
By:
/S/ XXXXXX X.
XXXXXXXX
|
By:
/S/ XXXXX
XXXXX
|
|
Xxxxxx
X. Xxxxxxxx, CFO
|
Xxxxx
Xxxxx, CEO
|
|
ADDRESS:
|
ADDRESS:
|
|
0000
Xxxxxxxxxx Xx., Xxxxx 000
|
000
X. Xxxxxxx Xx., Xxxxx 000
|
|
Xxxxxxxx,
XX 00000
|
Xxxxxxxxx,
XX 00000
|
|
Telephone:
(000) 000-0000 Ext 210
|
Telephone:
000-000-0000
|
|
Facsimile:
(000) 000-0000
|
Facsimile:
000-000-0000
|
13
