EXHIBIT 10(b)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of July 18, 2000, among FORTEL INC., a California corporation
(the "COMPANY"), and the investors signatory hereto (each such investor is a
"PURCHASER" and all such investors are, collectively, the "PURCHASERS").
This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof among the Company and the Purchasers (the "PURCHASE
AGREEMENT").
The Company and the Purchasers hereby agree as follows:
1. DEFINITIONS
Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in
the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "CONTROL," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "AFFILIATED," "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York or California are authorized or required by law or other government
actions to close.
"CLOSING DATE" shall have the meaning set forth in the Purchase
Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock, no par value, or such
securities in to which that such stock shall hereafter be reclassified.
"EFFECTIVENESS DATE" means, with respect to the initial Registration
Statement required to be filed hereunder, the 90th day following the Closing
Date and, with respect to any additional Registration Statements which may be
required pursuant to Section 3(c), the 90th day following the date that notice
of the requirement to file such additional Registration Statement is provided.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
EXHIBIT 10(B)-1.
"FILING DATE" means the 30th day following the Closing Date and, with
respect to any additional Registration Statements which may be required pursuant
to Section 3(c), the 15th day following the date that notice of the requirement
to file such additional Registration Statement is provided.
"HOLDER" or "HOLDERS" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 5(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 5(c).
"LOSSES" shall have the meaning set forth in Section 5(a).
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"REGISTRABLE SECURITIES" means (i) the Shares and (ii) the shares of
Common Stock issuable upon exercise in full of the Warrants.
"REGISTRATION STATEMENT" means the registration statement and any
additional registration statements contemplated by Section 3(c), including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"RULE 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"RULE 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
EXHIBIT 10(B)-2.
"RULE 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SHARES" means the shares of Common Stock issued and sold to the
Purchasers pursuant to the Purchase Agreement.
"SPECIAL COUNSEL" means one special counsel to the Holders, for which
the Holders will be reimbursed by the Company pursuant to Section 4.
"WARRANTS" shall have the meaning set forth in the Purchase Agreement.
2. SHELF REGISTRATION
On or prior to each Filing Date, the Company shall prepare and
file with the Commission a "Shelf" Registration Statement
covering the resale of all Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form S-3 (except
if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form) and shall
contain (except if otherwise directed by the Holders) the
"Plan of Distribution" attached hereto as Annex A. The Company
shall use its best efforts to cause the Registration Statement
to be declared effective under the Securities Act as promptly
as possible after the filing thereof, but in any event prior
to the Effectiveness Date, and shall use its best efforts to
keep such Registration Statement continuously effective under
the Securities Act until the date which is two years after the
date that such Registration Statement is declared effective by
the Commission or such earlier date when all Registrable
Securities covered by such Registration Statement have been
sold or may be sold without volume restrictions pursuant to
Rule 144(k) (the "EFFECTIVENESS PERIOD").
The initial Registration Statement to be filed hereunder shall
include 5,341,1261 shares of the Company's Common Stock.
If (a) a Registration Statement is not filed on or prior to its
Filing Date (if the Company files such Registration Statement
without affording the Holder the opportunity to review and
comment on the same as required by Section 3(a) hereof, the
Company shall not be deemed to have satisfied this clause
(a)), or (b) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461
promulgated under the Securities Act, within five days of the
date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration
Statement will not be "reviewed," or not
-----------------
(1) Represents 19.999% of 26,706,967, which is the total number of the
Company's issued and outstanding common stock as of this Agreement.
EXHIBIT 10(B)-3.
subject to further review, or (c) a Registration Statement
filed hereunder is not declared effective
by the Commission on or prior to its Effectiveness Date, or
(d) after a Registration Statement is filed with and
declared effective by the Commission, such
Registration Statement ceases to be effective as to all
Registrable Securities to which it is required to relate at
any time prior to the expiration of the Effectiveness Period
without being succeeded within ten Business Days by an
amendment to such Registration Statement or by a subsequent
Registration Statement filed with and declared effective by
the Commission, or (e) the Common Stock shall be delisted or
suspended from trading on the Nasdaq Smallcap Market
("NASDAQ") or on the New York Stock Exchange, the American
Stock Exchange or Nasdaq National Market (each, a "SUBSEQUENT
MARKET") for more than three Trading Days (which need not be
consecutive Trading Days), or (f) the exercise rights of the
Holders pursuant to the Warrants are suspended for any reason,
or (g) an amendment to a Registration Statement is not filed
by the Company with the Commission within ten Business Days of
the Commission's notifying the Company that such amendment is
required in order for such Registration Statement to be
declared effective (any such failure or breach being referred
to as an "EVENT," and for purposes of clauses (a), (c), (f)
the date on which such Event occurs, or for purposes of clause
(b) the date on which such five day period is exceeded, or for
purposes of clauses (d) and (g) the date which such ten
Business Day-period is exceeded, or for purposes of clause (e)
the date on which such three Trading Day-period is exceeded,
being referred to as "EVENT DATE"), then, on each such Event
Date and every monthly anniversary thereof until the
applicable Event is cured, the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 2.0% of the purchase price paid by such
Holder pursuant to the Purchase Agreement. If the Company
fails to pay any liquidated damages pursuant to this Section
in full within seven days after the date payable, the Company
will pay interest thereon at a rate of 18% per annum (or such
lesser maximum amount that is permitted to be paid by
applicable law) to the Holder, accruing daily from the date
such liquidated damages are due until such amounts, plus all
such interest thereon, are paid in full. The liquidated
damages pursuant to the terms hereof shall apply on a pro-rata
basis for any portion of a month prior to the cure of an
Event.
3. REGISTRATION PROCEDURES
In connection with the Company's registration obligations hereunder,
the Company shall:
Not less than five Business Days prior to the filing of each
Registration Statement or any related Prospectus or any
amendment or supplement thereto (including any document that
would be incorporated or deemed to be incorporated therein by
reference), the Company shall, (i) furnish to the Holders and
their Special Counsel copies of all such documents proposed to
be filed, which documents (other than those incorporated or
deemed to be incorporated by reference) will be subject to the
review of such Holders and their Special Counsel, and (ii)
cause its officers and directors, counsel and independent
certified public accountants to respond to
EXHIBIT 10(B)-4.
such inquiries as shall be necessary, in the reasonable
opinion of respective counsel to conduct a reasonable
investigation within the meaning of the Securities Act.
The Company shall not file the Registration Statement or
any such Prospectus or any amendments or supplements thereto
to which the Holders of a majority of the Registrable
Securities and their Special Counsel shall reasonably object,
PROVIDED, the Company is notified of such objection no later
than 3 Business Days after the Holders have been so furnished
copies of such documents.
(i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration
Statement and the Prospectus used in connection therewith as
may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file
with the Commission such additional Registration Statements in
order to register for resale under the Securities Act all of
the Registrable Securities; (ii) cause the related Prospectus
to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; (iii) respond as promptly as reasonably
possible, and in any event within ten Business Days, to any
comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and
complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv)
comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in
accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
File additional Registration Statements if the number of
Registrable Securities at any time exceeds 85% of the number
of shares of Common Stock then registered in all their
existing Registration Statements hereunder.
Notify the Holders of Registrable Securities to be sold and their
Special Counsel as promptly as reasonably possible (and, in
the case of (i)(A) below, not less than five Business Days
prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Business Day
following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a "review" of such
Registration Statement and whenever the Commission comments in
writing on such Registration Statement (the Company shall
provide true and complete copies thereof and all written
responses thereto to each of the Holders); and (C) with
respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional
information; (iii) of the
EXHIBIT 10(B)-5.
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in
any agreement contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the
Company of any notification with respect to the
suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any
event or passage of time that makes the financial statements
included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material
respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case
of the Registration Statement or the Prospectus, as the case
may be, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading.
Promptly deliver to each Holder and their Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request. The
Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders
in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or
supplement thereto.
Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling
Holders and their Special Counsel in connection with the
registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any Holder
requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or
things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a
Registration Statement; PROVIDED, THAT the Company shall not
be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or subject the
Company to any material tax in any such jurisdiction where it
is not then so subject.
Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities
to be delivered to a transferee pursuant to a Registration
Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable
EXHIBIT 10(B)-6.
Securities to be in such denominations and registered in
such names as any such Holders may request.
Upon the occurrence of any event contemplated by Section 3(d)(vi),
as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an
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, in light of the circumstances
under which they were made, not misleading.
Comply with all applicable rules and regulations of the Commission.
4. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the NASDAQ and any Subsequent Market on which the
Common Stock is then listed for trading, and (B) in compliance with applicable
state securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders )), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the Holders),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and Special Counsel for the Holders (in the case of the
latter, up to a maximum of $5,000), and (v) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement.
5. INDEMNIFICATION
INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities
as principal as a result of a pledge or any failure to perform
under a margin call of Common Stock), investment advisors and
employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of
preparation and attorneys' fees) and expenses (collectively,
"LOSSES"), as incurred, arising out of or relating to any
untrue or alleged untrue statement of a
EXHIBIT 10(B)-7.
material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus
or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading,
except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto or (2) in the case of an
occurrence of an event of the type specified in Section
3(d)(ii)-(vi), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). The Company shall notify the
Holders promptly of the institution, threat or assertion of
any Proceeding of which the Company is aware in connection
with the transactions contemplated by this Agreement.
INDEMNIFICATION BY HOLDERS. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to
appeal or review) arising solely out of or based solely upon
any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or
arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to
make the statements therein not misleading to the extent, but
only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such
Holder to the Company specifically for inclusion in such
Registration Statement or such Prospectus or to the extent
that (1) such untrue statements or omissions are based solely
upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, or to
the extent that such information relates to such Holder or
such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto or (2) in the case of an
occurrence of an event of the type specified in Section
3(d)(ii)-(vi), the use by such Holder of
EXHIBIT 10(B)-8.
an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(e). In no event shall
the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by
such Holder upon the sale of the Registrable Securities giving
rise to such indemnification obligation.
CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity
hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party
shall promptly notify the Person from whom indemnity is sought
(the "INDEMNIFYING PARTY") in writing, and the Indemnifying
Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; PROVIDED, THAT
the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to
the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; PROVIDED, THAT the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
EXHIBIT 10(B)-9.
CONTRIBUTION. If a claim for indemnification under Section 5(a) or 5(b)
is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements
or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined
by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of
a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such action, statement
or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable
attorneys' or other reasonable fees or expenses incurred by
such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by PRO RATA
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
The indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. MISCELLANEOUS
AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be
in writing and signed by the Company and the Holders of at
least two-thirds of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders and that
does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent
relates; PROVIDED, HOWEVER, that the provisions of this
sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.
EXHIBIT 10(B)-10.
NO INCONSISTENT AGREEMENTS. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its subsidiaries, on or after the date of
this Agreement, enter into any agreement with respect to its
securities that would have the effect of impairing the rights
granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as and to the
extent specified in Schedule 6(b) hereto, neither the Company
nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any
of its securities to any Person.
NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent
specified in Schedule 6(b) hereto, neither the Company nor any
of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the
Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the
date hereof enter into any agreement providing any such right
to any of its security holders.
COMPLIANCE. Each Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement.
DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described
in Sections 3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v) or
3(d)(vi), such Holder will forthwith discontinue disposition
of such Registrable Securities under the Registration
Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in
writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in
such Prospectus or Registration Statement. The Company may
provide appropriate stop orders to enforce the provisions of
this paragraph.
PIGGY-BACK REGISTRATIONS. If at any time during the Effectiveness
Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company
shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own
account or the account of others under the Securities Act of
any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) 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, then the Company
shall send to each Holder written notice of such determination
and, if within fifteen days after receipt of such notice, any
such Holder shall so request in writing, the Company shall
include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered.
EXHIBIT 10(B)-11.
NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m.
(New York City time) on a Business Day, (ii) the Business Day
after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30
p.m. (New York City time) on any date and earlier than 11:59
p.m. (New York City time) on such date, (iii) the Business Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall
be as follows:
If to the Company: FORTEL, Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer and Chief
Executive Officer
If to a Purchaser: To the address set forth
under such Purchaser's name on the signature
pages hereto.
If to any other Person who is then the registered Holder:
To the address of such Holder as it appears
in the stock transfer books of the Company
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each
Holder. The Company may not assign its rights or obligations
hereunder without the prior written consent of each Holder.
Each Holder may assign their respective rights hereunder in
the manner and to the Persons as permitted under the Purchase
Agreement.
COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed
to be an original and, all of which taken together shall
constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party
executing (or on whose behalf such signature is executed) the
same with the same force and effect as if such facsimile
signature were the original thereof.
EXHIBIT 10(B)-12.
GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be
governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.
CUMULATIVE REMEDIES. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the
meaning hereof.
EXHIBIT 10(B)-13.
INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder is several and not
joint with the obligations of any other Purchaser hereunder,
and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser
hereunder. Nothing contained herein or in any other agreement
or document delivered at any closing, and no action taken by
any Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be
entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]
EXHIBIT 10(B)-14.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
FORTEL INC.
By: S/
--------------------------------------
Name: Xxxx X. XxXxxx
---------------------------------
Title:CFO
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASER TO FOLLOW]
SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT
DEEPHAVEN PRIVATE PLACEMENT TRADING LTD.
By: S/
Name: Xxxx Xxxxxxx
Title: CFO
Address for Notice:
Deephaven Private Placement Trading Ltd.
c/o Deephaven Capital Management LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
HARP INVESTORS LLC
By: S/
Name: Xxxxxx Xxxx
Title: Managing Director
Address for Notice:
Harp Investors LLC
c/o WEC Asset Management LLC
000 Xxxxxxxxx Xxxx Xxxx
Xxxxxx-xx-Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxx
SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT
With copies to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT
ANNEX A
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales
- broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against the
box, puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares. The Selling Stockholders have advised the Company
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their shares other
than ordinary course brokerage arrangements, nor is there an underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
Selling Stockholders.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the
ANNEX A-1.
Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
ANNEX A-2.
