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EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of this 18th; day of December, 1997 by and between Walnut
Financial Services, Inc., a Utah corporation ("WFS"), Xxxxxxxx Xxxxxx,
Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxx Xxxxx and Xxxx Xxxxxx (individually, a
"Warrant Purchaser" and, collectively, the "Warrant Purchasers"), those parties
listed on Exhibit A attached hereto and made a part hereof, each of whom has
executed a supplemental signature page hereto (individually, a "Purchaser" and,
collectively, the "Purchasers", and, collectively, with the Warrant Purchasers,
the "Holders"), and Xxxxx Xxxxxxx Securities, LLC, a New York limited liability
company (the "Placement Agent").
RECITALS
A. Pursuant to a Warrant Purchase Agreement dated as of October 15, 1997
(the "Purchase Agreement") by and between the Warrant Purchasers and
WFS, the Warrant Purchasers have purchased in the aggregate 1,000,000
Class A Warrants of WFS.
B. Pursuant to a private placement consummated in October, 1997 (the
"Private Placement"), each of the Purchasers has purchased units (the
"Units") of WFS, with each Unit consisting of 50,000 shares of WFS'
common stock, $.01 par value per share (the "Common Stock"), and 35,000
Class A Redeemable Common Stock purchase warrants (the "Class A
Warrants").
C. In connection with the Private Placement and the Purchase Agreement,
WFS has agreed to provide certain registration rights to the Holders,
which registration rights are hereby provided on the terms and
conditions of this Agreement.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
a. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
b. "Registrable Securities" shall mean the Common Stock and the Common
Stock underlying the Class A Warrants, in each case as issued to a
Holder in connection with the Private Placement or the Purchase
Agreement, and any Common Stock issued or issuable with respect to
such securities by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization.
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As to any particular Registrable Securities, such securities will
cease to be Registrable Securities when they have (i) been
effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering them, (ii) are
eligible for resale to the public in accordance with Rule 144 under
the Securities Act by a Holder (or any similar rule or regulation
then in force), or (iii) been otherwise transferred and new
certificates for them not bearing a Securities Act restrictive
legend have been delivered by WFS. Whenever any particular
securities cease to be Registrable Securities, the holder thereof
will be entitled to receive from WFS, at such holder's sole cost and
expense, new securities of like tenor not bearing a restrictive
legend.
c. "Registration Expenses" shall mean all expenses incident to the
performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and
disbursements of counsel and all independent certified public
accountants, underwriters (excluding discounts and commissions) and
other persons or entities retained in connection therewith.
d. "Registration Statement" shall mean a registration statement filed
pursuant to the Securities Act on Form X-0, X-0, X-0 or any similar
form pursuant to which the Registrable Securities may be registered.
e. "Securities Act" shall mean the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.
2. PIGGYBACK REGISTRATIONS.
a. RIGHT TO PIGGYBACK. Whenever WFS proposes to register any of its
securities under the Securities Act (other than pursuant to a Demand
Registration (as defined in paragraph 3 below) and other than a
registration on Form S-4 or S-8 or any other registration in
connection with an acquisition by WFS) and the registration form to
be used may be used for the registration of any Registrable
Securities (a "Piggyback Registration"), WFS will (i) give at least
30 days prior written notice to all Holders of its intention to file
such a Registration Statement, and (ii) include in such registration
all Registrable Securities in accordance with the priorities set
forth in paragraphs 2(c) and 2(d) below with respect to which WFS
has received written requests for inclusion therein within 20 days
after the applicable Holder's receipt of WFS' notice.
b. PIGGYBACK EXPENSES. All Registration Expenses incurred by WFS in
connection with any Piggyback Registration will be paid by WFS. All
Registration Expenses incurred by a Holder in connection with any
Piggyback Registration will be paid by such Holder.
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c. PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is an
underwritten primary registration on behalf of WFS and the managing
underwriters advise WFS in writing that in their opinion the number
of securities requested to be included in such registration exceeds
the number which can be sold in such offering, WFS will include in
such registration (i) first, the securities that WFS proposes to
sell, and (ii) second, the Registrable Securities and other
securities requested to be included in such registration, pro rata
among the Holders and the holders of any other securities requested
to be included therein on the basis of the number of Registrable
Securities or other securities being requested for registration
which are owned by such persons.
d. PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of WFS'
securities and the managing underwriters advise WFS in writing that
in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such
offering, WFS will include in such registration (i) first, the
securities requested to be included therein by the holders of
securities requesting such registration, and (ii) second, the
Registrable Securities and other securities requested to be included
in such registration, pro rata among the Holders and the holders of
any other securities requested to be included therein on the basis
of the number of Registrable Securities or other securities being
requested for registration which are owned by such persons.
3. DEMAND REGISTRATIONS.
a. REQUESTS FOR REGISTRATION. Subject to the terms of this Agreement,
the Placement Agent, at any time after the date which is six months
after the final closing of the Private Placement, may request that
WFS file a Registration Statement with respect to all or part of the
Holders' Registrable Securities. Within 15 days after receipt of any
such request, WFS will give written notice of such request to each
of the other Holders and will include in such registration all
Registrable Securities with respect to which WFS has received
written requests for inclusion therein within 20 days after the
applicable Holder's receipt of WFS' notice. All registrations
requested pursuant to this Paragraph 3 are referred to herein as
"Demand Registrations."
b. NUMBER OF DEMAND REGISTRATIONS. The Placement Agent will be entitled
to request one Demand Registration solely with respect to the
Registrable Securities held by the Warrant Purchasers (excluding the
Purchasers) and one Demand Registration with respect to the
Registrable Securities held by the Holders, and in each such case
WFS will pay all Registration Expenses. A registration will not
count as one of the permitted Demand Registrations (i) until it has
become effective (unless such registration has not become effective
due to the fault of the Placement Agent or the Holders that request
to participate in such registration, as
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the case may be) and (ii) unless the Placement Agent or the Holders,
as the case may be, are able to register at least seventy-five
percent (75%) of the Registrable Securities requested to be included
in such registration (unless such persons are not so able to
register such Registrable Securities due to the fault of such
persons).
c. PRIORITY ON DEMAND REGISTRATIONS. In the case of the Demand
Registration relating solely to Registrable Securities held by the
Warrant Purchasers, if other securities (other than Registrable
Securities held by the Placement Agent) are to be included in such
Demand Registration, and such Demand Registration is an underwritten
offering in which the managing underwriters advise WFS in writing
that in their opinion the number of the Registrable Securities and
other securities requested to be included exceeds the number of
Registrable Securities and other securities which can be sold in
such offering, WFS shall include in such registration all of the
Warrant Purchasers' Registrable Securities requested to be
registered prior to the inclusion of Registrable Securities of any
Purchaser, and shall include in such registration, prior to the
inclusion of any securities which are not Registrable Securities,
the number of Registrable Securities requested to be included by the
Purchasers which in the opinion of such underwriters can be sold, pro
rata among the respective Purchasers on the basis of the number of
Registrable Securities so required to be included therein. In the
case of the Demand Registration relating to all of the Registrable
Securities, if other securities (other than Registrable Securities)
are to be included in such Demand Registration, and such Demand
Registration is an underwritten offering in which the managing
underwriters advise WFS in writing that in their opinion the number
of Registrable Securities and other securities requested to be
included exceeds the number of Registrable Securities and other
securities which can be sold in such offering, WFS will include in
such registration, prior to the inclusion of any securities which
are not Registrable Securities, the number of Registrable Securities
requested to be included which in the opinion of such underwriters
can be sold, pro rata among the respective Holders on the basis of
the number of Registrable Securities so requested to be included
therein.
4. HOLDBACK AGREEMENT. In connection with any underwritten Piggyback
Registration, each Holder agrees not to effect any public sale or
distribution of equity securities of WFS, or any securities convertible
into or exchangeable or exercisable for such securities, during the period
beginning seven days prior to and ending on the date which is 90 days
after the effective date of any such underwritten Piggyback Registration
in which Registrable Securities are included on behalf of said Holder,
unless the underwriters managing the registered public offering otherwise
agree.
5. REGISTRATION PROCEDURES. Whenever any holder has requested that any
Registrable Securities be registered pursuant to this Agreement, WFS will
use its best efforts to:
a. effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof, and
pursuant thereto, WFS will
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as expeditiously as possible prepare and file with the Securities
and Exchange Commission a Registration Statement with respect to
such Registrable Securities and use its best efforts to cause such
Registration Statement to become effective;
b. prepare and file with the Securities and Exchange Commission (the
"SEC") such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period
of not less than nine months and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement;
c. furnish to each Holder such number of copies of such Registration
Statement, each amendment and supplement thereto and the prospectus
included in such Registration Statement (including each preliminary
prospectus) as such Holder may reasonably require; and furnish to
Placement Agent copies of all correspondence with the SEC with
respect to such Registration Statement;
d. register or qualify, as the case may be, such Registrable Securities
under such other securities or blue sky laws of such jurisdictions
as any Holder may reasonably request and do any and all other acts
and things which may be reasonably necessary to enable such Holder
to consummate the disposition in such jurisdictions of Registrable
Securities owned by such Holder (provided that WFS will not be
required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
subparagraph, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any
such jurisdiction);
e. notify the Placement Agent, at any time when a prospectus relating to
Registrable Securities is required to be delivered under the
Securities Act, of the happening of any event as a result of which
the prospectus included in such Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of
the Placement Agent, prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading; and
f. provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration
Statement.
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6. INDEMNIFICATION.
a. WFS agrees to indemnify, to the extent permitted by law, each Holder,
its officers and directors and each person or entity who controls
such Holder (within the meaning of the Securities Act) against, and
to pay to such persons the amount of, all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of material fact contained in any Registration Statement,
prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material
fact required to be stated therein, except insofar as the same are
caused by or contained in any information furnished to WFS by such
Holder in writing expressly for use therein or which such Holder
failed to provide after being so requested or by such Holder's
failure to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after WFS has
furnished such Holder with a sufficient number of copies of the same
or which is otherwise attributable to the negligence or willful
misconduct of such Holder. In connection with an underwritten
offering, WFS will indemnify such underwriters, their officers and
directors and each person or entity who controls such underwriters
(within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders.
b. In connection with any Registration Statement in which a Holder is
participating, each such Holder will furnish to WFS in writing,
within 15 days after request therefor, such information and
affidavits as WFS reasonably requests for use in connection with any
such Registration Statement or prospectus and, to the extent
permitted by law, will indemnify WFS, its directors and officers and
each person or entity who controls WFS (within the meaning of the
Securities Act), against, and will pay to such persons the amount
of, all losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact
contained or required to be contained in the Registration Statement,
prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such
untrue statement or omission is contained or required to be
contained in any information or affidavit so furnished or required
to be so furnished in writing by such Holder.
c. Any person or entity entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification, and (ii) unless in
such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the
defense of such claim, with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying
party will not be subject to any liability for any settlement made
by the indemnified party without the
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indemnifying party's consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such
claim.
d. The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or
controlling person or entity of such indemnified party and will
survive the transfer of securities.
7. CURRENT PUBLIC INFORMATION. At all times after WFS has filed a
Registration Statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Exchange
Act in connection with a registration pursuant to this Agreement, and such
Registration Statement has been declared effective, WFS will file all
reports required to be filed by it pursuant to the Securities Act or the
Exchange Act, and will take such further action as any Holder may
reasonably request, all to the extent required to enable such Holders to
sell Registrable Securities pursuant to (i) Rule 144 under the Securities
Act (or any similar rule or regulation then in force), or (ii) an
effective Registration Statement.
8. MISCELLANEOUS.
a. POWER OF ATTORNEY. Each Holder, by its execution hereof, hereby
makes, constitutes and appoints the Placement Agent as its true and
lawful agent and attorney-in-fact, with full power of substitution
and full power and authority in its name, place and stead to make,
execute, sign, acknowledge, swear to, record and file any amendment,
supplement or modification to this Agreement and any certificate or
other instrument deemed advisable by the Placement Agent to carry
out the provisions of this Agreement and applicable law. The
foregoing power of attorney shall be deemed to be a power coupled
with an interest and shall be irrevocable, may be exercised by the
Placement Agent either by signing as attorney-in-fact for each
Holder or, after listing all of the Holders executing an instrument,
by a single signature of the Placement Agent acting as
attorney-in-fact for all of them, and shall survive the delivery of
an assignment by a Holder of the whole or any fraction of its
Registrable Securities.
b. REMEDIES. Any person or entity having rights under any provision of
this Agreement will be entitled to enforce such rights specifically,
to recover damages caused by reason of any breach of any provision
of this Agreement, and to exercise all other rights granted by law.
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c. AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended and WFS may take any
action herein prohibited, or omit to perform any act herein required
to be performed by it, only if WFS has obtained the written consent
of the Placement Agent.
d. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and
inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.
e. HEADINGS. The headings of various paragraphs of this Agreement have
been inserted for reference only and shall not be a part of this
Agreement.
f. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid
under applicable law. If, however, any provision of this Agreement
shall be determined by a court of competent jurisdiction to be
invalid or unenforceable, such provisions shall be ineffective to
the extent of such invalidity or unenforceability, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
g. GOVERNING LAW. This Agreement has been negotiated and delivered at
Chicago, Illinois, and shall be governed by and construed in
accordance with the internal laws of the State of Illinois without
reference to (i) its judicially or statutorily pronounced rules
regarding conflict of laws or choice of law; (ii) where any
instrument is executed or delivered; (iii) where any payment or
other performance required by any such instrument is made or
required to be made; (iv) where any breach of any provision of any
such instrument occurs, or any cause of action otherwise accrues;
(v) where any action or other proceeding is instituted or pending;
(vi) the nationality, citizenship, domicile, principal place of
business, or jurisdiction or organization or domestication of any
party; (vii) whether the laws of the forum jurisdiction otherwise
would apply the laws of a jurisdiction other than the State of
Illinois; or (viii) any combination of the foregoing.
h. NOTICES. Any notice required or permitted to be given hereunder
shall be in writing, and shall be either (i) personally delivered,
(ii) sent by U.S. certified or registered mail, return receipt
requested, postage prepaid, or (iii) sent by Federal Express or
other reputable common carrier guaranteeing next business day
delivery, to the respective addresses of the parties set forth
below, or to such other place as any party hereto may by notice
given as provided herein designate for receipt of notices hereunder.
Any such notice shall be deemed given and effective upon receipt or
refusal of receipt thereof by the primary party to whom it is to be
sent.
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If to WFS to: Walnut Financial Services, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
with a required copy to: Barack Xxxxxxxxxx Xxxxxxxxxx
Xxxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxx Xxxxx, Esq.
If to the Placement
Agent to: Xxxxx Xxxxxxx Securities, LLC
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxxx Xxxxx
with a copy to: XxXxxxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
If to a Holder to: The address of such Holder shown on Exhibit A
i. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding among the parties with regard to the subject matter hereof,
and there are no other prior or contemporaneous written or oral agreements,
undertakings, promises, warranties, or covenants respecting such subject
matter not expressly set forth herein.
j. COUNTERPARTS. This Agreement may be executed in any number of identical
counterparts, any of which may contain the signatures of less than all
parties, and all of which together shall constitute a single agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
WALNUT FINANCIAL SERVICES, INC.,
a Utah corporation
By: /s/ Xxxx X. Xxxxxx
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Its: President
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XXXXX XXXXXXX SECURITIES, LLC,
a New York limited liability company
By: /s/ Xxxxxxxx Xxxxx
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Its: Vice President
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[ADDITIONAL SIGNATURE PAGES FOLLOW]
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REGISTRATION RIGHTS AGREEMENT
SUPPLEMENTAL SIGNATURE PAGE
WARRANT PURCHASERS
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
Address: /s/ Xxxxxxxx Xxxxxx
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Xxxxxxxx Xxxxxx
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Address: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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Address: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
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Address: /s/ Xxxxxxxx Xxxxx
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Xxxxxxxx Xxxxx
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Address: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
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EXHIBIT A
PURCHASERS
