AMENDED AND RESTATED FORM OF REGISTRATION RIGHTS AGREEMENT
AMENDED
AND RESTATED
This
Registration Rights Agreement (this "Agreement")
is
made and entered into as of January 16, 2006, by and among Online Processing,
Inc., a Nevada corporation (the "Company"),
Diguang International Holdings, Ltd. (“Diguang”) and
the
purchasers listed on Schedule
I
hereto
(the "Purchasers").
This
Agreement is being entered into pursuant to the Private Placement Memorandum
dated as of the date hereof and the Supplement dated February 23, 2006 among
the
Company and the Purchasers (the Private Placement Memorandum and the Supplement
are collectively referred to as the "Memorandum").
The
Company and the Purchasers hereby agree as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Memorandum. As used in this Agreement, the following terms shall
have the following meanings:
"Advice"
shall
have meaning set forth in Section 3(m).
"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.
"Board"
shall
have meaning set forth in Section 3(n).
"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 generally are
authorized or required by law or other government actions to close.
"Closing
Date"
means
the date the Company receives subscriptions for all 2,400,000 shares of Common
Stock pursuant to the Memorandum.
"Commission"
means
the Securities and Exchange Commission.
"Common
Stock"
means
the Company's Common Stock, par value $.001 per share.
"Effectiveness
Date"
means
with respect to the Registration Statement the earlier of the one hundred and
eightieth (180th)
day
following the Filing Date or the
date
which is within five (5) days of the date on which the Commission informs the
Company that the Commission (i) will not review the Registration Statement
or
(ii) that
the
Company may request the acceleration of the effectiveness of the Registration
Statement and the Company makes such request.
"Effectiveness
Period"
shall
have the meaning set forth in Section 2.
"Event"
shall
have the meaning set forth in Section 7(e).
"Event
Date"
shall
have the meaning set forth in Section 7(e).
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
"Filing
Date"
means
the ninetieth (90th)
day
following the Closing Date.
"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 in such
Prospectus.
"Registrable
Securities”
means
the shares of Common Stock issuable pursuant to the Memorandum.
"Registration
Statement"
means
the registration statements and any additional registration statements
contemplated by Section 2, 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 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
158"
means
Rule 158 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.
"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.
“Transaction
Documents”
means
the Memorandum and all other documents relating to the Offering.
2. Resale
Registration.
On
or
prior to the Filing Date the Company shall prepare and file with the Commission
a "resale" Registration Statement covering 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-1 (except if the Company is not then eligible
to
register for resale the Registrable Securities on Form S-1, in which case such
registration shall be on another appropriate form in accordance herewith).
The
Company shall (i) not permit any securities other than the Registrable
Securities and the securities listed on Schedule
II
hereto
to be included in the Registration Statement and (ii) 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 to keep such Registration Statement continuously
effective under the Securities Act for twenty-four (24) months thereafter (the
"Effectiveness
Period").
3. Registration
Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a)
Prepare
and file with the Commission, on or prior to the Filing Date, a Registration
Statement on Form S-1 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-1 such registration shall be on
another appropriate form in accordance herewith) in accordance with the method
or methods of distribution thereof as specified by the Holders (except if
otherwise directed by the Holders) and in accordance with applicable law, and
cause the Registration Statement to become effective and remain effective as
provided herein; provided,
however,
that
not less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto,
the
Company shall (i) furnish to the Holders and any Special Counsel, copies of
all
such documents proposed to be filed, which documents will be subject to the
review of such Holders and such Special Counsel, and (ii) cause its officers
and
directors, counsel and independent certified public accountants to respond
to
such inquiries as shall be necessary, in the reasonable opinion of Special
Counsel, to conduct a reasonable review of such documents. 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 or any Special Counsel shall reasonably object in writing within
three (3) Business Days of their receipt thereof.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement 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 as necessary 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
(or any similar provisions then in force) promulgated under the Securities
Act;
(iii) respond as promptly as possible, but in no event later than fifteen (15)
business days, to any comments received from the Commission with respect to
the
Registration Statement or any amendment thereto and as promptly as 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.
(c) Notify
the Holders of Registrable Securities and any Special Counsel as promptly as
possible (and, in the case of (i)(A) below, not less than three (3) days prior
to such filing) and (if requested by any such Person) confirm such notice in
writing no later than two (2) Business Days following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is 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 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
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 or threatening 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
of
any Proceeding for such purpose; and (vi) of the occurrence of any event that
makes 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 the light of the circumstances under which they were made, not
misleading.
(d) Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of,
as promptly as possible, (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities
for sale in any jurisdiction.
(e) If
requested by the Holders of a majority in interest of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as
the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to
be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) If
requested by any Holder, furnish to such Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished
or
incorporated by reference) promptly after the filing of such documents with
the
Commission.
(g) Promptly
deliver to each Holder and any 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; and
subject to the provisions of Section 3(n), 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.
(h) Prior
to
any public offering of Registrable Securities, use its best efforts to register
or qualify or cooperate with the selling Holders and any 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,
however,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by the
Memorandum and applicable federal and state securities laws, shall be free
of
all restrictive legends, and to enable such Registrable Securities to be in
such
denominations and registered in such names as any Holder may request in
connection with any sale of Registrable Securities.
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(vi), as promptly as
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 the light
of the circumstances under which they were made, not misleading.
(k) Use
its
best efforts to cause all Registrable Securities relating to the Registration
Statement to be listed on the NASDAQ
National Market or
any
other securities exchange, quotation system or market, if any, on which similar
securities issued by the Company are then listed as and when required pursuant
to the Memorandum.
(l) Comply
in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act
and
Rule 158 not later than 45 days after the end of any 12-month period (or 90
days
after the end of any 12-month period if such period is a fiscal year) commencing
on the first day of the first fiscal quarter of the Company after the effective
date of the Registration Statement, which statement shall conform to the
requirements of Rule 158.
(m) The
Company may require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as
is
required by law to be disclosed in the Registration Statement, Prospectus,
or
any amendment or supplement thereto, and the Company may exclude from such
registration the Registrable Securities of any such Holder who unreasonably
fails to furnish such information within a reasonable time after receiving
such
request.
Each
Holder covenants and agrees that (i) it will not sell any Registrable Securities
under the Registration Statement until it has received copies of the Prospectus
as then amended or supplemented as contemplated in Section 3(g) and notice
from
the Company that such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 3(c) and (ii) it and
its officers, directors or Affiliates, if any, will comply with the prospectus
delivery requirements of the Securities Act as applicable to them in connection
with sales of Registrable Securities pursuant to the Registration
Statement.
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 Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
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.
(n) If
(i)
there is material non-public information regarding the Company which the
Company's Board of Directors (the "Board")
reasonably determines not to be in the Company's best interest to disclose
and
which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or
any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose, then the Company may postpone or suspend filing
or
effectiveness of a registration statement for a period not to exceed 20
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 360 day period; provided,
however,
that no
such postponement or suspension shall be permitted for consecutive 20 day
periods, arising out of the same set of facts, circumstances or
transactions.
4. Registration
Expenses.
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in Section 4, shall be borne
by the Company whether or not the Registration Statement is filed or becomes
effective and 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 each securities exchange or market on which Registrable
Securities are required hereunder to be listed, (B) with respect to filing
fees
required to be paid to the National Association of Securities Dealers, Inc.
and
the NASD Regulation, Inc. and (C) in compliance with state securities or Blue
Sky laws (including, without limitation, fees and disbursements of counsel
for
the Holders in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the Holders of a majority
of Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by
the
holders of a majority of the Registrable Securities included in the Registration
Statement), (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 Special Counsel, to a maximum amount of $7,500, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi)
fees
and expenses of all other Persons retained by the Company in connection with
the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including
the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated
by
this Agreement (including, without limitation, all salaries and expenses of
its
officers and employees performing legal or accounting duties), the expense
of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required
hereunder.
5. Indemnification.
(a) 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 based upon any untrue or alleged untrue statement
of
a 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 based upon 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 the light of the circumstances under which they were
made, not misleading, except to the extent, but only to the extent, that such
untrue statements or omissions arise out of or are based upon information
regarding the Holders or such other Indemnified Party furnished in writing
to
the Company by a Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to a Holder or such Holder's proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing
by
a Holder expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto. 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.
(b) 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 incurred, arising out of or based upon any
untrue or alleged untrue statement of a 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 based upon 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 the light of
the
circumstances under which they were made, 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 or other Indemnified Party
to
the Company expressly for use therein and that such information was reasonably
relied upon by the Company 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 any amendment or supplement thereto.
Notwithstanding anything to the contrary contained herein, the Holders shall
be
liable under this Section 5(b) for only that amount as does not exceed the
net
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.
(c) 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 promptly shall notify the Person from whom indemnity is sought
(the "Indemnifying
Party)
in
writing, and the Indemnifying Party shall be entitled to 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 parties 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 or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which any Indemnified Party is a party
and
indemnity has been sought hereunder, 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 (10) 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 Indemnified Party shall reimburse all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable
to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (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. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
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 pursuant to the law.
6. Rule
144.
As
long
as any Holder owns Registrable Securities, the Company covenants to timely
file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder
owns Registrable Securities, if the Company is not required to file reports
pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and
furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell the Shares without registration
under
the Securities Act within the limitation of the exemptions provided by Rule
144
promulgated under the Securities Act, including providing any legal opinions
relating to such sale pursuant to Rule 144. Upon the request of any Holder,
the
Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such
requirements.
7. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, such Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not
provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has, as of the date hereof entered
into
and currently in effect, 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 is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
in Schedule
III,
neither
the Company nor any of its subsidiaries has previously entered into any
agreement currently in effect granting any registration rights with respect
to
any of its securities to any Person. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority of the
then
outstanding Registrable Securities, the Company shall not grant to any Person
the right to request the Company to register any securities of the Company
under
the Securities Act unless the rights so granted are subject in all respects
to
the prior rights in full of the Holders set forth herein, and are not otherwise
in conflict with the provisions of this Agreement.
(c) No
Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto or as disclosed in Schedule
II
attached
hereto) may include securities of the Company in the Registration Statement,
and
the Company shall not after the date hereof enter into any agreement providing
such right to any of its securityholders, unless the right so granted is subject
in all respects to the prior rights in full of the Holders set forth herein,
and
is not otherwise in conflict with the provisions of this Agreement.
(d) Piggy-Back
Registrations.
If at
any time when there is not an effective Registration Statement covering the
Shares, 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, the Company shall send to each holder of Registrable Securities written
notice of such determination and, if within thirty (30) days after receipt
of
such notice, or within such shorter period of time as may be specified by the
Company in such written notice as may be necessary for the Company to comply
with its obligations with respect to the timing of the filing of such
registration statement, any such holder shall so request in writing, (which
request shall specify the Registrable Securities intended to be disposed of
by
the Purchasers), the Company will cause the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the holder, to the extent requisite to permit the disposition of
the
Registrable Securities so to be registered, provided that if at any time after
giving written notice of its intention to register any securities and prior
to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or
to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such holder and, thereupon, (i) in
the
case of a determination not to register, shall be relieved of its obligation
to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or
any
part of such Registrable Securities such holder requests to be registered;
provided,
however,
that
the Company shall not be required to register any Registrable Securities
pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k)
of the Securities Act. In the case of an underwritten public offering, if the
managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then
if
the Company after consultation with the managing underwriter should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement,
and
based on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration
statement shall be reduced pro-rata among such Holders (based
upon the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided,
however,
that if
Securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction
of
the number of Registrable securities intended to be offered by the Holders
than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).
(e) Failure
to File Registration Statement and Other Events.
The
Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date
and
maintained in the manner contemplated herein during the Effectiveness Time
or if
certain other events occur. The Company and the Holders further agree that
it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if, except as set forth in Section 3(n), (A) the Registration
Statement is not filed on or prior to the Filing Date, or (B) the Registration
Statement is not declared effective by the Commission on or prior to the
Effectiveness Date, or (C) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461 promulgated under the
Securities Act within five (5) Business 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 is not subject to further
review, or (D) the Registration Statement is filed with and declared effective
by the Commission but thereafter ceases to be effective as to all Registrable
Securities at any time prior to the expiration of the Effectiveness Period,
without being succeeded by a subsequent Registration Statement filed with and
declared effective by the Commission in accordance with Section 2 hereof or
(E)
the Company has breached Section 3(n), or (F) trading in the Common Stock shall
be suspended or if the Common Stock is delisted from the OTC Bulletin Board
for
any reason for more than three Business Days in the aggregate (any such failure
or breach being referred to as an "Event,"
and
for purposes of clauses (A) and (B) the date on which such Event occurs, or
for
purposes of clause (C) the date on which such five Business Day period is
exceeded, or for purposes of clause (D) after more than twenty Business Days,
or
for purposes of clause (F) the date on which such three Business Day period
is
exceeded, being referred to as "Event
Date"),
then
the total number of shares of Common Stock covered by the Registration Statement
for each Holder of Registrable Securities shall be increased by two percent
(2%)
for each calendar month thereafter until the applicable Event is cured,
provided
that the
aggregate increase in such shares pursuant to this section 7(e) will in no
event
exceed twenty percent (20%). Notwithstanding anything to the contrary in this
paragraph (e), if (I) any of the Events described in clauses (A), (B) or (C)
shall have occurred, (II) on or prior to the applicable Event Date, the Company
shall have exercised its rights under Section 3(n) hereof and (III) the
postponement or suspension permitted pursuant to such Section 3(n) shall remain
effective as of such applicable Event Date, then the applicable Event Date
shall
be deemed instead to occur on the second Business Day following the termination
of such postponement or suspension.
(f) 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 three-fourths (3/4) of the Registrable
Securities outstanding.
(g) Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery by telex (with correct answer back received), telecopy or facsimile
at
the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business
day
during normal business hours where such notice is to be received) or (b) on
the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be with respect to each Holder at its address set forth under its name
on
Schedule
I
attached
hereto, or with respect to the Company, addressed to:
Online
Processing, Inc.
000
Xxxx
Xxxxxxxxxx 00, Xxxxx 000
Xxxxxxxx,
XX 00000
Attention:
Xx. Xxxxx Xxxxxxxx
Tel.
No.:
(000) 000-0000
With
a
copy, which shall not constitute notice, to:
Law
Offices of Xxxxx X. Xxxxxxx, P.C.
000
Xxxxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxx, Esq.
Tel
No.:
(000) 000-0000
Fax
No.:
(000)
000-0000
or
to
such other address or addresses or facsimile number or numbers as any such
party
may most recently have designated in writing to the other parties hereto by
such
notice.
(h) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Holder and its successors and assigns. The Company may not assign this Agreement
or any of its rights or obligations hereunder without the prior written consent
of each Holder. Each Purchaser may assign its rights hereunder in the manner
and
to the Persons as permitted under the Memorandum.
(i) Assignment
of Registration Rights.
The
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of
this
Agreement, shall be automatically assignable by each Holder to any Affiliate
of
such Holder or any other Holder or
Affiliate of any other Holder
of
all or a portion of
the
Registrable Securities if: (i) the Holder 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 assignees is restricted
under the Securities Act and applicable state securities laws, (iv) at or before
the time the Company receives the written notice contemplated by clause (ii)
of
this Section, the transferee or assignee agrees in writing with the Company
to
be bound by all of the provisions of this Agreement, and (v) such transfer
shall
have been made in accordance with the applicable requirements of the Memorandum.
In addition, each Holder shall have the right to assign its rights hereunder
to
any other Person with the prior written consent of the Company, which consent
shall not be unreasonably withheld provided that such assignment shall be in
accordance with applicable securities laws. The rights to assignment shall
apply
to the Holders (and to subsequent) successors and assigns.
(j) 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.
(k) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts
of
law principles which would result in the application of the substantive law
of
another jurisdiction. This Agreement shall not interpreted or construed with
any
presumption against the party causing this Agreement to be drafted.
(l) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(m) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, 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.
(n) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(o) Shares
Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the
Company or its Affiliates (other than any Holder or transferees or successors
or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason
of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(p) Independent
Nature of Purchasers.
The
Company acknowledges that the obligations of each Purchaser under the
Transaction Documents are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under the Transaction
Documents. The Company acknowledges that the decision of each Purchaser to
purchase securities pursuant to the Memorandum has been made by such Purchaser
independently of any other purchase and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial
or
otherwise) or prospects of the Company or of its Subsidiaries which may have
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any Purchaser (or any other person) relating to or arising from
any
such information, materials, statements or opinions. The Company acknowledges
that nothing contained herein, or in any Transaction Document, and no action
taken by any Purchaser pursuant hereto or thereto (including, but not limited
to, the (i) inclusion of a Purchaser in the Registration Statement and (ii)
review by, and consent to, such Registration Statement by a Purchaser) 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 or as a group with respect to such obligations
or the transactions contemplated by the Transaction Documents. The Company
acknowledges that each Purchaser shall be entitled to independently protect
and
enforce its rights, including without limitation, the rights arising out of
this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that for reasons of
administrative convenience only, the Transaction Documents have been prepared
by
counsel for one of the Purchasers and such counsel does not represent all of
the
Purchasers but only such Purchaser and the other Purchasers have retained their
own individual counsel with respect to the transactions contemplated
hereby. The Company acknowledges that it has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience
of
the Company and not because it was required or requested to do so by the
Purchasers. The Company acknowledges that such procedure with respect to the
Transaction Documents in no way creates a presumption that the Purchasers are
in
any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated hereby or thereby.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
ONLINE
PROCESSING, INC.
By:_____________________________________
Name:
Title:
PURCHASER:
By:_____________________________________
Name:
Title:
Schedule
I
Purchasers
Schedule
II
Securities
Permitted to be Included on the Registration Statement
1. Chardan
Capital Markets, LLC
133,000
shares
2. Maxim
Group, LLC
110,000
shares
3. Chardan
Capital, LLC
800,000
shares
4. Chardan
JLF 1,000,000
shares
5. Xxxxx
Xxxxxxx
125,000
shares
6. Siar
Capital
125,000
shares
