EXHIBIT 10.73
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into on July 29, 2004, by and between Trinity Learning Corporation, a Utah
corporation (the "Company"), and Oceanus Value Fund, L.P. (the "Buyer").
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Buyer hereby agree as
follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings given such terms in the Securities Purchase Agreement
entered into between the Company and the Buyer dated concurrently herewith (the
"Securities Purchase Agreement"). As used in this Agreement, the following terms
shall have the specified 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.
"Blackout Period" shall have the meaning set forth in Section 2(c).
"Board" shall have the meaning set forth in Section 2(c).
"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 City of
New York or the State of New York are authorized or required by law or other
government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's no par value common stock.
"Effectiveness Date" means the 120th day following the Financing Deadline.
"Effectiveness Period" shall have the meaning set forth in Section 2(a).
"Event" shall have the meaning set forth in Section 8(d).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the 30th day following the Financing Deadline.
"Financing Deadline" means the 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 6(c).
"Indemnifying Party" shall have the meaning set forth in Section 6(c).
"Losses" shall have the meaning set forth in Section 6(a).
"Note" means the 12% Senior Secured Promissory Note of the Company, the
form of which is attached as Exhibit A to the Securities Purchase Agreement,
issued or to be issued to the Buyer pursuant to the Securities Purchase
Agreement.
"OTC Bulletin Board" shall mean the over-the-counter electronic bulletin
board market.
"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 a 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 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 such
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 (i) any shares of Common Stock issuable
pursuant to Section 5 of the Note (the "Conversion Shares") or upon the exercise
of the Warrant (the "Warrant Shares"), (ii) any shares issuable upon any stock
split, stock dividend, recapitalization or similar event with respect to the
Conversion Shares or Warrant Shares and (iii) any other dividend or other
distribution with respect to, conversion or exchange of, or in replacement of,
the Conversion Shares and/or Warrant Shares.
"Registration Statement" means each registration statement contemplated by
Section 2(a), including (in each case) the Prospectus, any 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 under 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 under 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 under 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.
"Special Counsel" means any special counsel to a Holder, for which such
Holder will be reimbursed by the Company pursuant to Section 5.
2. Registration.
(a) Required Registration. In the event that the Company has not completed
a financing of any kind of at least $1,000,000 (excluding the financing pursuant
to the Securities Purchase Agreement) by the Financing Deadline, on or prior to
the Filing Date, the Company shall prepare and file with the Commission a
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 Form SB-2 (unless the Company is not then eligible to register
for resale the Registrable Securities on Form SB-2, in which case such
registration shall be on another appropriate form in accordance herewith). 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 (except where
the Company's audited financial statements are stale, in which case by the
earlier of 90 days after the Effectiveness Date or the date that current audited
financial statements have been filed by the Company as part of a Form 10-KSB),
and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (i) the date when all
Registrable Securities covered by such Registration Statement have been sold or
(ii) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k), as determined by counsel to the Company or
the Buyer pursuant to a written opinion letter addressed to the Company's
transfer agent to such effect (the "Effectiveness Period"). If at any time
during the Effectiveness Period (i) the maximum number of Conversion Shares and
Warrant Shares exceeds (A) the number of shares of Common Stock initially
registered in respect of the Conversion Shares and the Warrant Shares minus (B)
the number of Conversion Shares and Warrant Shares, if any, already sold by the
Holder pursuant to the Registration Statement and (ii) such excess exists for a
period of more than ten (10) Business Days in any thirty (30) day period, the
Company shall be required to file an amendment to the Registration Statement or
an additional Registration Statement with respect to such excess shares within
ten (10) Business Days after such conditions have been met (except where the
Company's audited financial statements are stale, in which case within 100
calendar days after such conditions have been met), and the Company shall
thereafter use its best efforts to cause such amendment or additional
Registration Statement to be declared effective by the Commission as soon as
possible, but in no event later than ninety (90) days after filing.
(b) Shelf Registration. No later than thirty (30) days after becoming
eligible to file a registration statement for a secondary or resale offering of
the Registrable Securities on Form S-3, the Company shall prepare and file with
the Commission a post-effective amendment to the Registration Statement filed in
accordance with Section 2(a) above so as to continue the registration of all
Registrable Securities pursuant to a "shelf" Registration Statement on Form S-3
allowing all Registrable Securities to be sold on a continuous basis pursuant to
Rule 415. Notwithstanding anything to the contrary contained herein, at no time
during the Effectiveness Period shall any of the Registrable Securities cease
being registered.
(c) Delay in Filing or Effectiveness. Anything in this Agreement to the
contrary notwithstanding, 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 and which the Company would be required to disclose in
the Registration Statement, then, upon written notice to each Holder, the
Company may postpone or suspend the filing or effectiveness of a Registration
Statement for a period not to exceed 20 consecutive days; provided, however,
that the Company may not postpone or suspend its obligations under Section 2(a)
for more than 45 days in the aggregate during any 12 month period (each, a
"Blackout Period") and no such postponement or suspension arising out of the
same set of facts, circumstances or transactions shall be permitted for
consecutive 20 day periods.
3. Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Initial Filing. Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form SB-2 (or, if the Company is not
then eligible to register for resale the Registrable Securities on that Form,
such registration shall be on another appropriate form in accordance herewith)
in accordance with the method or methods of distribution thereof specified by
the Holder in writing (unless otherwise directed by the Holder in writing), and
cause the Registration Statement to become effective and remain effective as
provided herein; provided, however, that not less than five (5) Business Days
prior to the filing of the Registration Statement or any related Prospectus or
any amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall (i) furnish to each Holder
and any Special Counsel, copies of all such documents proposed to be filed,
which documents (other than those incorporated by reference) will be subject to
the review of each Holder and such Special Counsel and (ii) at the request of a
Holder, cause the Company's officers, directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of counsel to such Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which a Holder or any Special Counsel shall reasonably
object in writing within three (3) Business Days of their receipt thereof.
(b) Amendments. (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to a 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 amendments to a Registration Statement and/or
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 (or any
similar provisions then in force) under the Securities Act, (iii) respond as
promptly as possible to any comments received from the Commission with respect
to a Registration Statement or any amendment thereto and as promptly as possible
provide to each Holder true and complete copies of all correspondence from and
to the Commission relating to any Registration Statement or amendment 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 a Registration Statement during the applicable period in accordance
with the intended methods of disposition by each Holder thereof set forth in
such Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Related Matters. Notify each Holder of Registrable Securities to be
sold and any Special Counsel as promptly as possible (and, in the case of clause
(i)(A) below, not less than five (5) Business Days prior to such filing) (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to a
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 and
(C) with respect to a 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 a
Registration Statement or Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of a
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 that makes
any statement made in a 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 a Registration Statement,
Prospectus or other documents so that, in the case of such 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) Withdrawal and Suspension. Use its best efforts to avoid the issuance
of, or, if issued, at the earliest practicable time obtain the withdrawal of,
(i) any order suspending the
effectiveness of a 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) Incorporation of Certain Matters. 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 a 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 therein.
(f) Copies. To the extent requested by any Holder, provide to each 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, documents incorporated or deemed to be incorporated
therein by reference, and all exhibits), such documents to be provided promptly
after their filing with the Commission.
(g) Delivery. Promptly deliver to each Holder and any Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses and each
amendment or supplement thereto as they may reasonably request; and the Company
hereby consents to the use of each such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the offer
and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto.
(h) Blue Sky Matters. (A) 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 reasonably requests
in writing and (B) keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and perform or do any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of those 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) Preparation of Certificates. Cooperate with each Holder to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to a Registration Statement, which certificates
shall be free of all restrictive legends, and cause such certificates to be in
such denominations and registered in such names as each Holder may request at
least two (2) Business Days prior to any sale of Registrable Securities.
(j) Misrepresentation. 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 such
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) Listing and Quotation. Use its best efforts to cause all Registrable
Securities relating to a Registration Statement to be quoted on the OTC Bulletin
Board and any securities exchange, quotation system or other market on which
similar securities issued by the Company are then listed or quoted as and when
required pursuant to the Securities Purchase Agreement.
(l) Rule 158. Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders an earnings statement 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.
4. Additional Matters.
(a) Holder Information. In connection with the Registration Statement, each
selling Holder shall be required 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, and the Company may
exclude from such registration the Registrable Securities of any such Holder who
fails to furnish such information within a reasonable time prior to the filing
of such Registration Statement or any supplemented Prospectus and/or amended
Registration Statement.
(b) Reference to Holder. If the Registration Statement refers to any Holder
by name as the holder of any securities of the Company, then such Holder shall
have the right to require the deletion of the reference to such Holder in any
amendment or supplement to the Registration Statement that is filed subsequent
to the time that such reference ceases to be required by the Securities Act or
any similar federal statute then in force.
(c) Holder Covenants. Each Holder covenants and agrees that (i) it will not
sell any Registrable Securities under a 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 and
Affiliates, if any, will comply with the prospectus delivery requirements of the
Securities Act as applicable to them in connection with the sale of Registrable
Securities pursuant to such Registration Statement.
(d) Discontinuance. Each Holder agrees by its acquisition of Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in clauses (ii) through (vi) of Section 3(c),
such Holder will immediately 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 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.
5. 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 a Registration Statement is filed or becomes effective
and whether or not any Registrable Securities are sold pursuant to a
Registration Statement. Such fees and expenses 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 by or with the
OTC Bulletin Board and each securities exchange, quotation system or other
market on which Registrable Securities are required hereby to be listed or
quoted, (B) with respect to filings required to be made with the Commission and
(C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for each Holder in connection with
Blue Sky qualifications of the Registrable Securities and any 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 the 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 $10,000.00, (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 any 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, and the fees and expenses
incurred in connection with the listing or quoting of the Registrable Securities
on the OTC Bulletin Board or any securities exchange, quotation system or other
market on which Registrable Securities are required to be listed or quoted.
6. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, defend, indemnify and hold harmless each Holder,
each officer, director, manager, owner, agent, broker (including brokers who
offer and sell Registrable Securities as principals as a result of a pledge or
any failure to perform under a margin call), investment advisor and employee of
each Holder, each Person who controls any Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and each officer,
director, manager, owner, agent and employee of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages,
liabilities, reasonable costs (including, without limitation, costs of
investigation, preparation and attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in a Registration Statement or any
Prospectus or any amendment or supplement thereto, 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 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 (i) such untrue statements or omissions are based solely upon information
regarding such Holder which was furnished in writing to the Company by such
Holder expressly for use therein, which information was reasonably relied on by
the Company for use therein or (ii) 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 for use in the
Registration Statement or such Prospectus or in any amendment or supplement
thereto. The Company shall notify the Holder 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. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of an
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Holder.
(b) Indemnification by Holder. Each Holder shall, severally and not
jointly, defend, indemnify and hold harmless the Company, the Company's
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 solely out of or based solely upon any
untrue statement of a material fact contained in a Registration Statement, any
Prospectus or 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 (in the case of any 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 (i) such
untrue statement or omission is contained in or omitted from any information so
furnished in writing by such Holder to the Company specifically for inclusion in
such Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in such Registration Statement or
such Prospectus or (ii) 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 such
Registration Statement or such Prospectus or any amendment or supplement
thereto. Notwithstanding anything to the contrary contained herein, a Holder
shall be liable under this Section 6(b) for only that amount which 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 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: (i) the
Indemnifying Party has agreed in writing to pay such fees and expenses, (ii) 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 (iii) the named parties to any such Proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent both the Indemnified Party and the Indemnifying Party (in which case,
if the 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 (10) Business Days of written notice thereof to
the Indemnifying Party (regardless of whether it is ultimately determined that
the Indemnified Party is not entitled to indemnification hereunder; provided,
that the Indemnifying Party may require the Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that the Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution. If a claim for indemnification under Section 6(a) or 6(b)
is 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 as a result of any Losses shall be deemed
to include, subject to the limitations set forth in Section 6(c), any reasonable
attorneys' or other reasonable fees or expenses incurred in connection with any
Proceeding to the extent there would have been indemnification for such fees or
expenses if the indemnification provided in this Section was available in
accordance with its terms. Notwithstanding anything to the contrary contained
herein, a Holder shall be liable or required to contribute under this Section
6(d) for only such amount as does not exceed the net proceeds to such Holder as
a result of the sale of Registrable Securities pursuant to the Registration
Statement. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(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 this paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning provided in 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 an Indemnifying
Party may have to an Indemnified Party.
7. Rule 144. As long as any Holder owns a Note, Additional Shares,
Conversion Shares, a Warrant or Warrant Shares, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable
extension period) all reports required to be filed by the Company pursuant to
Section 13 or 15(d) of the Exchange Act and to promptly furnish each Holder with
true and complete copies of all such filings. As long as any Holder owns a Note,
Additional Shares, Conversion Shares, a Warrant or Warrant Shares, if the
Company is not required to file reports pursuant to Section 13 or 15(d) of the
Exchange Act, it will prepare and furnish to each Holder and make publicly
available in a timely fashion the information specified in Rule 144(c)(2). The
Company further covenants that it will take such further action as any Holder
may reasonably request to the extent required from time to time to enable each
Holder to sell Additional Shares, Conversion Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144, including providing any legal opinions of counsel to the
Company referred to in the Securities Purchase Agreement. 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 the foregoing
requirements.
8. Miscellaneous.
(a) Remedies. In the event of a breach by a party hereto of any of their
obligations under this Agreement, each non-breaching party, in addition to being
entitled to exercise all rights granted by law or 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 agree 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. The Company and the Buyer also acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement or
the Securities Purchase Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement or the Securities Purchase
Agreement and to enforce specifically
the terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
(b) No Inconsistent Agreements. Neither the Company nor any of its
Affiliates has, as of the date hereof, entered into and currently in effect, nor
shall the Company or any of its Affiliates 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 each Holder in this Agreement or
otherwise conflicts with the provisions hereof, except for registration rights
provisions disclosed in a Schedule to the Securities Purchase Agreement or in
the SEC Documents (as defined in the Securities Purchase Agreement). Except for
registration rights provisions disclosed in a Schedule to the Securities
Purchase Agreement or in the SEC Documents, neither the Company nor any of its
Affiliates 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 each Holder and are not otherwise in conflict with the provisions of
this Agreement. The foregoing notwithstanding, this Section 8(b) shall not
prohibit the Company from entering into any agreements concerning the
registration of securities on Form S-8 or Form S-4.
(c) Piggy-Back Registrations. If at any time when there is not an effective
Registration Statement covering the Registrable Securities, the Company shall
decide to prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others of any of its equity
securities, other than on Form S-4 or Form S-8 (or their then equivalents
relating to equity securities to be issued solely in connection with the
acquisition of an entity or business, or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Holder written notice of such decision and if, within thirty (30)
days after receipt of such notice, any Holder shall so request in writing (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder), the Company shall cause the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by such Holder, to the extent necessary to permit the disposition of
such Registrable Securities; provided, however, 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 each 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 5 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 8(c) 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 which each Holder requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 8(c) that are eligible for sale
pursuant to Rule 144(k). In the case of an
underwritten public offering, if the managing 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(s), should reasonably determine that the inclusion of the
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 a Holder, then (A) if the Company after consultation
with the underwriter(s) recommends the inclusion of fewer Registrable
Securities, 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), or (B) 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 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 (other than the Company).
(d) Failure to File Registration Statement and Other Events. The Company
and the Buyer agree that the Holders will suffer damages if a Registration
Statement required by Section 2(a) above 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 Period, or if certain other events occur. The Company and the
Buyer further agree that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, if (i) a required Registration
Statement is not filed on or prior to the Filing Date, or is not declared
effective by the Commission on or prior to the Effectiveness Date (or in the
event an additional Registration Statement is filed because the actual number of
Conversion Shares and/or Warrant Shares exceeds the number of shares of Common
Stock initially registered is not filed and declared effective within the time
periods set forth in Section 2(a)), (ii) the Company fails to file with the
Commission a request for acceleration in accordance with Rules promulgated under
the Exchange 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
required Registration Statement will not be "reviewed," or is not subject to
further review, (iii) a required 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 immediately by a subsequent
Registration Statement filed with and declared effective by the Commission, (iv)
trading in the Common Stock shall be suspended or if the Common Stock ceases to
be quoted on the OTC Bulletin Board for any reason for more than thirty (30)
days in the aggregate, (v) the conversion or exercise rights of a Holder are
suspended for any reason, including by the Company or (vi) the Company breaches
in a material respect any covenant or other material term or condition to this
Agreement, the Note, the Securities Purchase Agreement or any other agreement,
document, certificate or other instrument delivered in connection with the
transactions contemplated hereby and thereby, and such breach continues for a
period of thirty (30) days after written notice thereof to the Company (any such
circumstance, failure or breach being referred to as an "Event"), the Company
shall pay in cash as liquidated damages for such failure and not as a penalty to
each Holder an amount equal to 2% of such Holder's pro rata share of the
principal
amount of the Note then outstanding for each thirty (30) day period until the
applicable Event has been cured, which shall be pro rated for periods of less
than thirty (30) days (the "Periodic Amount"). Subject to a Holder's right to
add such accrued liquidated damages on to the principal amount of the Note (as
provided in the Note), payments to be made pursuant to this Section 8(d) shall
be due and payable immediately upon demand in immediately available funds. The
parties agree that the Periodic Amount represents a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of damages
that may be incurred by a Holder if a Registration Statement is not filed on or
prior to the Filing Date or has not been declared effective by the Commission on
or prior to the Effectiveness Date and maintained in the manner contemplated
herein during the Effectiveness Period or if any other Event as described herein
has occurred.
(e) Specific Enforcement; Consent to Jurisdiction. Each of the Company and
the Buyer hereby (i) irrevocably submits to the jurisdiction of any federal or
state court sitting in the State of Kansas for the purposes of any suit, action
or proceeding arising out of or relating to this Agreement or the Securities
Purchase Agreement and (ii) waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Buyer 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 in this Section 8(e) shall affect or limit any right to serve
process in any other manner permitted by law.
(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, shall not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof shall not be given,
unless the same shall be in writing and signed by the Company and the applicable
Holder. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates generally to the rights
of the 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, waived, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(g) Notices. Any and all communications required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
as provided in Section 8(f) of the Securities Purchase Agreement. The addresses
for such communications shall be as provided in Section 8(f) of the Securities
Purchase Agreement or such other address or addresses as any party may most
recently have designated in writing to the other parties hereto.
(h) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the Holder(s). The
Buyer may assign its rights hereunder in the manner and to the Persons as
permitted herein or in the Securities Purchase Agreement.
(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 transferee of such Holder of all
or a portion of the Note, the Warrant or 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 Securities Purchase
Agreement. 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. The rights to assignment shall
apply to the Holders and to their 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) such document 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 interpreted in
accordance with the laws of the State of Kansas without regard to the principles
of conflict of laws. The parties hereto agree that a final, non-appealable
judgment in any suit or proceeding with respect to this Agreement shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.
(l) Cumulative Remedies. No provision of this Agreement providing for any
specific remedy to a party shall be construed to limit such party to the
specific remedy described, and that any other remedy that would otherwise be
available to such party at law or in equity shall also be available. The parties
also intend that the rights and remedies hereunder be cumulative, so that
exercise of any one or more of such rights or remedies shall not preclude the
later or concurrent exercise of any other rights or remedies.
(m) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(n) Headings; Interpretation. The headings of this Agreement are for
convenience of reference and shall not form a part of, or affect the
interpretation of, this
Agreement. As used herein, (i) the neuter gender includes the masculine or
feminine and the singular number includes the plural, and vice versa, as the
context may require and (ii) unless the context clearly requires otherwise, the
words "herein," "hereunder" and "hereby," shall refer to this entire Agreement
and not only to the Section or paragraph in which such word appears. If any date
specified herein falls upon a Saturday, Sunday or public or legal holidays, the
date shall be construed to mean the next Business Day following such Saturday,
Sunday or public or legal holiday. Each party intends that this Agreement be
deemed and construed to have been jointly prepared by the parties. As a result,
the parties agree that any uncertainty or ambiguity existing herein shall not be
interpreted against either of them.
(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 and shall not
be counted as outstanding.
(p) Notice of Effectiveness. Within two (2) business days after a
Registration Statement which includes the Registrable Securities is ordered
effective by the Commission, the Company shall deliver, or shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities and to the Buyer (with copies to the Holders whose Registrable
Securities are included in such Registration Statement, if other than the Buyer)
confirmation that the Registration Statement has been declared effective by the
Commission.
(q) Attorney's Fees. If any party to this Agreement shall bring any action
for relief against the other arising out of or in connection with this
Agreement, in addition to all other remedies to which the prevailing party may
be entitled, the losing party shall be required to pay to the prevailing party a
reasonable sum for attorney's fees and costs incurred in bringing such action
and/or enforcing any judgment granted therein, all of which shall be deemed to
have accrued upon the commencement of such action and shall be paid whether or
not such action is prosecuted to judgment. Any judgment or order entered in such
action shall contain a specific provision providing for the recovery of
attorney's fees and costs incurred in enforcing such judgment. For the purposes
of this Section, attorney's fees shall include, without limitation, fees
incurred with respect to the following: (i) post-judgment motions, (ii) contempt
proceedings, (iii) garnishment, levy and debtor and third party debtor and third
party examinations, (iv) discovery and (v) bankruptcy litigation.
(r) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized persons as of the date first
written above.
TRINITY LEARNING CORPORATION
By:_______________________________
President
By:_______________________________
Secretary
OCEANUS VALUE FUND, L.P.
By: Oceanus Asset Management, L.L.C.,
General Partner
By:_______________________________
Title:____________________________
