EXHIBIT 10.20
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of December 2, 1998, by
and among Prosoft I-Net Solutions, Inc., a Nevada corporation (the "Company"),
and the Persons set forth on Schedule I attached hereto (the "Investors").
The Investors intend to purchase convertible promissory notes (the
"Notes") of the Company pursuant to a Note and Warrant Purchase Agreement dated
as of December 2, 1998. The Notes are convertible into shares of Common Stock
of the Company. The execution and delivery of this Agreement is a condition to
the Investors' purchase of the Notes. Capitalized terms used herein shall have
the meanings set forth in Section 8 below.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, agree as follows:
1. REGISTRATION STATEMENTS.
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(a) Shelf Registration.
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(i) The Company shall, on or before January 31, 1999, prepare
and file with the Commission under the Securities Act a Registration Statement
with respect to the Registrable Securities, and shall use its best efforts to
cause such Registration Statement to be declared effective at the earliest
practicable date. The Company shall, subject to Section 1(a)(v), ensure the
availability of a Prospectus meeting the requirements of Section 10(a) of the
Securities Act and shall take any and all other actions necessary in order to
ensure the ability of the holders of the Registrable Securities to effect a
resale of their Registrable Securities, for such period as the Company is
obligated to maintain the effectiveness of a Registration Statement pursuant to
Section 1(a)(ii).
(ii) The Company shall use its best efforts to cause any such
Registration Statement described in Section 1(a)(i) to remain effective (or, if
required by applicable law, to cause another Registration Statement with respect
to the Registrable Securities to become and remain effective) until the earlier
to occur of: (i) such time as all the Registrable Securities have been sold by
the Investors and (ii) such time as all the Registrable Securities held by the
Investors could be sold under Rule 144 of the Securities Act during any 90-day
period.
(iii) Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities to give at least five Business Days' prior notice
to the Company of any intended distribution of Registrable Securities under any
Registration Statement described in Section 1(a)(i), which notice shall specify
the date on which such holder intends to begin such distribution.
(iv) As soon as possible after the date notice is provided
pursuant to Section 1(a)(iii), and in any event within five Business Days of
such date, the Company shall, subject to Section 1(a)(v):
(A) file such amendments to the Registration Statement and the
Prospectus, file such documents as may be required to be incorporated by
reference in any of such documents, and take all other actions as may be
necessary to ensure to the holders of Registrable Securities the ability to
effect the public resale of their Registrable Securities for a period of at
least 90 days following the date set forth in such notice (including without
limitation taking any actions necessary to ensure the availability of a
Prospectus meeting the requirements of Section 10(a) of the Securities Act), (B)
provide each holder of Registrable Securities copies of any documents prepared
pursuant to Section 1(a)(iv)(A), and (C) inform each holder of Registrable
Securities that the Company has complied with the obligations in Section
1(a)(iv)(A) and that such holder may sell such holder's Registrable Securities.
(v) The Company may suspend the effectiveness of any
Registration Statement filed pursuant to this Section 1(a) if, in its reasonable
judgment, (A) maintaining the effectiveness of such Registration Statement at
such time would adversely affect a proposed financing, reorganization or
recapitalization, or pending negotiations relating to a merger, consolidation,
acquisition or similar transaction, or otherwise adversely affect the Company;
or (B) financial statements meeting the requirements of Regulation S-X are not
available at such time because of any such pending proposal or negotiations;
provided, however, that the right of the Company pursuant to this subSection (v)
to suspend the effectiveness of the Registration Statement shall not extend for
more than 90days; and provided, further, that the Company shall give to each
holder of Registrable Securities prior written notice of such suspension.
(b) Amendments. Upon the occurrence of any event that would cause any
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Registration Statement (i) to contain a material misstatement or omission or
(ii) not to be effective and usable for resale of Registrable Securities during
the period that such Registration Statement is required to be effective and
usable, the Company shall promptly file an amendment to the Registration
Statement, in the case of clause (i), correcting any such misstatement or
omission, and in the case of either clause (i) or (ii), using its best efforts
to cause such amendment to be declared effective and such Registration Statement
to become usable as soon as practicable thereafter.
2. REGISTRATION PROCEDURES.
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In connection with any Registration Statement and subject to the
provisions of Section 1 the Company shall use its best efforts to effect such
registration to permit the sale of the Registrable Securities being sold in
accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company shall as expeditiously as possible:
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(a) prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Registrable Securities being
sold in accordance with the intended method or methods of distribution thereof
and shall include all financial statements required by the Commission to be
filed therewith (including, if required by the Securities Act or any regulation
thereunder, financial statements of any Subsidiary of the Company which shall
have guaranteed any indebtedness of the Company), cooperate and assist in any
filings required to be made with the NASD and use its best efforts to cause such
registration Statement to become effective and approved by such governmental
agencies or authorities as may be necessary to enable the selling holders to
consummate the disposition of such Registrable Securities;
(b) prepare and file with the Commission such amendments and post-
effective amendments to the Registration Statement as may be necessary to keep
the Registration Statement effective for the applicable period set forth in
Section1; in the case of any Registration Statement filed pursuant to Rule 415
under the Securities Act, cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424under the Securities Act, and to comply fully with the applicable
provisions of Rules 424 and 430A under the Securities Act in a timely manner,
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(c) advise the holders of the Registrable Securities promptly and, if
requested by such Persons, confirm such advice in writing:
(i) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective;
(ii) of the existence of any fact and the happening of any event
that makes any statement of a material fact made in the Registration Statement,
the Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Registration Statement or the Prospectus in order
to make the statements therein not misleading; and
(iii) of the issuance by the Commission of any stop order or
other order suspending the effectiveness of the Registration Statement, or any
order issued by any state securities commission or other regulatory authority
suspending the qualification or exemption from qualification of such Registrable
Securities under state securities or "blue sky" laws. If at any time the Company
shall receive any such stop order suspending the effectiveness of the
Registration Statement, or any such order from a state securities commission or
other regulatory authority, the Company shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
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(d) deliver to each holder of the Registrable Securities, without
charge, as many copies of the Prospectus and any amendment or supplement thereto
as such Persons may reasonably request; the Company consents to the use of the
Prospectus and any amendment or supplement thereto by each of the holders of the
Registrable Securities in connection with the offering and the sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto;
(e) prior to any public offering of Registrable Securities, cooperate
with the holders of the Registrable Securities and their respective counsel in
connection with the registration and qualification of the Registrable Securities
under the securities or "blue sky" laws of such jurisdictions as the holders of
the Registrable Securities may reasonably request and do any and all other acts
or things necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the Registration Statement;
(f) use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Registrable Securities;
(g) if any fact or event contemplated by clause (c)(ii) above shall
exist or have occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Registrable Securities, the Prospectus will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(h) provide a transfer agent and registrar (if the Company does not
already have such an agent) and CUSIP number for all Registrable Securities not
later than the effective date of the Registration Statement;
(i) make available for inspection by a representative of the holders
of the Registrable Securities, and any attorney, accountant or other
professional retained by such holders, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such holder, attorney, accountant or other professional in
connection with such Registration Statement subsequent to the filing thereof and
prior to its effectiveness, except that the aforementioned advisors may be
required to sign a reasonably acceptable confidentiality agreement;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission;
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(k) use its best efforts to cause all Registrable Securities to be
listed on each securities exchange, if any, on which equity securities issued by
the Company are then listed; and
(l) use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities contemplated hereby.
Each holder of the Registrable Securities as to which any Registration
Statement is being effected agrees to furnish promptly to the Company all
information reasonably known to such holder to be necessary to make the
information previously furnished to the Company by such holder not materially
misleading.
Each holder of the Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the existence of any fact of the kind described in Section 2(c)(ii), or notice
of a stop order or suspension described in Section 2(c)(iii), such holder shall
forthwith discontinue disposition of Registrable Securities and cease to use the
Prospectus in use under such Registration Statement. The Company shall, as
promptly as practicable, provide each holder with copies of the supplemented or
amended Prospectus contemplated by Section 2(g), or advise the holders in
writing that the use of the Prospectus may be resumed, and provide each holder
with copies of any additional or supplemental filings which are incorporated by
reference in the Prospectus. If so directed by the Company, each such holder
shall deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
3. REGISTRATION EXPENSES. All expenses incident to the Company's
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performance of or compliance with this Agreement shall be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation:
(a) all registration and filing fees and expenses (including filings
made with the NASD);
(b) fees and expenses of compliance with federal securities and state
"blue sky" or securities laws;
(c) expenses of printing (including printing certificates for the
Registrable Securities and Prospectuses), messenger and delivery services and
telephone;
(d) all application and filing fees in connection with listing the
Registrable Securities on a national securities exchange or automated quotation
system pursuant to the requirements hereof;
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(e) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit and"cold
comfort" letters required by or incident to such performance); and
(f) any reasonable out-of-pocket expenses of the holders of the
Registrable Securities (or the agents who manage their accounts).
The Company shall, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, rating agency fees and the fees and expenses of any Person, including
special experts, retained by the Company.
4. INDEMNIFICATION.
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(a) The Company agrees to indemnify and hold harmless each holder of
the Registrable Securities and each Person, if any, who controls such holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses (including, without limiting the foregoing but subject to Section
4(c),the reasonable legal and other expenses incurred in connection with any
action, suit or proceeding or any claim asserted) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein 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, except insofar as such losses,
claims, damages, liabilities or expenses are caused directly by an untrue
statement or omission contained in information relating to such holder,
furnished in writing to the Company by or on behalf of such holder expressly for
use therein. In connection with any Underwritten Offering permitted by Section
7, the Company shall also indemnify underwriters, if any, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the Securities Act and the Exchange Act) to the
same extent as provided above with respect to the indemnification of the
holders, if requested in connection with any Registration Statement.
(b) As a condition to the inclusion of its Registrable Securities in
any Registration Statement pursuant to this Agreement, each holder thereof shall
furnish to the Company in writing, promptly after receipt of a request therefor,
such information as the Company may reasonably request for use in connection
with any Registration Statement, Prospectus or preliminary prospectus (including
such completed and executed questionnaires as the Company may reasonably
request) and agrees to indemnify and hold harmless, severally and not jointly,
the Company and its directors, its officers who sign such Registration
Statement, and any Person controlling the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent
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as the indemnity from the Company to each holder and Persons controlling such
holder, but only with reference to information relating specifically to such
holder furnished in writing by or on behalf of such holder expressly for use in
such Registration Statement or the Prospectus or any preliminary prospectus
included therein, and of which none of the Company, its directors, officers or
Affiliates has any actual or constructive knowledge independent of such holder;
provided, however, that such holder of Registrable Securities shall not be
liable in any such case to the extent that the holder has furnished in writing
to the Company prior to the filing of any such Registration Statement,
Prospectus or preliminary prospectus information expressly for use in such
Registration Statement, Prospectus or preliminary prospectus which corrected or
made not misleading information previously furnished to the Company, and the
Company failed to include such information therein. In case any action shall be
brought against the Company, any of its directors, any such officer, or any such
controlling Person based on the Registration Statement, the Prospectus or any
preliminary prospectus and in respect of which indemnity may be sought against
one or more of the holders, such holders shall have the rights and duties given
to the Company by Section 4(c) (except that if the Company as provided in
Section 4(c) shall have assumed the defense thereof such holders shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof but the fees and expenses of such counsel shall be at such
holder's expense) and the Company and its directors, any such officers, and any
such controlling Person shall have the rights and duties given to the holders by
Section 4(c). In no event shall the liability of any selling holder hereunder be
greater than the net proceeds (i.e., proceeds net of underwriting discounts,
fees, commissions and any other expenses payable by such selling holder)received
by such holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought against any current or
former holder of the Registrable Securities or any Person controlling such
holder, with respect to which indemnity may be sought against the Company
pursuant to Section 4(a), such holder or such Person controlling such holder
shall promptly notify the Company in writing and the Company shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such holder and payment of all fees and expenses relating thereto. Such holder
and such Persons controlling such holder shall have the right to employ separate
counsel in any such action or proceeding and participate in the defense thereof,
but the fees and expenses of such counsel shall be at such holder's expense
unless (i) the employment of such counsel has been specifically authorized in
writing by the Company, which authorization shall not be unreasonably withheld,
(ii) the Company has not assumed the defense and employed counsel reasonably
satisfactory to such holder within 15 days after notice of any such action or
proceeding, or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both such holder or any Person
controlling such holder and the Company and such holder or any Person
controlling such holder shall have been advised by such counsel that there maybe
one or more legal defenses available to such holder or Person controlling such
holder that are different from or additional to those available to the Company
and, in the reasonable opinion of such counsel, could not be asserted by the
Company's counsel without creating a conflict of interest (in which case the
Company shall not have the right to assume the defense of such action or
proceeding on behalf of such holder or controlling Person, it being understood,
however, that the
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Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to all
local counsel which is necessary, in the good faith opinion of both counsel for
the indemnifying party and counsel for the indemnified party in order to
adequately represent the indemnified parties) for all such holders and
controlling Persons, which firm shall be designated in writing by the holders of
a majority of the Registrable Securities currently or formerly held by such
holders and that all such fees and expenses shall be reimbursed as they are
incurred upon written request and presentation of invoices). The Company shall
not be liable for any settlement of any such action effected without the written
consent of the Company (which consent shall not be unreasonably withheld), but
if settled with the written consent of the Company or if there is a final
judgment for the plaintiff, the Company agrees to indemnify and hold harmless
such holder and all Persons controlling such holder from and against any loss or
liability by reason of such settlement or judgment. The Company shall not,
without the prior written consent of the holder, effect any settlement of any
pending or threatened proceeding in respect of which any holder or any Person
controlling such holder is a party and indemnity has been sought hereunder by
such holder or any Person controlling such holder unless such settlement
includes an unconditional release of such holder or such controlling Person from
all liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 4 is
unavailable to an indemnified party under paragraphs (a), (b) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, 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, claims, damages, liabilities and expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the holders of the Registrable Securities on the
other hand from the original sale by the Company of the Registrable Securities,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and such holders on the other hand in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and such holders on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company on the one hand or
by such holders on the other hand and the parties' relative intent,
knowledge,access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
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(e) The Company and the holders of the Registrable Securities agree
that it would not be just and equitable if contribution pursuant to this Section
4 were determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
subsection(d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
subsection(d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding any other provision of this Agreement, no
holder of the Registrable Securities shall be required to contribute an amount
greater than the net proceeds received by such holder with respect to the sale
of Registrable Securities giving rise to any indemnification or contribution
obligation under this Section 4. 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.
5. RULE 144A. The Company hereby agrees with each holder of the
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Registrable Securities for so long as any of the Registrable Securities remain
outstanding and during any period in which the Company is not subject to
Section13 or 15(d) of the Exchange Act, to make available to any beneficial
owner of Registrable Securities in connection with any sale thereof and any
prospective purchaser of such Registrable Securities from such beneficial owner,
the information required by Rule 144A(d)(4) under the Securities Act.
6. RULE 144. The Company agrees with each holder of Registrable
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Securities to:
(a) comply with the requirements of Rule 144(c) under the Securities
Act with respect to current public information about the Company;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
(c) furnish to any holder of Registrable Securities upon request (i) a
written statement by the Company as to its compliance with the requirements of
said Rule 144(c) and the reporting requirements of the Securities Act and the
Exchange Act (at any time it is subject to such reporting requirements), (ii) a
copy of the most recent annual or quarterly report of the Company, and (iii)such
other reports and documents of the Company as such holder may reasonably request
to avail itself of any similar rule or regulation of the Commission allowing it
to sell any such securities without registration.
7. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No holder of the
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Registrable Securities may participate in any Underwritten Offering hereunder
unless such holder (a) agrees to sell such holder's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b)
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completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements; provided, that no holder of Registrable
Securities included in any Underwritten Offering shall be required to make any
representations or warranties to the Company other than representations and
warranties regarding such holder and such holder's intended method of
distribution.
8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
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(a) Definitions. Unless the context otherwise requires, the terms
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hereinafter set forth when used herein shall have the following meanings and the
following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined.
"AFFILIATE" means, as to any Person, a Person which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, the first Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock, through an investment advisory or other fiduciary
arrangement, by contract or otherwise.
"AGREEMENT" means this Registration Rights Agreement and all Schedules
hereto.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which banks in New York are required by law to close or are customarily
closed.
"COMMISSION" means the Securities and Exchange Commission as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Exchange Act, then the Person performing
such duties at such time.
"COMMON STOCK" means any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company.
"COMPANY" has the meaning assigned in the first paragraph of this
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"INVESTORS" means, collectively, the Persons listed on Schedule I, and
any successors or permitted assignees of any of their rights hereunder that hold
Registrable Securities.
"NASD" means National Association of Securities Dealers, Inc.
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"NOTES" means the convertible promissory notes of the Company issued
pursuant to the Note and Warrant Purchase Agreement dated as of December 2,
1998, by and among the Company and the Investors.
"OFFERING" means the November 1997 offering of up to $10,000,000 of
shares of Common Stock to the Investors under the terms set forth in separate
subscription agreements between the Company and each of the Investors.
"PERSON" means an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
"PROSPECTUS" means the prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"REGISTRABLE SECURITIES" means all shares of Common Stock issued or
issuable upon conversion of the Notes and held at the relevant time by an
Investor. As to any particular securities, such securities will cease to be
Registrable Securities when (i)they have been transferred in a public offering
registered under the Securities Act, (ii) they have been transferred in a sale
made through a broker, dealer or market-maker pursuant to Rule 144 under the
Securities Act or (iii) the holder thereof is able to sell all of such
securities under Rule 144 under the Securities Act during any 90-day period.
"REGISTRATION STATEMENT" means any registration statement of the
Company relating to the registration for resale of Registrable Securities,
including any registration statement filed pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and all exhibits and
material incorporated by reference therein.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"UNDERWRITTEN OFFERING" means a registration in which securities of
the Company are sold to an underwriter for reoffering to the public.
(b) Accounting Principles. Where the character or amount of any asset
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or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with the
generally accepted accounting principles in effect from time to time, to the
extent applicable, except where such principles are inconsistent with the
express requirements of this Agreement including without limitation the
definitions set out in Section 8.
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(c) Directly or Indirectly. Where any provision in this Agreement
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refer to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
9. MISCELLANEOUS.
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(a) Remedies. Each holder of the Registrable Securities, in addition
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to being entitled to exercise all rights provided herein, and granted by law,
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not, on or after
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the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to such holders of the
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any other agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
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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 without the written consent of the Company and each of the
Investors.
(d) Notices. All notices, demands and other communications provided
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for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery. Such notices, demands and other communications will be sent to any
Investor at the address indicated on Schedule I, to any other holder of
Registrable Securities at such holder's address of record appearing on the
Company's books and to the Company at the address indicated below:
Prosoft I-Net Solutions, Inc.
0000 Xxx Xxxxx Xx., Xxxxx 000
Xxxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. All
such notices, demands and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; upon receipt, if
mailed postage prepaid; when answered back, if telexed; when receipt is
acknowledged, if telecopied; or at the time delivered, if delivered by an air
courier guaranteeing overnight delivery.
12
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and permitted assigns of the Investors,
including without limitation and without the need for an express assignment,
Affiliates of the Investors; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon transferees of the Investors that are
not Affiliates of the Investors and do not hold at least 25,000 shares of Common
Stock. In addition, whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of the Investors are also
for the benefit of, and enforceable by, any subsequent holder of Registrable
Securities that is either an Affiliate of an Investor or a holder of at least
25,000 shares of Common Stock.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate 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.
(g) Governing Law. THE CORPORATE LAW OF THE STATE OF NEVADA SHALL
-------------
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND OBLIGATIONS
OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
(h) Severability. Should any part of this Agreement for any reason be
------------
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in force and effect as if this
Agreement had been executed with the invalid portion thereof eliminated and it
is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts, or portion which may, for any reason, be hereafter declared
invalid.
(i) Captions. The descriptive headings of the various Sections or
---------
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
(j) Waiver of Jury Trial. EACH OF THE COMPANY AND THE INVESTORS
--------------------
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
13
(k) Effectiveness of Agreement. This Agreement shall become effective
--------------------------
upon execution by the Company and delivery hereof by the Company to at least one
Investor and the execution by such Investor and delivery hereof by such Investor
to the Company, notwithstanding the fact that any other potential Investors
listed in Schedule I have not so executed and delivered this Agreement.
(l) Final Agreement. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
---------------
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written.
PROSOFT I-NET SOLUTIONS, INC., a Nevada
corporation
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
[Signatures of Investors are contained in Schedule I]
14
SCHEDULE I
INVESTORS
Name:___________________________________________________________________________
Authorized Signature:___________________________________________________________
Amount of Notes:________________________________________________________________
Schedule I
