REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of this ___ day
of October, 2000 by and among Ebiz Enterprises, Inc., a Nevada corporation (the
"Company"), and XxxxxXxxx.xxx, Inc., a Delaware corporation ("LinuxMall"), on
behalf of and for the benefit of the stockholders and debentureholders of
LinuxMall listed on Schedule A attached hereto (collectively the
"Shareholders").
Recitals
A. Pursuant to an Agreement and Plan of Merger dated August 7, 2000 (the "Merger
Agreement"), the Company and LinuxMall have agreed to a merger of LinuxMall with
and into a subsidiary of the Company (the "Merger"). In connection with the
Merger, the Shareholders will receive common stock, par value $0.001 per share,
of the Company ("Common Stock").
B. The Shareholders have approved the Merger with the understanding that they
would be granted certain registration rights with respect to the Common Stock.
SECTION 1
Definitions
Hereafter, the following terms shall have the following respective meanings:
"Holder" or "Holders" shall mean any purchaser holding Registrable Securities
and any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 2.1 hereof.
"Initial Registration" shall mean the registration by the Company of shares of
its Common Stock for resale by holders of such stock or warrants exercisable for
such stock as per the obligations of the Company to register such stock as of
the date of the Merger Agreement, but only if a registration statement with
respect thereto is initially filed by the Company with the United States
Securities and Exchange Commission (the "SEC") within six (6) months after the
date of this Agreement.
"Purchaser" or "Purchasers" shall mean the Shareholders or each of them.
"Registrable Securities" means the Common Stock issued to the Shareholders and
all other securities issued with respect to such Common Stock upon any stock
split, stock dividend, recapitalization, or similar event; provided, however,
that shares of Common Stock or other securities shall only be treated as
Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, whether in a registered offering, Rule 144 transaction
or otherwise, or (B) distributed to the public pursuant to an offering
registered under the Securities Act (or similar rule then in force).
The terms "register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise stated
below, incurred by the Company or LinuxMall in complying with Section 2.1
hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration and the reasonable fees and
disbursements of counsel for all Holders in any registration pursuant to Section
2.1 hereof, provided that such counsel is also counsel for the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling commissions
and stock transfer taxes applicable to the Registrable Securities.
SECTION 2
Registration Rights
2.1 Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time the Company
shall determine to register any of its securities, either for its own account or
the account of a security holder or holders, other than (i) a registration
relating solely to employee benefit plans, (ii) a registration relating solely
to Rule 145 under the Securities Act ("Rule 145"), or (iii) the Initial
Registration, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) use its best efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 15 calendar days after mailing of such written notice
by the Company, by any Holder.
(b) Underwriting. If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise Shareholders as a part of the written notice given pursuant to Section
2.1(a)(i). In such event the right of any Holder to registration pursuant to
this Section 2.1 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 2.1, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may limit the Registrable Securities to be included in such
registration. The Company shall so advise all Holders and other holders
distributing their securities through such underwriting and the number of shares
of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or holder to the nearest 100
shares. If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 180 calendar days after the
effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 2.1
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration.
(d) Limitation on Sale or Transfer. Nothing in this Agreement shall be construed
to permit any Holder to sell or transfer any Registrable Securities in violation
of any sales or transfer restriction on such Registrable Securities imposed by
contract or applicable law.
2.2 Limitations on Subsequent Registration Rights. From and after the date of
this Agreement, the Company shall not enter into any agreement granting any
holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such new registration rights,
including standoff obligations, are on a pari passu basis with or subordinate to
the rights of the Holders hereunder. Any additional parties receiving rights on
a pari passu basis with the Holders hereunder may execute a counterpart of this
Agreement, and upon execution by such additional parties and by the Company,
shall be considered a Holder for all purposes of this Agreement (and their
securities shall be considered Registrable Securities for all purposes of this
Agreement).
2.3 Expenses of Registration. All Registration Expenses incurred in connection
with up to one registration pursuant to Section 2.1 shall be borne by the
Company. Unless otherwise stated, all Selling Expenses relating to securities
registered on behalf of the Holders shall be borne by the Holders and all other
Registration Expenses shall be borne by the Holders and the Company on a pro
rata basis in accordance with the number of shares included in the registration
held or issued by each.
2.4 Registration Procedures. In the case of each registration, qualification or
compliance effected by the Company pursuant to this Section 2, the Company shall
keep each Holder advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. At its expense
the Company will:
(a) Keep such registration effective for a period of 90 calendar days or until
the Holder or Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs; provided,
however, that such 120-day period shall be extended for a period of time equal
to the period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other
securities) of the Company;
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) Furnish such number of prospectuses and other documents incident thereto,
including any amendment of or supplement to the prospectus, as a Holder from
time to time may reasonably request;
(d) Notify each seller of Registrable Securities covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing,
and at the request of any such seller, prepare and furnish to such seller a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include 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 not misleading or incomplete
in the light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant hereunder to be
listed on each securities exchange on which similar securities issued by the
Company are then listed;
(f) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration;
(g) Otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least 12
months, but not more than 18 months, beginning with the first month after the
effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act; and
(h) In connection with any underwritten offering pursuant to a registration
statement filed pursuant to Section 2 hereof, the Company will enter into an
underwriting agreement reasonably necessary to effect the offer and sale of
Common Stock, provided such underwriting agreement contains customary
underwriting provisions and provided further than if the underwriter so requests
the underwriting agreement will contain customary contribution provisions.
2.5 Indemnification
(a) The Company shall indemnify each Holder, each of its officers, directors,
partners, accountants, legal counsel and agents, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, with respect
to which registration, qualification or compliance has been effected pursuant to
this Section 2, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against any
and all expenses, claims, losses, damages or liabilities (or Actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto prepared by the Company, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder are included
in the securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors, officers,
accountants, legal counsel and agents, each underwriter, if any, of the Company'
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers, directors,
partners, accountants, legal counsel and agents, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such Holders,
such directors, officers, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this subsection (b) shall be limited in an amount equal to the
initial public offering price of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this Section 2.7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who conducts the defense of such claim or litigation, shall be approved
by the Indemnified Party (whose approval shall not unreasonably be withhold,)
and the Indemnified Party may participate in such defense at such party's
expense, and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
2.6 Termination of Registration Rights. The rights granted pursuant to this
Agreement, to the extent not earlier terminated by the terms hereof, shall
terminate as to any Holder, (i) two years after the closing of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of common stock for the account of
the Company to the public, or (ii) at such time as all Registrable Securities
held by such Holder can be sold without compliance with the registration
requirements of the Securities Act pursuant to Rule 144 (including Rule 144(k))
promulgated thereunder.
2.7 Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders, the Registrable Securities held by them and
the distribution proposed by such Holder or Holders as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this Section
2.
2.8 Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the SEC which may at any time permit the sale of the
Restricted Securities to the public without registration, after such time as a
public market exists for the Common Stock of the Company, the Company agrees to
use its reasonable efforts to:
(a) Make and keep public information available, as those terms are understood
and defined in Rule 144 under the Securities Act, at all times after the
effective date that the Company becomes subject to the reporting requirements of
the Securities Act or the Securities Exchange Act of 1934, as amended;
(b) File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Securities Exchange Act
of 1934, as amended (at any time after it has become subject to such reporting
requirements);
(c) So long as a purchaser owns any Restricted Securities to furnish to the
Purchaser forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 calendar days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the Securities Exchange Act of 1934 (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Purchaser may reasonably request in
availing itself of any rule or regulation of the SEC allowing a purchaser to
sell any such securities without registration.
(d) Limitation on Sale or Transfer. Nothing in this Agreement shall be construed
to permit any Holder to sell or transfer any Registrable Securities in violation
of any sales or transfer restrictions on such Registrable Securities imposed by
contract or applicable law.
2.9 Transfer of Registration Rights. The rights to cause the Company to register
securities granted purchasers under Section 2 may be assigned to a transferee or
assignee reasonably acceptable to the Company in connection with any transfer or
assignment of Registrable Securities by a Shareholder provided that the Company
is first given notice of the transfer or assignment and such transfer may
otherwise be effected in accordance with applicable securities laws.
Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned to any constituent partner (or member in the case of
a Shareholder that is a limited liability company) of a Shareholder.
SECTION 3
Miscellaneous
3.1 Governing Law. This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of Arizona as applied to
agreements made and performed in Arizona by residents of the State of Arizona.
3.2 Amendment. Except as expressly provided herein, neither this Agreement not
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; provided however, that
holders of a majority of the Registrable Securities may waive, modify or amend
on behalf of all holders, any provisions hereof.
3.3 Notices, etc. Any notice or other communication required or permitted under
this Agreement will be given in writing and will be sent by facsimile or
commercially recognized express courier to the address specified below or to any
other address that may be designated by prior notice. Any notice or other
communication delivered by facsimile will be deemed to have been received the
day it is sent and must be confirmed by a copy sent by express courier. Any
notice or other communication sent by commercially recognized courier will be
deemed to have been received on the 3rd business day after delivery to the
courier.
If to Holder, at the address last provided in writing to the Company by the
Holder.
If to the Company:
Ebiz Enterprises, Inc.
Attn: Chief Executive Officer
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
facsimile: (000) 000-0000
3.4 Severability. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
3.5 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not considered in construing or interpreting
this Agreement.
3.6 Facsimile Signatures. Any signature page delivered by a fax machine shall be
binding to the same extent as an original signature page, with regard to any
agreement subject to the terms hereof or any amendment thereto. Any party who
delivers such a facsimile signature page agrees to later deliver an original
counterpart to any party which requests it.
3.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which may be executed by less than all of the Purchasers, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.
EBIZ ENTERPRISES, INC.
By:
Name: ________________________________
Title: ________________________________
XXXXXXXXX.XXX, INC.
By:
Name: ________________________________
Title: ________________________________
Schedule A
Security Holder Address
H&Q Workgroup Solutions Investors, LLC Xxxxxxxxx & Xxxxx
Attn: Xxxxx Xxxxxx
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
The Santa Xxxx Operation, Inc. The Santa Xxxx Operation, Inc.
Attn: Legal Department
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
XX.xxx, LLC XX.xxx, LLC
Xxxxx X. Xxxxxxx
Registered Agent
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
BATB, LLC BATB, LLC
Xxxxxx X. Xxxxxxxxxx
Manager
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
SRTB, LLC SRTB, LLC
Xxxxxx X. Xxxxxxxxxx
Manager
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Elihu and Xxxxxx Xxxxxx 0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Tundra Resources, LLC Tundra Resources, LLC
Attn: Xxxxxx and Xxxx Vessels
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Sibylline Capital, LLC Sibylline Capital, LLC
Attn: Xx. Xxxx X. Xxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Xxxx Xxxxxxx 0000 Xxxxx Xxxxxx Xxx
Xxxxxx, Xxxxxxxx 00000
Xxxxxx Xxxxxxxx 000 Xxxxxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
Xxxxxx Xxxxxxxxx 0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxx 00000
Xxxx Xxxxx 0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Xxxxx Xxxxxx, Xx. 000 Xxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Xxxxxxx Most 0000 Xxxx 00xx Xxxxxx, #00
Xxxxxxxxx, Xxxxxxxxx 00000
Xxxxxxxx Xxxxx 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Xxxxx Xxxx 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Xxx Xxxxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxxxx Xxxxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxxx Xxxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxxxxx Xxxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxx Xxxxxxxxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxxxxx Xxxxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxxxxxxx Xxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Xxx Xxxxxxx c/o XxxxxXxxx.xxx, Inc.
00000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
