GENERAL RELEASE AND SETTLEMENT AGREEMENT
This General Release and Settlement Agreement ("Settlement Agreement") is made
and entered into this 31 day of July 2001, by and between Chequemate
International Inc., a Utah corporation ("Chequemate") and Lions Gate
Entertainment, Inc. a Delaware corporation ("Lions Gate", together with
Chequemate, the "Parties").
WHEREAS, Chequemate and Trimark Pictures, Inc. ("Trimark"), a California
corporation, entered into that certain License Agreement dated as of February 8,
2000 (the "License Agreement"), a copy of which is attached hereto as EXHIBIT A;
WHEREAS, Lions Gate is a successor-in-interest to Trimark; and
WHEREAS, the Parties desire to terminate the License Agreement and resolve any
differences amicably and without any admission of fault or liability by either
party;
NOW THEREFORE, in consideration of the foregoing and of the mutual rights and
obligations created herein and for other good and sufficient consideration the
receipt and adequacy of which are hereby acknowledged, the parties agree to the
following:
I. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF LIONS GATE
1. Organization and Standing. Lions Gate is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has the full and unrestricted corporate power and corporate
authority to execute and deliver this Settlement Agreement to Chequemate,
and to carry out the transactions contemplated hereby.
2. Authorization. (i) Lions Gate is a successor-in-interest to Trimark; (ii)
Lions Gate has all requisite power and authority to execute and deliver
this Settlement Agreement and to consummate the transactions contemplated
hereby. (iii) The execution, delivery and performance of this Settlement
Agreement by Lions Gate, the fulfillment of and the compliance with the
respective terms and provisions hereof and the due consummation of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Lions Gate (none of which
actions have been modified or rescinded, and all of which actions are in
full force and effect).
3. BINDING OBLIGATION. When executed by Lions Gate, this Settlement Agreement
and the representations and warranties contained herein will constitute a
valid and binding obligation of Lions Gate, enforceable in accordance with
its terms.
4. CONSENTS. Lions Gate is not subject to any law, ordinance, regulation,
rule, order, judgment, injunction, decree, charter, bylaw, contract,
commitment, lease, agreement, instrument or other restriction of any kind
which would prevent Lions Gate's
consummation of this Settlement Agreement or any of the transactions
contemplated hereby without the consent of any third party, which would
require the consent of any third party to the consummation of this
Settlement Agreement or any of the transactions contemplated hereby, or
which would result in any penalty, forfeiture or other termination as a
result of such consummation.
5. RELIANCE. All representations and warranties of Lions Gate contained
herein, shall be deemed to have been relied upon by Chequemate
notwithstanding any investigation heretofore or hereafter made by
Chequemate or by its counsel or by any other representative of Chequemate
and shall survive the date hereof and continue in full force and effect for
the benefit of Chequemate for an unlimited duration.
B. REPRESENTATIONS AND WARRANTIES OF CHEQUEMATE
1. ORGANIZATION AND STANDING. Chequemate is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah
and has the full and unrestricted corporate power and corporate authority
to execute and deliver this Settlement Agreement to Lions Gate, and to
carry out the transactions contemplated hereby.
2. AUTHORIZATION. (i) Chequemate has all requisite power and authority to
execute and deliver this Settlement Agreement and to consummate the
transactions contemplated hereby. (ii) The execution, delivery and
performance of this Settlement Agreement by Chequemate, the fulfillment of
and the compliance with the respective terms and provisions hereof and the
due consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of
Chequemate (none of which actions have been modified or rescinded, and all
of which actions are in full force and effect).
3. BINDING OBLIGATION. When executed by Chequemate, this Settlement Agreement
and the representations and warranties contained herein will constitute a
valid and binding obligation of Chequemate, enforceable in accordance with
its terms.
4. CONSENTS. Chequemate is not subject to any law, ordinance, regulation,
rule, order, judgment, injunction, decree, charter, bylaw, contract,
commitment, lease, agreement, instrument or other restriction of any kind
which would prevent Chequemate's consummation of this Settlement Agreement
or any of the transactions contemplated hereby without the consent of any
third party, which would require the consent of any third party to the
consummation of this Settlement Agreement or any of the transactions
contemplated hereby, or which would result in any penalty, forfeiture or
other termination as a result of such consummation.
5. RELIANCE. All representations and warranties of Chequemate contained
herein, shall be deemed to have been relied upon by Lions Gate
notwithstanding any investigation heretofore or hereafter made by Lions
Gate or by its counsel or by any other
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representative of Lions Gate and shall survive the date hereof and continue
in full force and effect for the benefit of Lions Gate for an unlimited
duration.
II. TERMS OF SETTLEMENT
1. RESCISSION OF THE LICENSE AGREEMENT. The Parties hereby agree and
acknowledge that the License Agreement is in all respects rescinded and as
of the date of this Settlement Agreement has no further force or effect.
2. ISSUANCE OF SETTLEMENT SHARES.
A. Concurrent with the execution and delivery of this Settlement Agreement,
Chequemate shall enter into that certain Subscription Agreement
("Subscription Agreement") with Lions Gate incorporated hereto in
substantial form as EXHIBIT B by which Chequemate will issue to Lion Gate
one hundred thousand (100,000) shares of common stock of Chequemate, in
addition to the one hundred thousand (100,000) shares of common stock of
Chequemate previously issued, (together the "Settlement Shares").
B. Notwithstanding anything to the contrary, this Settlement Agreement
shall not be valid and shall not be enforceable until such time that Lions
Gate is in a position to freely trade the Settlement Shares without any
restriction.
C. Checkmate represents and warrants that as of July 31, 2001 Chequemate
has not issued any additional shares of common stock or any other form of
stock or options for any stock that may become freely tradable before the
Settlement Shares. In the event that this representation and warranty is
untrue or becomes untrue, now or in the future, notwithstanding anything to
the contrary, this Settlement Agreement, at Lions Gate's discretion, shall
be deemed void AB INITIO and shall be of no legal force or effect. To be
clear, as of the date of this Settlement Agreement, Chequemate has shares
of common stock issued and outstanding that are as of the date of this
Settlement Agreement not freely tradable ("Restricted Shares"). Some
Restricted Shares may become freely tradable as a result of a holder of
Restricted Shares having held such Restricted Shares for the statutory
holding period.
D. Except for price fluctuation resulting from the payment of a reverse
split or a forward split, if there is fluctuation in the stock price, of
greater than 12.5% between the date of this Settlement Agreement and the
date upon which the Settlement Shares are freely tradable ("Stock Date"),
Chequemate shall pay Lions Gate the sum ("Safety Sum") in accordance with
the following formula:
The period of time between the date of this Settlement Agreement and
the Stock Date shall be referred to herein as the "Period".
THE FORMULA: The highest value at which a share of Chequemate common
stock was traded during the Period less the closing value of one share of
Chequemate common stock on the Stock Date multiplied by the number shares
issued pursuant to the License
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Agreement and this Settlement Agreement and held by Lion's Gate on the
Stock Date.
Notwithstanding anything to the contrary, this Settlement Agreement,
at Lions Gate's discretion, shall be deemed void ab initio and shall be of
no legal force or effect in the event that the Safety Sum is not paid
within fifteen (15) days of the Stock Date.
3. PAYMENT OF REIMBURSEMENT. Within 30 days of the execution of this
Settlement Agreement, Chequemate will reimburse Lions Gate forty-one
thousand seven hundred twenty dollars ($41,720) to offset the legal and
other fees Lions Gate has accrued in connection with the subject
transaction ("Reimbursement")
4. FULL RELEASE. (a) Subject to the terms of Paragraph 2, above, at such time
as Lions Gate receives the Reimbursement and the 200,000 shares of common
stock which are freely and without restriction, Lions Gate shall release
and discharge Chequemate, Chequemate's former, present, or future officers,
directors, stockholders, employees, assigns, agents and parent,
subsidiaries, affiliates, predecessors or successor corporations and
entities of Chequemate from all claims arising from or in connection with
the License Agreement that Lions Gate may have had, now has or may have in
the future against Chequemate or its former, present or future officers,
directors, stockholders, employees, assigns, agents and parent, subsidiary,
affiliate, predecessor or successor corporations and entities of
Chequemate, PROVIDED, THAT, any and all claims that Lions Gate may have now
or in the future against Xxxxxxx X. Xxxx are not released by this Section
4(a), including, but not limited to, those claims that Lions Gate may have
now or in the future against Xxxxxxx X. Xxxx related to matters in any
connected with the License Agreement. (b) Chequemate agrees and
acknowledges that this settlement Agreement shall constitute full
settlement of all claims arising from or in connection with the License
Agreement that Chequemate may have had, now has or may have in the future
against Lion Gate or present or former officers, directors, stockholders,
employees, assigns, agents and parent, subsidiary, affiliate, predecessor
or successor corporations and entities of Lion Gate.
5. 2D TO 3D CONVERSION. Within one year of this Settlement Agreement,
Chequemate will convert from 2D to 3D stereoscopic (the "Conversion"), a
mutually acceptable film title from the library of Lions Gate. Chequemate
will have exclusive distribution rights with Lion Gate to the conversion,
subject to the parties agreeing upon distribution terms and conditions
which shall have a minimum term of seven (7) years. In the event that the
parties do not agree on a mutually acceptable film and/or do not agree on
distribution terms, the parties shall have no obligations to one another
under the terms of this paragraph which shall be deemed deleted from this
Settlement Agreement.
6. JOINT VENTURE. Chequemate and Lions Gate will attempt to negotiate a
mutually acceptable agreement to transfer additional film titles of Lions
Gate in a joint venture marketing effort. In the event that the parties do
not reach an agreement in this regard, the parties shall have no
obligations to one another under the terms of this paragraph which shall be
deemed deleted from this Settlement Agreement.
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III. MISCELLANEOUS
1. ENTIRE AGREEMENT; AMENDMENT. This Settlement Agreement sets forth the
entire agreement and understanding of the Parties hereto in respect to the
transactions contemplated hereby and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof and
are not intended to confer upon any other person any rights or remedies
hereunder. There have been no representations or statements, oral or
written, that have been relied on by any party hereto, except those
expressly set forth in this Settlement Agreement. This Agreement may be
amended, modified or supplemented but only in writing signed by all of the
Parties.
2. NOTICES. Any notice, request, instruction or other document to be given
hereunder by a party hereto shall be in writing and shall be deemed to have
been given, (i) when received if given in person, (ii) on the date of
transmission if sent by telex, telecopy or other wire transmission
(provided that a copy of such transmission is simultaneously sent in the
manner provided in CLAUSE (iii) below) or (iii) five (5) days after being
deposited with a reputable courier service:
(a) If to the Company addressed as follows:
000 Xxxxx Xxxx Xxxx.
Xx. Xxxxxxx, Xxxxxxxx 00000
Attn: CEO or President
with a copy to:
00000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
(b) If to Lions Gate, to
Lions Gate Entertainment
0000 Xxxxxxx Xxx., Xxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Attn: Xxxxx Xxxxx
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
3. WAIVER. Any term or condition of this Agreement may be waived at any time
by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by
any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either
5
under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
4. AMENDMENT. This Agreement may be amended, supplemented or modified only by
a written instrument duly executed by or on behalf of Lions Gate and
Chequemate.
5. NO THIRD PARTY BENEFICIARY. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties
to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other person.
6. NO ASSIGNMENT; BINDING EFFECT. Except as provided herein, Chequemate may
not assign (by operation of law or otherwise) this Agreement without the
prior written consent of Lions Gate. This Agreement is binding upon, inures
to the benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
7. HEADINGS. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions
hereof.
8. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not
be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (c) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (d) in lieu of
such illegal, invalid or unenforceable provision, there will be added as a
part of this Agreement a legal, valid and enforceable provision, agreed to
the parties to this Agreement, as similar in terms to such illegal, invalid
or unenforceable provision as may be possible.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of California, without giving effect to
any choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
California. The Superior Court of the State of California in and for the
County of Los Angeles, West District shall have exclusive jurisdiction of
any dispute arising in connection with this Settlement Agreement.
10. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
11. SEVERABILITY. If any provision of this Agreement is deemed to be invalid,
illegal or unenforceable by an arbitrator, a court of competent
jurisdiction or other governmental
6
authority, the remainder of this Settlement Agreement shall remain in full
force and effect or shall be reasonably construed to carry out the intent
of the parties as expressed herein. This Settlement Agreement shall be
construed according to its fair meaning, with the language used herein
deemed to be the language chosen by the parties to express their mutual
intent, and no presumption or rule of strict construction shall be applied
against any party hereto.
12. RECITALS. The Parties acknowledge the accuracy of the preamble and recitals
hereto and such preamble and recitals are hereby incorporated by reference
as if set forth herein at length.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Chequemate and Lions Gate have executed and delivered this
Agreement as of the date first above written.
LIONS GATE ENTERTAINMENT CHEQUEMATE INTERNATIONAL INC.
By: By:
----------------------------- -----------------------------
Name: Name: Xxxxxxx Xxxxx
Its: Its: President and CEO
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EXHIBIT B
SUBSCRIPTION AGREEMENT
The undersigned (the "SUBSCRIBER") hereby subscribes to and offers to purchase
shares, and a warrant to purchase shares, of Common Stock, of Chequemate
International Inc., a Utah corporation (the "COMPANY").
1. OFFER AND ACCEPTANCE.
Subscriber hereby subscribes to and offers to purchase 100,000 newly issued
shares along with the 100,000 previously issued shares (together the "SHARES")
of Common Stock, $0.001 par value per share of the Company (the "COMMON STOCK").
Except as set forth below, this Subscription Agreement shall become a binding
obligation on behalf of the Company upon its written acceptance thereof.
The condition precedent to the obligations set forth in this Subscription
Agreement include the execution and delivery of that certain Settlement
Agreement ("SETTLEMENT AGREEMENT"), into which this Subscription Agreement is
incorporated as Exhibit B hereto in substantial form as Exhibit B.
2. REPRESENTATION AND WARRANTIES OF SUBSCRIBER.
Subscriber hereby represents and warrants as follows:
(a) Subscriber is organized under the laws of the State of Delaware.
(b) Subscriber is purchasing the Securities for Subscriber's own account for
investment only, and not with the view to the resale or distribution thereof.
(c) In making the decision to purchase the Securities, Subscriber has relied
upon independent investigations made by Subscriber or Subscriber's professional
advisors, has had the opportunity to review and have questions answered by the
appropriate officers of the Company with respect to the Company and the Business
Plan of the Company, has had an opportunity to review such records of the
Company as Subscriber may have requested, desires no further or additional
information concerning the Company or its operation and deems such information
received and reviewed adequate to evaluate the merits and risks of Subscriber's
investment in the Company.
(d) Subscriber has sufficient experience in business, financial, and investment
matters to be able to evaluate the risks involved in the purchase of the
Securities, and to make an informed investment decision with respect to such
purchase.
(e) Subscriber understands that it may be required to hold the Securities for
an indefinite period of time, and Subscriber can afford a complete loss of the
value of the Securities and is able to bear the economic risk of holding the
Securities for such indefinite period.
9
(f) Subscriber understands that the Securities have has not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or under
any applicable state securities law and that the Securities can not be sold,
transferred, or otherwise disposed of unless they are subsequently registered
under the Securities Act or state securities law or an exemption from such
registration is then available. Except as set forth in the Investor Rights
Agreement, Subscriber acknowledges that it has no right to require the Company
to register the Securities that the Company has made no undertaking either to
register the Securities or to make available any exemption from the registration
or to supply any information to facilitate the sale of the Securities.
Subscriber further understands and agrees that the Company will not honor any
attempt by Subscriber to sell, pledge, transfer or otherwise dispose of any of
the Securities in the absence of an effective registration statement for the
Securities under the Securities Act or the Company's reasonable satisfaction
that an exemption in available therefrom.
(h) Subscriber understands that a legend will be placed on the certificates
representing the Securities concerning the securities law restrictions on
transfer of the Securities.
(i) Upon issuance, the Securities will be registered only in the name of
Subscriber.
(j) Subscriber has not and will not rely upon the Company for advice with
respect to any tax consequences related to the ownership, purchase or
disposition of the Securities, and Subscriber assumes full responsibility for
all such consequences as to the preparation and filing of all tax returns and
elections which may and must be filed in connection with the Securities.
(k) Subscriber is an "accredited investor" as such term is defined (and set
forth below) in Rule 501 of Regulation D promulgated pursuant to the Securities
Act. Subscriber qualifies as an accredited investor because the Subscriber is:
(l) Subscriber understands that the Company is relying upon the representations
and warranties contained herein to ensure its compliance with the Securities Act
and applicable state securities laws, and the rules and regulations promulgated
thereunder. Accordingly, Subscriber hereby affirms the truth and accuracy of
such representations and warranties and undertakes to inform the Company if at
any time prior to the purchase by Subscriber of the Securities any of the
representation or warranties contained herein shall cease to be true and
correct.
3. STATEMENT OF REGISTRATION RIGHTS.
3.1 The following rights shall be attached to each of the Shares.
3.2 NO HOLDER HEREUNDER SHALL BE ENTITLED TO EXERCISE ANY REGISTRATION RIGHTS
PROVIDED FOR IN THIS STATEMENT OF REGISTRATION RIGHTS INCLUDING, PRIOR TO
SIX (6) MONTHS OR AFTER FIVE (5) YEARS FOLLOWING THE EXECUTION OF THE
SETTLEMENT AGREEMENT INTO WHICH THIS SUBSCRIPTION AGREEMENT IS INCORPORATED
AS EXHIBIT B. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, CHEQUEMATE
AGREES TO INCLUDE THE SHARES IN THE REGISTRATION STATEMENT ON FORM S-3 THAT
CHEQUEMATE IS CURRENTLY PREPARING.
3.3 DEFINITIONS. For purposes of this Section 3:
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The term "Act" shall mean the Securities Act of 1933, as amended.
(a) The term "Agreement" shall have the meaning set forth in the
recital above.
(b) The term "Form S-4 or S-8" means such form under the Act as in
effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits the registration of
securities to be issued in a merger or other Rule 145 transaction
under the Act, or securities to be issued to an employee,
consultant or other similar person pursuant to a plan.
(c) The term "Holder" means Lions Gate.
(d) The term "initial public offering" shall mean the first issuance
in an underwritten public offering pursuant to a registration
statement filed by the Company under the Act that yields net
proceeds to the Company in excess of $2 million to the Company in
connection with the initial firm commitment underwritten offering
of its securities to the general public.
(e) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration
statement or document.
(f) The term "Registrable Securities" means (i) the First Shares and
the Second Shares issued to the Holders and the shares of Common
Stock issued to the Holders upon the exercise of the Warrants by
such Holders, and (ii) any Common Stock of the Company issued as
a dividend to the Holders or other distribution with respect to,
or in exchange for or in replacement of the shares referenced in
(i) above, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights
under this Section 1 are not assigned.
(g) The term "SEC" shall mean the Securities and Exchange Commission.
3.4 DEMAND REGISTRATION. If the Company shall be requested by the Subscriber to
effect a registration under the Act, then the Company shall use its best
efforts to effect the registration of such Registrable Securities; PROVIDED
however, that the Company shall not be obligated to effect any registration
under the Securities Act except in accordance with the following
provisions:
(a) The Company shall not be obligated to file (i) more than one
registration statement initiated pursuant to this Section 3.4
which becomes effective or which is rescinded by the Subscriber
without reimbursement, (ii) any registration statement during any
period in which any other registration statement (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any
successor forms thereto) pursuant to which shares offered by the
Company are to be or were sold has been filed and not withdrawn
or has been declared effective within the prior 90 days;
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(b) The Company shall not be obligated to effect any registration
under this Section 3.4 if the Subscriber has been given the
opportunity to register all of its Registrable Securities
pursuant to Section 3 hereof;
(c) The Company may delay the filing or effectiveness of any
registration statement for a period not to exceed 90 days after
the date of a request for registration pursuant to this Section
3.4 if (i) at the time of such request the Company is engaged, or
has fixed plans to engage within 60 days of the time of such
request, in a firm commitment underwritten public offering of its
own shares in which the Subscriber may, to the extent such
registration statement is in the registration process, include
Registrable Shares pursuant to Section 3.5 or (ii) the Company
shall furnish to the Subscriber certificate signed by the
President or its General Counsel stating that, in the good faith
judgment of the Board of Directors of the Company, that (A) it
would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed or (B)
there exists a material development or a potential material
development with respect to or involving the Company that the
Company would be obligated to disclose in the prospectus or
offering circular used in connection with the registration
statement, which disclosure would in the judgment of the Company
be premature or otherwise inadvisable at such time, and that it
is therefore essential to defer the filing of such registration
statement.
(d) A requested registration under this Section 3.4 may be rescinded
by written notice to the Company by the Subscriber; PROVIDED,
HOWEVER, that such rescinded registration shall not count as a
registration statement initiated pursuant to this Section 3.4
above if the Subscriber shall have reimbursed the Company for all
out-of-pocket expenses incurred by the Company in connection with
such rescinded registration. The Company may select any firm of
underwriters in connection with a registration under this Section
3.4.
3.5 COMPANY REGISTRATION. If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by
the Company for stockholders other than the Subscriber) any shares of its
Common Stock or other securities under the Act in connection with the
public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities under Form S-4 or
S-8, or a registration on any form which does not include substantially the
same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities to the public or
a registration in which the only common stock being registered is common
Stock issuable upon conversion of debt securities which are also being
registered), the Company shall, at such time, promptly give the Subscriber
written notice of such registration. Upon the written request of the
Subscriber given within twenty (20) days after mailing of such notice by
the Company, the Company shall, cause to be registered, together with the
shares of its common stock to be registered in connection with the public
offering of such securities under the Act, all of the Registrable
Securities that the Subscriber beneficially owns at the time of the
request.
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3.6 OBLIGATIONS OF THE COMPANY. Whenever required hereunder to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use all commercially reasonable
efforts to cause such registration statement to become effective, and
to keep such registration statement effective until the distribution
contemplated by the Company of its securities registered under the
registration statement has been completed; provided, however, in the
case of any registration by the Company (and incidentally by the
Subscriber) on Form S-3 which are intended to be offered on a
continuous or delayed basis, the Company may keep such registration
effective for so long as is necessary to sell all of the securities
registered thereunder.
(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 Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Subscriber such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of
Registrable Securities owned by it.
(d) Use all commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be
determined to be appropriate by the managing underwriter in such
public offering.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The
Subscriber shall also enter into and perform its obligations under
such an agreement, and shall have the right to negotiate the terms
thereof in addition to any negotiation by the Company on behalf of
itself.
(f) Notify the Subscriber at any time when a prospectus relating thereto
is required to be delivered under the 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 in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant hereunder to
be listed or to continue to be listed on the American Stock Exchange.
(h) 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.
(i) Use all commercially reasonable efforts to furnish to the Subscriber
requesting registration of Registrable Securities pursuant to this
Section 3.6, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a
registration pursuant to this Section 3.6, if such securities are
being sold through underwriters, or, if such securities are not being
sold through
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underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the
underwriters, and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as
is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any.
3.7 FURNISH INFORMATION. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 3.7 with respect
to the Registrable Securities of the Subscriber that such Subscriber shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be required to effect the registration of such
Subscriber's Registrable Securities.
3.8 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 3.4 or 3.5 for the Subscriber including (without
limitation) all registration, filing, and qualification fees, printers and
accounting fees relating or apportionable thereto and the fees and
disbursements of counsel for the Company in its capacity as counsel to the
Subscriber hereunder.
3.9 DELAY OF REGISTRATION. The Subscriber shall not have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration
as the result of any controversy that might arise with respect to the
interpretation or implementation of this Section, except in the case of bad
faith or unreasonable determinations by the Company or the chosen
underwriters.
3.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 3 may be assigned
to an Affiliate, provided that: (a) the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and
address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; and (b) such transferee
or assignee agrees in writing to be bound by and subject to the terms and
conditions hereof, including without limitation the provisions of Section
below.
3.11 DURATION OF REGISTRATION RIGHTS.
(a) The Subscriber shall not be entitled to exercise any registration
rights provided for in this Statement of Registration Rights Agreement
including, but not limited to those rights detailed in Sections 3.4
and 3.5 of this Statement of Registration Rights, prior to six (6)
months or after five (5) years following the execution of the
Settlement Agreement.
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(b) In addition, the right of the Subscriber to demand registration
pursuant to Section 3.4 or inclusion in any registration pursuant to
Section 3.5 shall terminate on the closing of the first
Company-initiated registered public offering of common stock of the
Company if all Registrable Securities held by such Holder may
immediately be sold under Rule 144 during any 90-day period, or on
such date after the closing of the first Company-initiated registered
public offering of common stock of the Company as all shares of
Registrable Securities held by such Holder may immediately be sold
under Rule 144 during any 90-day period.
4. GOVERNING LAW
This Subscription Agreement shall be governed by and constituted in
accordance with the laws of the State of California.
This the ______ day of ______________, 2001.
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SUBSCRIBER INFORMATION AND SIGNATURE:
--------------------------
Tax Information Number
By:
------------------------------ ------------------------------
Address Its:
------------------------------
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ACCEPTANCE
The foregoing Subscription is hereby accepted by the Company effective as of
___________________, 2001.
Chequemate International Inc.
By:
-------------------------------------
Xxxxxxx Xxxxx
President and Chief Executive Officer
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