REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT made as of September 1, 1999 by and between
INTERNATIONAL CAPITAL FUNDING, INC., a Colorado corporation with an office at
0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0 (the "Company")
and XXXXXXXX XXXXX, with an address at 00 Xxx Xxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 ("Xxxxx"),
WITNESSETH:
WHEREAS, Xxxxx has, simultaneously herewith, purchased from the Company
the Warrants (defined below); and
WHEREAS, in connection with the sale of the Warrant, the Company has
agreed to enter into this Registration Rights Agreement with Xxxxx.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
"Securities Act" (as defined herein).
"Common Stock" shall mean the Common Stock, par value $.0001 per share,
of the Company, as constituted as of the date of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Person" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Warrant Shares" shall have the meaning ascribed thereto in the Warrant.
"Warrant" shall mean the Common Stock Purchase Warrant, dated as of the
date hereof, issued and sold by the Company to Xxxxx, a copy of which is
annexed hereto.
2. PIGGY-BACK REGISTRATION.
(a) If the Company at any time proposes to file a registration statement
to register any of its Common Stock under the Securities Act (except for a
registration filed in connection with an employee benefit plan, a transaction
relating to a merger or business combination, a transaction relating to an
exchange offer, a transaction relating to an acquisition of assets or
securities, or a transaction otherwise described in Rule 145 of the Securities
Act), whether or not for sale for its own account, it will each such time give
prompt written notice to Xxxxx of its intention to do so. Upon the written
request of Xxxxx (which request shall specify the amount of Warrant Shares
intended to be disposed of by Xxxxx) made as promptly as practicable and in
any event within ten (10) days after the receipt of any such notice, the
Company will use its best efforts to effect the registration under the
Securities Act of all Warrant Shares which the Company has been so requested
to register by Xxxxx.
(b) If the Company proposes to register any of its securities under the
Securities Act as contemplated by this Section and such securities are to be
distributed by or through one or more underwriters, the Company will arrange
for such underwriters to include the Warrant Shares to be offered and sold by
Xxxxx among the securities of the Company to be distributed by such
underwriters. In such event, (i) Xxxxx shall be a party to the underwriting
agreement between the Company and such underwriters, which shall contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including provisions for
indemnification and contribution to the effect and to the extent provided in
Section 7; (ii) the representations and warranties by, and the other
agreements on the part of, the Company in the underwriting agreement to and
for the benefit of such underwriters shall also be made to and for the benefit
of Xxxxx and the conditions precedent to the obligations of such underwriters
under the underwriting agreement shall be conditions precedent to the
obligations of Xxxxx; and (iii) Xxxxx shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
Xxxxx, his Warrant Shares and his intended method of distribution or any other
representations required by applicable law. It is a condition to the
obligations of the Company hereunder that Xxxxx shall accept the terms of the
underwriting agreement as agreed between the Company and such underwriters,
provided such terms are consistent with this Section and are not otherwise
inconsistent with this Agreement.
(c) If the managing underwriter of any underwritten offering shall
deliver a written statement to Xxxxx that in such underwriter's opinion the
total amount of Warrant Shares requested to be included in such registration
could have a material adverse effect on such offering, then the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in (or during the time of) such offering, first, all
securities proposed by the Company to be sold for its own account, and second,
the Warrant Shares requested to be included in such registration by Xxxxx
pursuant to this Agreement and the securities requested to be included therein
by any other holders entitled to include securities in such registration, pro
rata based on the number of securities which each of them has requested to be
included in such registration.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by the
provisions of this Agreement to use its best efforts to effect the
registration of any Warrant Shares under the Securities Act, the Company will,
as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities (on such applicable form as the Company may in its
sole discretion elect to use) and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby, determined as hereinafter provided;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for the
period specified in subsection (a) above and comply with the provisions of the
Securities Act with respect to the disposition of all Warrant Shares covered
by such registration statement in accordance with Xxxxx'x intended method of
disposition set forth in such registration statement for such period;
(c) furnish to Xxxxx such number of copies of the registration statement
and the prospectus included therein, including each preliminary prospectus, as
Xxxxx reasonably may request in order to facilitate the public sale or other
disposition of the Warrant Shares covered by such registration statement;
(d) use its best efforts to register or qualify the Warrant Shares
covered by such registration statement under the securities or "blue sky" laws
of such jurisdictions as Xxxxx reasonably shall request and keep such
registration or qualification in effect for so long as such registration
statement remains in effect; and take any other action which may be reasonably
necessary or advisable to enable Xxxxx to consummate the disposition in such
jurisdictions of the Warrant Shares to be sold by Xxxxx; provided, however,
that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in
any such jurisdiction;
(e) immediately notify Xxxxx at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as a result of which the
prospectus contained 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 light of the circumstances then existing; and at the request
of Xxxxx promptly prepare and furnish to him 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 Warrant 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 in the light of the circumstances under
which they were made;
(f) otherwise comply with all applicable rules and regulations of the
Commission, and, if required, make available to its security holders, as soon
as reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the
first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 promulgated thereunder, and promptly
furnish to Xxxxx a copy of any amendment or supplement to such registration
statement or prospectus;
(g) keep Xxxxx advised in writing as to the initiation and progress of
the registration;
(h) use its best efforts to include or list, as the case may be, the
Warrant Shares being registered on the automated quotation system of the
National Association of Securities Dealers, Inc. or the principal securities
exchange on which Common Stock of the Company is then quoted or listed;
(i) afford to Xxxxx an opportunity to make such examination and inquiry
into the financial position, business and affairs of the Company and its
subsidiaries as Xxxxx or his counsel may reasonably deem necessary to satisfy
Xxxxx and his counsel as to the accuracy and completeness of the registration
statement;
(j) deliver promptly to Xxxxx copies of all correspondence between the
Commission and the Company relating to the registration statement; and
(k) use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement (which in no event
shall require the Company to commence any judicial proceeding).
For purposes of Section 3(a) hereof, the period of distribution of
Warrant Shares shall be deemed to extend until the earlier of the sale of all
Warrant Shares covered by the Registration Statement or 180 days after the
effective date thereof.
In connection with registration hereunder, Xxxxx will furnish to the
Company in writing, upon request, such information with respect to himself
and the proposed distribution by him as the Company reasonably deems necessary
in order to assure compliance with federal and applicable state securities
laws.
4. EXPENSES. All expenses incurred by the Company in complying with
Sections 2 and 3 hereof, including without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company and independent public accountants for the Company, fees and expenses,
including counsel fees, incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and
costs of insurance shall be borne by the Company. All selling commissions
applicable to Warrant Shares, including any fees and disbursements of any
special counsel to Xxxxx, shall be borne by Xxxxx.
5. RULE 144 REPORTING. With a view to making available to Xxxxx the
benefits of certain rules and regulations of the Commission which may permit
the sale of the Warrant Shares without registration, the Company agrees that,
from and after the time it becomes subject to the reporting obligations of the
Exchange Act, it will:
(a) make and keep public information available, as those terms are used
and defined in Commission Rule 144;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required by the Company under the Exchange
Act.
6. LIMITATION ON SALES OF REGISTERED WARRANT SHARES. Xxxxx agrees that,
notwithstanding any registration of Warrant Shares under the Securities Act as
provided herein,
(a) in the event of a public offering of not less than $5 million of
Common Stock by the Company for its own account pursuant to a firm commitment
underwriting (a "Qualified Offering"), if the underwriter requires the
principal shareholders or affiliates of the Company to agree not to dispose of
or pledge their shares of Common Stock during a "lock-up" period, Xxxxx will
enter into an identical agreement with respect to the Warrant Shares; and
(b) prior to a Qualified Offering, he will not, without the consent of
the Company, sell any Warrant Shares to the public if the sale of such Warrant
Shares would both (i) cause the total number of Warrant Shares sold by Xxxxx
to the public during the period of three months ending with (and including)
the date of the proposed sale to exceed the average weekly volume of trading
in the Common Stock on all national securities exchanges and/or reported
through NASDAQ for the four calendar weeks preceding such sale and (ii) cause
the total number of Warrant Shares sold by Xxxxx to the public to exceed the
limitation set forth below for any applicable period:
Applicable Period Limitation
----------------- ----------
9/1/99 through 11/30/99 50,000 shares
9/1/99 through 2/28/00 100,000 shares
9/1/99 through 5/31/00 150,000 shares
7. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of a registration of any Warrant Shares under the
Securities Act pursuant to this Agreement, the Company will indemnify and hold
harmless Xxxxx, and each other Person, if any, who controls Xxxxx within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which Xxxxx or such controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities, or actions in respect thereof, arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such Warrant
Shares was registered under the Securities Act pursuant to this Agreement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the 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 Xxxxx and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by Xxxxx, or
any such controlling person in writing specifically for use in such
registration statement or prospectus.
(b) In the event of a registration of any of the Warrant Shares under
the Securities Act pursuant to this Agreement, Xxxxx will indemnify and hold
harmless the Company, each officer of the Company who signs the registration
statement, each director of the Company, each Person, if any, who participates
as an underwriter in the offering or sale of such securities, and each Person,
if any, who controls the Company or any such underwriter within the meaning of
the Securities Act, against all losses, claims, damages or liabilities, joint
or several, to which the Company or such officer, director, underwriter, or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities, or actions in respect
thereof, arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Warrant Shares were registered under the Securities Act pursuant to
this Agreement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the 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 and each such officer, director,
underwriter, and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, however, that Xxxxx will be
liable hereunder in any such case if and only to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to Xxxxx,
furnished in writing to the Company by Xxxxx specifically for use in such
registration statement or prospectus; and provided further, however, that the
liability of Xxxxx shall be limited to the proceeds received by Xxxxx from the
sale of the Warrant Shares covered by such registration statement.
(c) Promptly after receipt by a party indemnified hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 7 and shall only
relieve it from any liability which it may have to such indemnified party
under this Section 7 if and to the extent the indemnifying party is prejudiced
by such omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 7 for any legal expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with
counsel so selected; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified parties shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) If the indemnification provided for in this Section 7 shall for any
reason be held by a court to be unavailable to an indemnified party under
subparagraph (a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu of the amount paid
or payable under subparagraph (a) or (b) hereof, the indemnified party and the
indemnifying party under subparagraph (a) or (b) hereof shall contribute to
the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating the same),
(i) in such proportion as is appropriate to reflect the relative fault of the
Company and Xxxxx which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and Xxxxx from the
offering of the securities covered by such registration statement; provided,
however, that in any such case, (x) Xxxxx will not be required to contribute
any amount in excess of the public offering price of all such Warrant Shares
offered by him pursuant to such registration statement; and (y) no Person
guilty of fraudulent misrepresentation, within the meaning of Section 11(f) of
the Securities Act, will be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
8. MISCELLANEOUS.
(a) The rights granted to Xxxxx hereunder may not be transferred or
assigned to any other Person except in conjunction with an assignment of the
Warrant (to the extent permitted thereunder) to such other Person, and then
only if such other Person shall agree in writing with the Company to be bound
by the terms hereof. In the event of an transfer or assignment permitted by
this Section, the transferee or assignee shall thereupon be substituted for
Xxxxx for all purposes of this Agreement and all references to "Xxxxx" herein
shall thenceforth be deemed references to such transferee or assignee.
(b) All notices, requests, demands and other communications which are
required to be or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when (a) delivered in person, (b) the
day following dispatch by an overnight courier service (such as Federal
Express or UPS, etc.) or (c) five (5) days after dispatch by certified or
registered first class mail, postage prepaid, return receipt requested, to the
party to whom the same is so given or made, at the address of such party set
forth above or at such other address as such party may have given written
notice of.
(c) All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and
not the law of conflicts, of the State of New York.
(d) This Agreement may not be amended or modified or otherwise altered
except pursuant to an instrument, in writing, signed by each of the parties.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) The provisions of Section 2 hereof to the contrary notwithstanding,
the Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for
a period not to exceed 90 days in any 12-month period if there exists at the
time material non-public information relating to the Company which, in the
reasonable opinion of the Company, should not be disclosed.
(g) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability
shall attach only to such provision and shall not in any manner affect or
render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by a duly authorized officer, and Xxxxx has duly executed this Agreement, as
of the date first written above.
INTERNATIONAL CAPITAL FUNDING, INC.
By ______________________________________
Xxxxx Xxxxxxx, Chief Executive Officer
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Xxxxxxxx Xxxxx
