REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement") between Jungle Street,
Inc., a Utah corporation (the "Company"), and UTCO Associates, Ltd., a Utah
limited partnership ("Holder").
Recitals
A. The Company, as maker, has executed and delivered a Promissory Note
(the "Note") to Holder, as payee, in the original principal amount of
$500,000 which Note, upon default by the Company, is convertible by Holder
into shares of the Company's common stock, $.001 par value, at the
conversion price of $.75 per share, but which shares will be unregistered
and restricted.
X. Xxxxxx would not have agreed to accept the Note or to loan funds
thereunder unless the Company had agreed to enter into this Agreement.
Agreement
In consideration of the promises contained in this Agreement and in
the Note, and for other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge by their signatures below, the
Company and Holder agree as follows:
1. Piggyback Registrations. If the Company at any time proposed to
file a registration statement covering proposed sales by it or any of its
shareholders of shares of its capital stock in a manner which would permit
registration of shares of common stock for sale to the public (other than a
registration statement (i) covering only shares issuable upon the exercise
of employee stock options or pursuant to an employee stock purchase,
dividend reinvestment or similar plan, (ii) on Form S-4 or S-8 or any
similar form) under the U.S. Securities Act of 1933, as amended (the
"Act"), (iii) in connection with a registered public offering of the
Company's capital stock, or (iv) pursuant to Section 2 hereof, the Company
will give prompt notice to Holder of such proposed registration (which
notice shall describe the proposed filing date and the date by which the
registration rights granted pursuant to this Section 1 must be exercised,
the nature and method of any such sale or disposition of securities and
shall include a listing of the jurisdictions, if any, in which the Company
proposes to register or qualify the securities under the applicable state
securities or "Blue Sky" laws of such jurisdictions). At the request of
Holder given within thirty (30) calendar days after the receipt of such
notice by Holder (which request shall specify the number of shares Holder
requests to be included in such registration), the Company will use its
best efforts to cause all share as to which registration has been requested
by Holder to be included in such registration statement for sale or
disposition in accordance with the method described in the initial notice
given to Holder and subject to the same terms and conditions as the other
shares of capital stock being sold, and thereafter shall cause such
registration statement to be
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filed and become effective; provided, however, that the Company shall be
permitted to (A) withdraw the registration statement for any reason in its
sole and exclusive discretion and upon the written notice of such decision
to Holder shall be relieved of all of its obligations under this Section 1
with respect to that particular registration; or (B) exclude all or any
portion of the shares sought to be registered by Holder from such
registration statement if the offering of the shares is an underwritten
offering and to the extent that, in the judgment of the managing
underwriter of the offering, the inclusion of such shares would be
materially detrimental to the offering of the remaining shares of capital
stock, or such delay is necessary in light of market conditions. Any shares
sought to be registered by Holder so excluded from a registration statement
shall be excluded pro rata based on the total number of shares of capital
stock being sold by all selling Holders (other than the Company).
2. Demand Registration. If at any time from and after the date of this
Agreement, the Company shall be requested in writing by Holder to effect
the registration under the Act of shares of the Company's common stock then
owned by Holder (which request shall specify the aggregate number of shares
intended to be offered and sold by Holder, shall describe the nature or
method of the proposed offer and sale thereof and shall contain an
undertaking by Holder to cooperate fully with the Company in order to
permit the Company to comply with all applicable requirements of the Act
and the rules and regulations thereunder and to obtain acceleration of the
effective date of the registration statement contemplated thereby), the
Company shall effect the registration of such securities on an appropriate
form under the Act, provided that (i) Holder may exercise the right to
request registration pursuant to this Section 2 only with respect to those
shares that, at the time such request for registration is delivered to the
Company, may not be sold to the public pursuant to Rule 144 under the Act
or any similar or successor rule; (ii) Holder's rights under this Section 2
shall be exercisable only if the shares as to which Holder requests
registration have an aggregate value of at least $250,000 based on the
average of the closing bid price for the Company's common stock as listed
on any exchange on which the Company's common stock then may be traded for
the thirty (30) trading-day period immediately preceding the date of such
request for registration; (iii) the Company shall be entitled to postpone
the filing of any registration statement otherwise required to be prepared
and filed by it pursuant to this Section 2, if at the time it receives a
request for such registration, the Company's underwriter determines that
such registration and offering would materially interfere with any existing
or then presently contemplated financing, acquisition, corporate
reorganization or other material transaction involving the Company, and the
Company promptly gives the Holder written notice of such determination,
provided, however, that such postponement shall not extend beyond the time
that such material interference continues to exist; and (iv) Holder shall
have no right to demand registration with respect to any shares with in
ninety (90) calendar days after the effective date of any registration
statement filed by the Company.
3. Registration Procedures. If and whenever this Agreement
contemplates that the Company will effect the registration under the Act of
any shares held by the Holder, the Company shall:
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3.1 prepare and file with the Securities and Exchange Commission
(the "SEC") a registration statement on the appropriate form with respect
to such shares and use its best efforts to cause such registration
statement to become effective;
3.2 prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith and to take such other action as may be necessary to keep such
registrations statement effective until the earlier of (i) the completion
of the distribution of shares so registered, or (ii) expiration of the
ninety (90) day period following immediately the effective date of such
registration statement (at which time unsold shares may be deregistered),
and otherwise comply with applicable provisions of the Act and the rules
and regulations promulgated under the Act;
3.3 furnish to Holder and its counsel, and to each underwriter of
the shares to be sold by the Holder, without charge, such number of copies
of one or more preliminary prospectuses, any supplements thereto and a
final prospectus and any supplements thereto in conformity with the
requirements of the Act, and such other documents as the Holder or such
underwriter may reasonably request, in order to facilitate the public sale
or other disposition of such shares;
3.4 if, during any period in which, in the opinion of the
Company's counsel, a prospectus relating to the shares is required to be
delivered under the Act in connection with any offer or sale contemplated
by any registration statement, any event known to the Company occurs as a
result of which the prospectus would include an untrue statement of
material fact or omit to state any material fact necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend or
supplement the related prospectus to comply with the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or the respective
rules and regulations thereunder, to notify the Holder promptly and to
prepare and file with the SEC an amendment or supplement, whether by filing
such documents pursuant to the Act or the Exchange Act as may be necessary
to correct such untrue statement or omission or to make any registration
statement or the related prospectus comply with such requirements and to
furnish to Holder and its counsel such amendment or supplement to such
registration statement or prospectus;
3.5 timely to file with the SEC (i) any amendment or supplement
to any registration statement or to any related prospectus that is required
by the Act or the Exchange Act or requested by the SEC, and (ii) all
documents (and any amendments to previously filed documents) required to be
filed by the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the
Exchange Act;
3.6 within five days of filing with the SEC of (i) any amendment
or supplement to any registration statement, (ii) any amendment or
supplement to the related prospectus, or (iii) any document incorporated by
reference in any of the foregoing or any
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amendment of or supplement to any such incorporated document, to furnish a
copy thereof to Holder;
3.7 to advise Holder and its counsel promptly (i) when any
post-effective amendment to any registration statement becomes effective
and when any further amendment of or supplement to the prospectus shall be
filed with the SEC, (ii) of any request or proposed request by the SEC for
an amendment or supplement to any registration statement, to the related
prospectus, to any document incorporated by reference in any of the
foregoing or for any additional information, (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of any registration
statement or any order directed to the related prospectus or any document
incorporated therein by reference or the initiation or threat of any stop
order proceeding or of any challenge to the accuracy or adequacy of any
document incorporated by reference in such prospectus, (iv) of receipt by
the Company of any notification with respect to the suspension of the
qualification of the shares for sale in any jurisdiction or the initiation
or threat of any proceeding for such purpose, and (v) of the happening of
any event which makes untrue any statement of a material fact made in any
registration statement or the related prospectus as amended or supplemented
or which requires the making of a change in such registration statement or
such prospectus as amended or supplemented in order to make any material
statement therein not misleading;
3.8 use its reasonable best efforts to register or qualify the
shares covered by such registration statement under the securities or blue
sky laws of such jurisdictions as the Holder shall reasonably request
considering the nature and size of the offering and do such other acts and
things as may be reasonably necessary to enable the Holder to consummate
the public sale or other disposition in each such jurisdiction of such
shares; provided, however, that the Company shall not be obligated to
qualify as a foreign corporation to do business under the laws of any
jurisdiction in which it has not been qualified or to file any general
consent to service of process; and
3.9 use its best efforts to cause all shares sold pursuant to any
registration statement to be listed on each national securities exchange,
if any, on which such shares are then listed.
4. Agreements of Holder. Holder (i) upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Subsection
3.4 shall forthwith discontinue Holder's disposition of securities included
in the registration statement until Holder receives copies of the
supplemented or amended prospectus, and (ii) if so directed by the Company,
shall deliver to the Company, at the Company's expense, all copies (other
than permanent file copies) then in Holder's possession of the prospectus
covering such securities that was in effect at the time of receipt of such
notice.
5. Withdrawal. If Holder disapproves of the terms of any offering, the
sole remedy of Holder shall be to withdraw Holder's securities therefrom by
giving written notice
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to the Company and any managing underwriter (if any). Holder's securities
of the Company so withdrawn from the offering also shall be withdrawn from
registration.
6. Participation in Underwritten Registrations. In the case of any
registration under Section 2, if Holder or the Company determines to enter
into an underwriting agreement in connection therewith, or in the case of a
registration under Section 1, if the Company determines to enter into an
underwriting agreement in connection therewith, (i) all shares of Holder's
securities to be included in such registration shall be subject to an
underwriting agreement, which shall be in customary form and contain such
terms as are customarily contained in such agreements, and (ii) no person
may participate in any such registration unless such person (A) agrees to
sell such person's securities on the basis provided in such underwriting
arrangement, and (B) completes and executes all questionnaires,
powers-of-attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting
arrangements.
7. Registration Expenses. With respect to each registration effected
pursuant to Section 1 and Section 2 of this Agreement, the Company shall
pay the following fees, disbursements and expenses: all registration and
filing fees, printing expenses, auditors' fees, listing fees, registrar and
transfer agent's fees, fees and disbursements of counsel to the Company,
expenses (including reasonable fees and disbursements of counsel) of
complying with applicable securities or "Blue Sky" laws and the fees of any
securities exchange in connection with the review of such offering. The
underwriting discounts and commissions allocable to the shares included in
any offering shall be borne by the holders thereof.
8. Rule 144 Sales.
8.1 The Company covenants that it will file the reports required
to be filed by the Company under the Securities Act and the Exchange Act so
as to enable any Holder to sell Shares pursuant to Rule 144 under the
Securities Act.
8.2 In connection with any sale, transfer or other disposition by
any Holder of any shares pursuant to Section 4(1) of the Securities Act or
Rule 144 thereunder, the company shall cooperate with such Holder to
facilitate the timely preparation and delivery of certificates representing
shares to be sold and not bearing any Securities Act legend, and enable
certificates for such shares to be for such number of shares and registered
in such names as the selling Holders may reasonably request at least two
business days prior to any sale of shares.
9. Indemnification.
9.1 In each case of a registration of shares under the Securities
Act pursuant to this Agreement, the Company will indemnify and hold
harmless the Holder, its officers and directors, each underwriter (as
defined in the Act) and each other person, if any, who controls any of the
Holder or any such underwriter within the meaning of the Act or the
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Exchange Act from and against any and all losses, claims, damages and
liabilities (including the fees and expenses of counsel in connection
therewith in connection with any governmental or regulatory investigation
or proceeding), arising out of any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under
which such shares ere registered under the Act, any prospectus or
preliminary prospectus contained therein or any amendment or supplement
thereto (including, in each case, documents incorporated by reference
therein), or arising out of any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements made therein not misleading, except insofar as such losses,
claims, damages or liabilities arise out of any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any of the Holder, Holder's counsel or any underwriter and
furnished to the Company in writing by any of the Holder or such counsel or
underwriter; provided that the foregoing indemnification with respect to a
preliminary prospectus shall not inure to the benefit of any underwriter
(or the benefit of any person controlling such underwriter) from whom the
person asserting any such losses, claims, damages or liabilities purchased
shares to the extent such losses, claims, damages or liabilities result
from the fact that a copy of the final prospectus had not been sent or
given to such person at or prior to written confirmation of the sale of
such shares to such person.
9.2 In each case of a registration of shares under the Act
pursuant to this Agreement, Holder will indemnify and hold harmless the
Company, its directors, its officers who sign the registration statement,
its attorneys, each underwriter and each person, if any, who controls the
Company or such underwriter within the meaning of the Act or the Exchange
Act, to the same extent as the foregoing indemnity from the Company to the
Holder, but only with reference to information provided to the Company in
writing by the Holder and furnished to the Company by the Holder expressly
for use in the registration statement, any publicly available report of the
Holder published within the time frame of the registration statement, any
prospectus or preliminary prospectus contained therein or any amendment or
supplement thereto.
9.3 In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 9, such person (the
"Indemnified Party") shall promptly notify the person against whom such
indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party, upon request of the Indemnified Party, shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees
and disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party has agreed to
the retention of such counsel at its expense, or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party, the Indemnifying Party
proposes that the same counsel represent
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both the Indemnified Party and the Indemnifying Party and representation of
both parties by the counsel would be inappropriate due to actual or
potential differing interests between them. It is understood, where the
expense of separate counsel shall be borne by the Indemnifying Party
pursuant to the foregoing sentence, that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm qualified in such jurisdiction to act as counsel for such Indemnified
Party. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify the Indemnified Party from and against any loss
or liability by reason of such settlement or judgment.
9.4 The indemnification pursuant to this Section 8 shall be on
such other terms and conditions as are at the time customary and reasonably
required by underwriters in public offerings, including providing for
contribution in the event indemnification provided in this Section 9 is
unavailable or insufficient.
10. Holdback Agreement. Holder agrees not to effect any public sale or
distribution of the Company's shares of capital stock during the seven (7)
calendar days prior to and the ninety (90) calendar day period beginning on
the effective date of any underwritten registration statement effected
pursuant to this Agreement (except as part of such underwritten
registration) unless the managing underwriter or underwriters with respect
to such offering otherwise agree.
11. Selection of Underwriters. The Company will have the right to
select the investment banking firm(s) acting as managing underwriter in
connection with any underwritten public offering.
12. Termination. This Agreement and all rights and obligations of the
parties to this Agreement shall terminate four (4) years after the date of
this Agreement; provided, however, that the indemnification provisions of
Section 9 shall not terminate and shall survive forever.
13. General.
13.1 Assignment. Holder's rights under this Agreement shall not
be transferable without the written consent of the Company, which consent
shall not be unreasonably withheld.
13.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so signed shall be deemed to be an
original, and such counterparts together shall constitute one and the same
instrument.
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13.3 Entire Agreement. This Agreement sets forth the entire
agreement between the parties as to the subject matter hereof, supersedes
any and all prior or contemporaneous agreements or understandings of the
parties relating to the subject matter of this Agreement, and may not be
amended except by an instrument in writing signed by all of the parties to
this Agreement.
13.4 Governing Law. The laws of the State of Utah (without giving
effect to the choice of law provisions thereof) shall govern the
interpretation and enforcement of this Agreement.
13.5 Headings. The headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement.
13.6 Notices. All notices or other communications provided for
under this Agreement shall be in writing, and mailed, telecopied or
delivered by hand delivery or by overnight courier service, to the parties
at their respective addresses as indicated below or at such other address
as the parties may designate in writing:
If to the Company, to it at:
Jungle Street, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
If to Holder, to it at:
UTCO Associates, Ltd.
000 Xxxx 000 Xxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx
With a copy to:
Durham, Evans, Xxxxx & Xxxxxxx
00 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
All notices and communications shall be effective as follows: When mailed,
upon three (3) business days after deposit in the mail (postage prepaid);
when telecopied, upon confirmed transmission of the telecopied notice; when
hand delivered, upon delivery; and when sent by
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overnight courier, the next business day after deposit of the notice with
the overnight courier.
13.7 Remedies. Any person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically, to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
DATED September __, 1996.
JUNGLE STREET, INC., a Utah corporation
By /s/
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Its
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UTCO ASSOCIATES, LTD., a Utah corporation
By
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Its
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