RAINBOW COMMUNICATIONS, INC. AGREEMENT
This Rainbow Communications, Inc. Agreement (the "Agreement") is entered
into on this 14th day of April, 2000, between Rainbow Communications, Inc., a
Florida corporation ("RAINBOW"), and XxxxXxxxxx.xxx Corp., a Canadian
Corporation ("Client").
Whereas, RAINBOW is in the business of planning, developing, and
implementing advertising, marketing and promotional campaigns for corporations
and other business entities ("Advertising and Promotional Services");
Whereas, the Client desires to retain RAINBOW to provide the Advertising
and Promotional Services, and RAINBOW desires to provide such Advertising and
Promotional Services to Client, pursuant to the terms, conditions, and
provisions contained in this Agreement;
Now, therefore, in consideration of the mutual promises contained herein
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Advertising and Promotional Services. Subject to Client's compliance
with each of the representations, warranties and covenants and agreements made
by Client in this Agreement, RAINBOW agrees to provide to Client the Advertising
and Promotional Services identified on Exhibit A which is attached hereto and
incorporated herein by reference, for the period commencing on the latter of
(the "Effective Date") the date that this Agreement is executed and delivered by
Client or the date that RAINBOW receives payment of its fees as herein provided
and expiring on the 730th day following the effective date of the Agreement (the
"Term").
2. Obligations and Responsibilities of Client. As of the date hereof and
during the Term of this Agreement, Client agrees as follows.
1. Representations and Warranties.
Client represents and warrants to RAINBOW that:
(1) Organization. Client is a corporation duly organized, validly existing
and in good standing under the laws of the Canada of its corporation and it is
duly qualified to do business as a foreign corporation in each jurisdiction in
which it owns or leases property or engages in business.
(2) Formal Action. Client has the corporate power and authority to execute
and deliver this Agreement and to perform each of its obligations hereunder and
this Agreement has been duly approved by Client's Board of Directors.
(3) Valid and Binding Agreement. This Agreement has been duly executed and
delivered by Client and is the valid and binding obligation of Client
enforceable against it in accordance with its terms.
(4) No Violation. The execution, delivery and performance of this Agreement
does not and will not violate any provisions of the charter or bylaws of Client
or any agreement to which Client is a party or any applicable law or regulation
or order or decree of any court, arbitrator or agency of government and no
action of, or filing with, any governmental or public body or authority is
required in connection with the execution, delivery or performance of this
Agreement.
(5) Litigation. No action, suit or proceeding is pending against or
affecting the Client or any of its properties before any court, arbitrator of
governmental body or administrative agency and none of the persons owning
beneficially or of record more than 10% of the outstanding capital stock of the
Client or any of the directors or officers of Client is a party to any action,
suit or proceeding before any federal or state court, arbitrator governmental
body or administrative agency (other than routine traffic violations) and no
such person has been a party to any such proceedings for more than the past five
years.
(6) Accuracy of Information. The information furnished by Client to RAINBOW
regarding the business, operations, financial condition, including financial
statements, business plans and biographical information regarding the Client's
directors and officers (collectively referred to as the "Information Package")
is complete and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which there were made not misleading.
2. Covenants and Agreements.
Client covenants and agrees to comply with the following covenants:
(1) Client Certification. Client acknowledges that it is responsible for
the accuracy and completeness of the Information Package and for all other
information furnished to RAINBOW and for the accuracy and completeness of the
contents of all materials prepared by RAINBOW for and on behalf of Client, which
are approved by Client. The Client hereby designates the individuals listed on
Exhibit B attached hereto and incorporated herein by reference as the duly
authorized representatives of Client for purposes of certifying to RAINBOW the
accuracy of all documents, advertisements or other materials prepared by RAINBOW
for and on behalf of Client. The Client agrees to promptly advise RAINBOW in
writing within five (5) business days, of any condition, event, circumstance or
act that would constitute a material adverse change in the business, properties,
financial condition or business prospects of the Client or which would make any
of the information contained in the Information Package or in any report,
advertorial or other document prepared by RAINBOW for and on behalf of Client
misleading in any material respect. Client hereby agrees that RAINBOW and its
directors, officers, agents and employees may rely on the Information Package
and on all other information furnished by Client, and on each and every
certificate provided by an authorized representative of Client, until RAINBOW is
advised in writing by an authorized representative of Client that the
information previously furnished to RAINBOW is inaccurate or incomplete in any
material respect. Client acknowledges that RAINBOW shall have no obligation to
provide services hereunder until it has received a written certificate from an
authorized representative of Client as follows: RAINBOW shall prepare proof
and/or tapes of all agreed upon materials and information, as set for
dissemination, for the Client's review and approval prior to any such
dissemination, and Client shall sign and return such materials marking all
corrections and changes that the Client believes appropriate. Client
acknowledges that RAINBOW will make moral representation based on the
information furnished hereunder and the Client authorizes such representations.
(2) Books and Records. Client shall maintain true and complete books,
records and accounts in which true and correct entries shall be made of its
transactions in accordance with generally accepted accounting principles
consistently applied ("GAAP"). GAAP refers to the American set of provisions.
(3) Financial and Other Information. Client agrees to furnish to RAINBOW
the following information:
(i) Annual Financial Statements. As soon as practicable, and in any even within
90 days after the close of the Client's fiscal year, annual financial statements
including a balance sheet, an income statement, a statement of cash flows, and a
statement of stockholder's equity, and all notes thereto prepared in accordance
with GAAP and audited by an independent certified public accountant.
(ii) Quarterly Financial Statements. As soon as practicable, and in any event
within 45 days after the end of each fiscal quarter, quarterly financial
statements, including a balance sheet, a quarterly and year-to-date income
statement, a statement of cash flows, and a statement of stockholder's equity,
prepared by Client in accordance with GAAP and certified by the chief financial
officer and chief executive officer of Client as fairly presenting, subject to
normal year-end audit adjustments, the Client's financial position as of and for
the period indicated.
(4) RAINBOW Reliance on Client's Full Disclosure. Client will provide, or
cause to be provided, to RAINBOW all financial and other information requested
by RAINBOW for the purpose of rendering its services pursuant to this Agreement.
Client recognizes and confirms that RAINBOW will use such information in
performing the services contemplated by this Agreement without independently
verifying such information and that RAINBOW does not assume any responsibility
for the accuracy of completeness of such information. The persons executing this
Agreement on behalf of Client certify that there is no fact known to them which
materially adversely affects or may (so far as the Client's senior management
can now reasonably foresee) materially adversely affect the business,
properties, condition (financial or other) or operations (present or
prospective) of the Client which has not been set forth in written form
delivered by Client to RAINBOW. The persons executing this Agreement on behalf
of Client agree to keep RAINBOW promptly informed of any facts hereafter know to
Client which materially adversely affects or may (so far as the Client's senior
management can now reasonably foresee) materially adversely affect the business,
properties, condition (financial or other) or operations (present or
prospective) of Client.
(5) Legal Representation. Client acknowledges and agrees that it has been
and will continue to be, represented by legal counsel experienced in corporate
and securities laws and Client acknowledges that it had been advised as to the
obligations imposed on it pursuant to such laws and understands that it will
have the obligation and responsibility to see that all such laws are complied
with at all times during the Term of the Agreement.
3. Compensation. In consideration of the Advertising and Promotional
Services to be performed by RAINBOW hereunder, Client hereby agrees to
compensate RAINBOW in the manner and in the amount specified in Exhibit C which
is attached hereto and incorporated herein by reference thereto. In addition to
the compensation to be paid to RAINBOW as provided in Exhibit C, Client shall
reimburse RAINBOW promptly after a written request therefore accompanied by
appropriate documentation, for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements of RAINBOW's counsel, if any) incurred in
connection with providing services hereunder or to the extent provided in
Exhibit C.
4. Indemnity. Client acknowledges that it is responsible for the accuracy
of the Information Package and all other information provided to RAINBOW and for
the contents of all materials, advertorials and other information prepared by
RAINBOW for and on behalf of Client and approved by Client as provided herein
and Client agrees to indemnify RAINBOW in accordance with the Indemnification
Agreement set forth in Exhibit D, which is attached hereto and incorporated
herein by reference.
5. Relationship of the Parties. This agreement provides for the
providing of marketing, promotional and advertising services by RAINBOW to
Client and the provisions herein for compliance with financial covenants,
delivery of financial statements, and similar provisions are intended solely for
the benefit of RAINBOW to provide it with information on which it may rely in
providing services hereunder and nothing contained in this Agreement shall be
construed as permitting or obligation RAINBOW to act as a financial or business
advisor or consultant to Client, as permitting or obligation RAINBOW to
participate in the management of client's business, as creating or imposing any
fiduciary obligation on the part of RAINBOW with respect to the provisions of
services hereunder and RAINBOW shall have no such duty or obligation to client,
as providing or counseling Client as to the compliance by Client with any
federal or state securities or other laws effecting the services to be provided
hereunder, or as creating any joint venture, agency, or other relationship
between the parties other then as explicitly and specifically stated in this
Agreement. The Client acknowledges that it has had the opportunity to obtain the
advice of experienced counsel of its own choosing in connection with the
negotiation and execution of the Agreement, the provision of services hereunder
and with respect to all matters contained herein, including, without limitation,
the provisions of Section 45 hereof.
6. Survival of Certain Provisions. The Client's obligations to pay the fees
and expenses of RAINBOW pursuant to Section 3 of this Agreement and to comply
with the indemnification provisions pursuant to Section 4 shall remain operative
and in full force and effect regardless of any termination of this Agreement and
shall be binding upon, and shall inure to the benefit of, RAINBOW and, in the
case of the indemnity agreement, the persons, agents, employees, officers,
directors and controlling persons referred to in the Indemnification Agreement,
and their respective successors and assigns and heirs, and no other person shall
acquire or have any right under or by virtue of this Agreement. All amounts paid
or required to be paid under Sections 3 and 4 of this Agreement shall be fully
earned on the Effective Date of this Agreement notwithstanding prior termination
of this Agreement.
7. Termination. RAINBOW shall have the right in its sole and absolute
discretion to terminate its obligations hereunder and to immediately cease
providing Advertising and Promotional Services pursuant to this Agreement if
RAINBOW, in the exercise of its reasonable judgment, believes that the
representations and warranties made by Client hereunder are inaccurate in any
material respect of if Client breaches any of its covenants and agreements
contained herein or if any federal or state governmental agency or
instrumentality institutes an investigation or suit against Client or pertaining
to the services hereunder. Client shall have the right to terminate the
Agreement in the event of bankruptcy, receivership or change in ownership and
control of RAINBOW.
8. Non-Solicitation Covenant. Client agrees that it will not directly or
indirectly during the term of the Agreement or for three years following the
termination or expiration of this Agreement, wither voluntarily or
involuntarily, for any reason whatsoever, recruit or hire or attempt to recruit
or hire any employee of RAINBOW or of any of its affiliates or subsidiaries, or
otherwise induce any such employees to leave the employment of RAINBOW or of any
of its affiliates or subsidiaries or to become an employee of or otherwise be
associated with Client or any affiliate or subsidiary of Client. Client
acknowledges that RAINBOW and its affiliates and subsidiaries have invested a
significant amount of time, energy and expertise in the training of their
employees to be able to provide Advertising and Promotional Services and Client
therefore agrees that this covenant is reasonable and agrees that the breach of
such covenant is very likely to result in irreparable injury to RAINBOW, which
is unlikely to be adequately compensated by damages. Accordingly, in the event
of a breach or threatened breach by Client of the Section 8, RAINBOW shall be
entitled to an injunction restraining Client and any affiliate, subsidiary or
director or officer thereof from recruiting, or hiring or attempting to recruit
or hire any employee of RAINBOW or of any affiliate or subsidiary of RAINBOW.
Nothing herein shall be construed as prohibiting RAINBOW from pursuing any other
remedies available to RAINBOW for such breach or threatened breach, including
recovery of damages from Client. The undertakings herein shall survive the
termination or cancellation of the Agreement for three years.
9. Miscellaneous.
A. Governing Law. This Agreement shall be governed by the laws of
the State of Florida applicable to contracts executed and performed in the
Circuit Court, Orange County, in the State of Florida (without regard to the
principles of conflicts of laws.
B. Entire Agreement. This agreement and the Exhibits hereto embody
the entire agreement of the parties with respect to its subject matter. There
are no restrictions, promises, referred herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter.
C. Amendments to be in Writing. This Agreement may be amended only
in a writing signed by all of the parties.
D. No Waivers by Course of Dealing; Limited Effect of Waivers.
No waiver shall be effective against either party to this Agreement unless
it is in writing signed by that party. Such party's failure to insist upon the
strict performance of any provision of this Agreement, or to exercise any right
or remedy available to RAINBOW, shall not constitute a waiver by either party of
such provision. No specific waiver by such party of any such party of any
specific breach of any provision of this Agreement shall operate as a general
waiver of the provision or of any other breach of the provision. Client shall
have no right to cure an\t breach except as specifically provided herein. Upon
written notification to the other party that breach under this Agreement has
occurred, the breaching party will have ten (10) business days to cure such
breach. Beyond this period, there shall be no right cure and the agreement may
be terminated at the option on the non-breaching party.
E. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
F. Cumulation of Rights and Remedies. No right or remedy of
either party under this Agreement is intended to preclude any other right
or remedy and every right and remedy shall coexist with every other right and
remedy now or hereafter existing, whether by contract, at law, or in equity.
G. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties and their successors and
assigns. Neither party shall have any right to assign any of its rights or
delegate any of its obligations or responsibilities under this Agreement except
that RAINBOW may subcontract its obligations hereunder when necessary and as
otherwise expressly stated herein.
H. Payment of Fees and Expenses on Enforcing Agreement. In the
event of any dispute between the parties arising out of or related to this
Agreement or the interpretation thereof, at the trial level or appellate level,
the prevailing party shall be entitles to recover from the non-prevailing party
all costs and expenses, including reasonable fees and disbursements of counsel
which may be incurred in connection with such proceeding, without limitation,
including any costs and expenses of experts, witnesses, depositions and other
costs.
I. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing, and shall be delivered
to the parties at the addresses set forth below (or to such other addresses as
the parties may specify by due notice to the others). Notices or other
communications shall be effective when received at the recipient's location (or
when delivered to that location if receipt is refused). Notices or other
communications given by facsimile transmission shall be presumed received at the
time indicated in the recipient's automatic acknowledgement. Notices or other
communications given by Federal Express or other recognized communications given
by certified mail, return receipt requested, postage prepaid, shall be presumed
received 3 business days after the date of mailing.
Client: XxxxXxxxxx.xxx Corp.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX X0X 0X0
Attn: Xxxxxx Xxxxx
Fax: 000-000-0000
Phone: 000-000-0000
Rainbow Communications, Inc.
0000 Xxx Xxxx
Xxxxxx Xxxx, Xxxxxxx 00000
Attn:
Fax: 000-000-0000
Phone: 000-000-0000
J. Headings. The headings in this Agreement are intended solely
for convenience of reference. They shall be given no effect in the construction
or interpretation of this Agreement.
K. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not impair the validity or enforceability of
any other provision.
In Witness Whereof, the parties have executed this Agreement as of the
date first above written.
Attest: Client: XxxxXxxxxx.xxx Corp.
By:__________________ By:___________________
Xxxxx XxxXxxxxxx, Director Xxxxxx Xxxxx, President
[Corporate Seal]
Attest: Rainbow Communications, Inc.
By:__________________ By:___________________
Secretary Xxxxxxx X. Xxxxxx, President
[Corporate Seal]
EXHIBIT A
Advertising and Promotional Services
The Services to be provided are as follows:
A. Growth Industry Report - A minimum of four-page, two-color
follow-up mail pieces designed for additional information
purposes, that is mailed to respondents, in addition to those
brokers requesting said information. A total of 202,000 will
be printed to satisfy RAINBOW's responsibility to the Client
will be at the Client's expense.
B. The Lead Distribution Program - RAINBOW will contact retail
brokers, market makers, and/or money managers and will arrange
a meeting between representative of the Client and interested
retail brokers, market makers, and money managers, which will
include a show and tell from the top management of the
"Client" in disseminating information to these interested
parties. The aforementioned may be accomplished by a Road
Show.
C. Other Advertising and Promotional Services.
1. Public relations exposure to newsletter writers,
trade and financial publications. The Client shall be
totally responsible for all travel expenses for the
purpose of due diligence of the Client by financial
newsletter writers and/or brokers. The Client will
have total pre-approval rights on these trips. Road
Show(s) - Locations to be determined. Client will
cover all expenses of Road Show(s). Client will have
prior approval of those expenses. RAINBOW will be
responsible for RAINBOW's own travel expenses to
support the show.
2. Inclusion as a featured Lead Generator of the Month
in Confidential Fax Alert, a newsletter transmitted
by fax to over 5,000 Brokers.
3. Preparation of a Broker Bullet Sheet to be sent to
every broker who indicates an interest in the Client.
4. Lead Tracking Summary maintained for all response
leads generated and provided to the "Client" monthly.
5. Press Releases - Up to four (4) press releases - the
first Press Release shall announce the hiring of
RAINBOW by the "Client"; with three Press Releases
remaining which may be extended at the option of the
"Client", at the Client's expense, at a rate of
$1,000.00 per Press Release. RAINBOW shall be
mentioned as the Client's Public Relations firm.
6. RAINBOW will distribute at its cost the due diligence
packages to all inquiring brokers only. The Client
shall supply the necessary materials for this
package, if an Arrow Marketing Contract is not
entered into. In the even an Arrow Marketing Contract
is not entered into, the Client will provide RAINBOW
with 300 packages or in the alternative provide a
master to RAINBOW and RAINBOW will then charge the
Client for the cost of reproduction.
7. RAINBOW targets a minimum of 3% return of qualified
investor leads specifically generated for the Client.
8. Production of Due Diligence Folder (minimum 500) with
company Sector Report.
D. Performance By Client.
1. Client is required to do a Standard & Poor's listing
at the Client's expense.
2. Client is required to provide RAINBOW with all S&P
listings on their attorney's stationary.
3. Client will provide its shareholder's with audited
financials on a yearly basis and unaudited financials
on a quarterly basis.
4. Client agrees to send RAINBOW, DTC sheets on a weekly
basis.
5. Client agrees to provide RAINBOW with a complete
shareholders list on a semi-annual basis.
6. Client will use its reasonable best efforts to
register or qualify any shares of common stock of
Client under the securities or blue sky laws of such
jurisdictions as any broker or market maker may
reasonably request and do any and all other acts and
things wchich may be reasonably necessary or
advisable to enable such broker or market maker to
consummate the disposition in such jurisdictions of
shares of common stock of Client, provided that the
Client will not be required to (1) qualify generally
to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section
and (2) subject itself to taxation in any such
jurisdictions or (3) consent to general service of
process in any such jurisdiction.
The parties hereto by signing this Exhibit in the space provided below
signify their agreement regarding the service to be provided by RAINBOW
under the Agreement.
Client: XxxxXxxxxx.xxx
By: ______________________
Xxxxxx Xxxxx, President
Rainbow Communications, Inc.
By: ______________________
Xxxxxxx X. Xxxxxx, President
EXHIBIT B
Client hereby designates the following person or persons to act on its
behalf for the purposes set forth in Section 2.2 (1) of the Agreement.
Xxxxx XxxXxxxxxx
---------------------- -----------------------
DIRECTOR (PLEASE SIGN) DIRECTOR (PLEASE PRINT)
Xxxxxx Xxxxx
---------------------- -----------------------
PRESIDENT (PLEASE SIGN) PRESIDENT (PLEASE PRINT)
Xxx Xxxxxxxxx
---------------------- -----------------------
VICE PRESIDENT (PLEASE SIGN) VP of Marketing(PLEASE PRINT)
EXHIBIT C
COMPENSATION
1. Client agrees to pay to RAINBOW Five Hundred Thousand and 00/100
Dollars ($500,000) in cash on execution and delivery of the Agreement or, at the
option of Client, to issue to RAINBOW 466,918 shares of Common Stock in Client
(the "Shares"), to be based upon the total issued upon completion of the
Companies Reverse Merger/ or becoming a publicly traded company, which Shares
shall be duly and validly issued, fully paid and nonassessable and shall not be
issued in violation of any preemptive right of any stockholders of client. The
Shares shall be issued in compliance with the exemption from the registration
requirements of the Securities Act of 1933 (the "Act") provided by Section 4(2)
of the Act and/or pursuant to Rules 505 or 506 of the General Rules and
Regulation and Regulation under the Securities Act of 1933, or free trading if
available.
2. Concurrently with payment of cash or the issuance of the Shares,
Client will execute and deliver the Registration Rights Agreement attached
hereto as Exhibit E under which the Client agrees to register the Shares for
sale in compliance with the Act as therein provided and to comply with all
conditions necessary or required to enable the Shares to be sold pursuant to
Rule 144 of the General Rulers and Regulation under the Securities act of 1933.
3. The Shares, if any, to be issued to RAINBOW shall be approved for
issuance in accordance with the rules and regulations of any stock exchange on
which the Shares are listed for trading or by the NASDAQ if the shares are
listed for trading thereon and shall be issued in compliance with all
appropriate federal or state governmental rules and regulations.
4. Client acknowledges that the consideration to be paid to RAINBOW
shall be fully earned on the date that RAINBOW commences providing services
under the Agreement except that if either party terminates this Agreement
pursuant to the provisions contained herein, then the consideration shall be
prorated to the extent of performance with any remaining consideration reverting
back to the Client
5. Client agrees to pay or reimburse RAINBOW for all expenses arising
out of or related to the provision of services by RAINBOW under the Agreement to
the extent provided in the Agreement and/or in Exhibit A thereto. For all
expenses exceeding $500,000, RAINBOW agrees to obtain pre-approval for such
expenditures from the Client.
The parties hereto by signing this Exhibit in the space provided below
signify their agreement to the compensation provisions contained herein.
CLIENT: XXXXXXXXXX.XXX CORP.
By: _____________________________
Xxxxxx Xxxxx, President
RAINBOW COMMUNICATIONS, INC.
By: _____________________________
Xxxxxxx X. Xxxxxx, President
EXHIBIT D
INDEMNIFICATION
This indemnification Agreement constitutes part of the Corporate
Relations Agreement (the Agreement) dated the 14th day of April, 2000, between
Client (as defined in the Agreement) and RAINBOW.
Client acknowledges and agrees that if, in connection with the services
or matter that are the subject of or arise out of such Agreement, RAINBOW
becomes involved (whether or not as a named party) in any action, claim or legal
proceeding (including any governmental inquiry or investigation), Client agrees
to reimburse RAINBOW for its reasonable legal fees, disbursements of counsel and
other expenses (including the cost of investigation and preparation) as they are
incurred by RAINBOW. Client also agrees to indemnify and hold RAINBOW harmless
against any losses, claims, damages or liabilities, joint or several, as
incurred, to which RAINBOW may become subject in connection with the services or
xxxxxx which arise out of the Agreement' provided, however, that Client shall
not be liable under this Indemnification Agreement with respect to any loss,
claim, the foregoing indemnity in respect of any loss, claim, damage or
liability to the extent that a court having jurisdiction shall have determined
by a final judgment that such loss, claim, damage or liability is a consequence
of intentional or negligent acts committed by RAINBOW without the knowledge
and/or consent of Client. In the even that the foregoing indemnity is
unavailable by operation of law, then Client shall contribute to amounts paid or
payable by RAINBOW in respect of such losses, claims, damages, and liabilities
in the proportion that Client's interest bears to RAINBOW's interesting the
matters contemplated by the Agreement. If, however, the allocation provided by
the immediately preceding sentence is not the method of liability allocation
under applicable law, or otherwise, then Client shall contribute to such amount
paid or payable by RAINBOW in such proportion as is appropriate to reflect not
only such relative interests but also the relative fault of Client on the hone
hand, and RAINBOW on the other hand in connection with the xxxxxx as to which
such losses, claims, damages or liabilities relate and other equitable
considerations.
Promptly after RAINBOW's receipt of notice of the commencement of any
action or of any claim, RAINBOW will, if a claim in respect thereof is to be
made against Client under this Indemnity Agreement, notify Client of the
commencement thereof. In case any such action or claim is brought against GP,
Client will be entitled to participate therein and, to the extent that Client
may wish, to assume the defense thereof, with counsel satisfactory to RAINBOW.
After notice from Client to RAINBOW of Clients election to so assume the defense
thereof, Client will not be liable to RAINBOW for indemnification as provided in
the preceding paragraph for any legal fees, disbursements of counsel or other
expenses subsequently uncured by RAINBOW in connection with the defense thereof
other than reasonable costs of investigation' provided that RAINBOW shall have
the right to employ separate counsel if, in the reasonable costs of
investigation' provided that RAINBOW shall have the right to employ separate
counsel if, in the reasonable judgment of RAINBOW's counsel, it is advisable for
RAINBOW to be represented by separate counsel or if in the reasonable judgment
of RAINBOW's counsel, Client is not vigorously and actively defending against
any such claim or claims, and in either such event the reasonable legal fees and
disbursements of such separate counsel shall be paid by Client.
The foregoing agreements shall apply to any modification of the
Agreement, shall remain in full force and effect following the completion or
termination of RAINBOW's engagement under Agreement and shall be in addition to
any rights that RAINBOW may have in common law or otherwise. The agreements in
this Indemnification Agreement shall extend to and inure to the benefit of each
control with RAINBOW and to RAINBOW's and to each such other person's respective
affiliates, directors, officers, employees and agents. This Indemnification
Agreement shall be binding on any successor of Client.
Client represents that the Indemnification Agreement contained herein
is the legal, valid, binding and enforceable obligation of Client, enforceable
against Client according to its terms.
This Indemnification Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida without regard to principles
of conflicts of law, and the forum for resolution of legal and interpretative
issues shall be the Federal District courts in the State of Florida.
The parties hereto by signing this Exhibit in the space provided below
signify their agreement to the indemnification provisions contained herein.
Client: XxxxXxxxxx.xxx Corp.
By: _________________________
Xxxxxx Xxxxx, President
Rainbow Communications, Inc.
By: _________________________
Xxxxxxx X. Xxxxxx, President
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Agreement") is
made and entered into as of April 14th, 2000 by and between Gulf Atlantic
Communications, Inc., a Florida corporation (RAINBOW), and XxxxXxxxxx.xxx Corp.,
a Canadian corporation (the Client).
WHEREAS, RAINBOW concurrently with the exception of this Registration
Agreement is acquiring shares of the Client's common stock ("Common Stock")
and/or options to purchase share of Common Stock; and
Whereas, as a condition to such acquisition, the parties are willing to
enter into the agreements contained herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Definitions
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person.
"Agreement" means the Public Relations and Advertising Agreement dated
as of the date of this Registration Agreement between RAINBOW and Client.
"Client" is defined in the Preamble to this Registration Agreement.
"Common Stock" is defined in the Recitals to this Registration
Agreement.
"RAINBOW" is defined in the Preamble to this Registration Agreement.
"Holder" is defined in Section 2.1 hereof.
"Lock-Up Period" is defined in Section 2.1 hereof.
"Options" mean the Options issuable, in certain circumstances, pursuant
to the Agreement, which are exercisable for Common Stock.
"Other Holders" is defined in Section 4.3 hereof.
"Permitted Transfer" is defined in Section 2.2 hereof.
"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and government or any
department or agency thereof.
"Piggyback Notice" is defined in Section 4.1 hereof.
"Piggyback Registration" is defined in Section 4.1 hereof.
"Registrable Securities" means (i) the Common Stock issued to RAINBOW
pursuant to the Agreement, (ii) any Common Stock issued to RAINBOW pursuant to
the exercise of Options, and (iii) any securities issued or issuable with
respect to the Common Stock referred to in clauses (i) or (ii) by way of
replacement, share dividend, share split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization.
"Registration Agreement" is defined in the Preamble to this
Registration Agreement.
"Registration Expenses" is defined in Section 6.1 hereof.
"Restricted Securities" is defined in Section 2.1 hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Transfer" is defined in Section 2.1 hereof.
Section 2. Restrictions on Transfer
2.1 Lock-Up Period. Without the express prior written consent of the
Client, RAINBOW agrees that, except as set forth in Section 2.2 below, it will
not, directly or indirectly, offer, sell, contract to sell or otherwise dispose
of (or announce any offer, sale, contract of sale or other disposition of)
("Transfer") any Registrable Securities or Options (collectively, "Restricted
Securities") prior to the first anniversary following the date of this
Registration Agreement.
2.2 Permitted Transfers. The restrictions contained in this Section 2 will
not apply with respect to any of the following transactions (each, a "Permitted
Transfer"):
2.2.1 a natural person may Transfer Restricted Securities to his or her
spouse, siblings, parents or any natural or adopted children or other
descendants or to any personal trust in which such family members or such
transferee retains the entire beneficial interest; 2.2.2 RAINBOW may (A)
Transfer Restricted Securities to one or more other entities that are wholly
owned and controlled, legally and beneficially, by RAINBOW or an Affiliate, or
(B) Transfer Restricted Securities by distributing such Restricted Securities in
a liquidation, winding up or otherwise without consideration to the equity
owners of such corporation, partnership or business entity or to any other
corporation, partnership or business entity that is wholly owned by such equity
owners; or (C) Transfer Restricted Securities to a director, officer or key
employee of RAINBOW or an Affiliate; 2.2.3 a transferee acquiring Restricted
Securities in a Permitted Transfer may Transfer Restricted Securities on his or
her death or mental incapacity to such Person's estate, executor, administrator
or personal representative or to such Person's beneficiaries pursuant to a
devise or bequest or by the laws of descent and distribution; or 2.2.4 RAINBOW
or any transferee acquiring Restricted Securities in a Permitted Transfer may
Transfer Restricted Securities pursuant to an effective Registration Statement
as provided herein or pursuant to an exemption from the registration
requirements of the Securities Act.
If any Person Transfers Restricted Securities as described in
this Section 2.2, such Restricted Securities shall remain subject to this
Registration Agreement and, as a condition of the validity of such Transfer, the
transferee shall be required to execute and deliver a counterpart of this
Registration Agreement. Thereafter, such transferee shall be deemed to be a
Holder for purposes of this Registration Agreement.
2.3 Right of Subsequent Holder. Subject to the foregoing restrictions, the
Client and RAINBOW hereby agree that any subsequent holder of the Registrable
Securities shall be entitled to all beneficial hereunder as a holder of such
securities.
Section 3 Demands for Registration.
3.1 Demand Period. From the date thereof, until the date which is four
years from the date hereof (the "Demand Period"), subject to the terms
and conditions set forth herein, RAINBOW and the Permitted Transferees
will have in the aggregate three opportunities, in addition to other
rights enumerated in this Registration Agreement, to request
registration under the Securities Act of all or part of its
Registrable Securities (a "Demand Registration"). The Holders of 50%
or more of the Registrable Securities shall have the right to exercise
the registration rights under this Section 3.
3.2 Demand Procedure.
3.1.1 Subject to Sections
3.2.2 and 3.2.4 below, during the Demand Period any Holder or
combination of Holders (the "Demanding Shareholders") owning 50% or more of
the Registrable Securities may deliver to the Client a written request (a
"Demand Registration Request") that the Client register any or all of such
Demanding Shareholders' Registrable Shares. 3.1.2 Holders, in the aggregate, may
only make one Demand Registration Request in each six-month period during the
Demand Period (the "Interim Demand Periods"). The Client shall only be required
to file one registration statement (as distinguished from supplements or
pre-effective or post-effective amendments thereto) in response to each Demand
Registration Request.
3.1.3 A Demand Registration Request from Demanding Shareholders shall
(i) set forth the number of Registrable Securities intended to be sold
pursuant to the Demand Registration Request (ii) disclose whether all or any
portion of a distribution pursuant to such registration will be sought by means
of an underwriting, and (iii) identify any managing underwriter or managing
underwriters proposed for the underwritten portion, if any of such registration.
3.1.4 If during any Interim Demand Period, the Client receives a Demand
Registration Request from Demanding Shareholders for the registration of
Registrable Securities having an aggregate market value of $100,000 or greater,
as determined according to the closing price of the Common Stock on the NASDAQ
National Market, on the Bulletin Board or in the Pink Sheets on the date of such
Demand Registration Request, then the Client shall, subject to the limitations
in Sections 3.2.5 and 3.2.6 hereof, (i) use its reasonable best efforts to
prepare and file within 30 days of receipt of the Demand registration request
with the SEC a registration statement under the Securities Act with respect to
all the Registrable Securities that the Demanding Shareholders requested to be
registered in the Demand Registration Request, (ii) use its reasonable best
efforts to cause such registration statement to become effective within 75 days
of receipt of the Demand Registration Request, and (iii) if such registration
can be accomplished by means of a registration statement of Form S-3, keep such
registration statement effective until such time as the Demanding Shareholders
shall have sold or otherwise disposed of all of their Registrable Securities
included in the registration. If such registration cannot be accomplished by
means of a registration statement on Form S-3, the Client shall use its
reasonable best efforts to keep such registration statement effective for at
least 180 days.
3.1.5 It is anticipated that the registration contemplated under this
Section 3 will be accomplished by means of the filing of a Form S-3, and that
registration on such form will allow for different means of distribution,
including sales by means of an underwriting as well as sales into the open
market. If the Demanding Shareholders desire to distribute all or part of the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Client in writing in their Demand Registration Request
as described in Section 3.2.3 above. A determination of whether all or part of
the distribution will be by means of an
Underwriting shall be made by Demanding Shareholders holding a majority of
the Registrable Securities to be included in the registration. If all or part of
the distribution is to be by means of an underwriting, all subsequent decisions
concerning the underwriting which are to be made by the Demanding Shareholders
pursuant to the terms of this Registration Agreement, which shall include the
selection of the underwriter or underwriters to be engaged and the
representative, if any, of the underwriters so engaged, shall be made by the
Demanding Shareholders who hold a majority of the Registrable Securities to be
included in the underwriting, subject to approval by the Board of Directors of
the Client.
3.2.6 Upon the receipt by the Client of a Demand Registration Request in
accordance with Section 3.2.4 hereof, the Client shall, within ten days
following receipt of such Demand Registration Request, give written notice of
such request to all Holders. The Client shall include in such notice information
concerning whether all, part or none of the distribution is expected to be made
by means of an underwriting, and, if more than one means of distribution is
contemplated, may require Holders to notify the Client of the means of
distribution of their Registrable Securities to be included in the registration.
If any Holder who is not a Demanding Shareholder desires to sell any Registrable
Securities included in the registration statementby notifying the Client in
writing (a "Supplemental Demand Registration Request") within 20 days of
receiving notice of the Demand Registration Request from the Client. The right
of any Holder to include all or any portion of its Registrable Securities in an
underwriting shall be conditioned upon the Client's having received a timely
written request for such inclusion by way of a Demand Registration Request of
Supplemental Demand Registration Request (which right shall be further
conditioned to the extent provided in this Registration Agreement). All Holders
proposing to distribute their Registrable Securities through an underwriting
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
3.2.7 Notwithstanding any other provision of this Section 3, if an
underwriter advises the Client in writing that marketing factors require a
limitation on the number of shares to be underwritten, then the number of shares
of Registrable Securities that may be included in the underwritten, then the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among the Holders in proportion (as nearly as
practicable) to the respective amounts of Registrable Securities each Holder
owns (or such other proportions they shall mutually agree). Registrable
Securities excluded or withdrawn from the underwriting in accordance with this
Section 3.2.7 shall be withdrawn from the registration.
3.3 Priority on Request Registration. The Client will not include in any
Demand Registration any securities which are not Registrable Securities without
the prior written consent of the Holders of a majority of shares of Registrable
Securities included in such registration. If a Demand Registration is an
underwritten offering and the managing underwriters advise the Client in writing
that in their opinion the number of Registrable Securities and, if permitted
hereunder, other securities requested to be included in such offering exceeds
the number of securities that can be sold in an orderly manner in such offering
within a price range acceptable to the Holders of a majority of the shares of
Registrable Securities initially requesting registration, the Client will
include in such registration prior to the inclusion of any securities which are
not Registrable Securities the number of share of Registrable Securities
requestd to be included that in the opinion of such underwriters can be sold in
an orderly manner within such acceptable price range, pro rata among the
respective Holders thereof on the basis of the number of shares of Registrable
Securities owned by each such Holder.
Section 4. Piggyback Registrations
4.1 Right to Piggyback. If the Client proposes to undertake an offering of
shares of Common Stock for its account or for the account of other stockholders
and the registration form to be used for such offering may be used for the
registration of Registrable Securities (a "Piggyback Registration"), each such
time the Client will give prompt written notice to all Holders of Registrable
Securities of its intention to effect such a registration (each, a "Piggyback
Notice") and, subject to Sections 4.3 and 4.4 hereof, the Client will use its
best efforts to cause to be included in such registration all Registrable
Securities with respect to which the Client has received written requests for
inclusion therein within 20 days after the date of sending the Piggyback Notice.
4.2 Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Client, and the managing
underwriters advise the Client in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in an orderly manner within a price range acceptable to the Client,
the Client will include in such registration (a) first, the securities the
registration and any other securities requested to be included in such
registration that are held by Persons other than the Holders of Registrable
Securities pursuant to registration rights, pro rata among the holders of
Registrable Securities and the holders of such other securities requesting such
registration on the basis of the number of shares of such securities owned by
each such holder.
4.3 Priority on Secondary. If a Piggyback Registration is an underwritten
secondary registration on behalf of holders of the Client's securities other
than the Holders of Registrable Securities (the "Other Holders"), and the
managing underwriters advise the Client in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in an orderly manner in such offering within a price
range acceptable to the Other Holders requesting such registration, the Client
will include in such registration (a) first, the securities requested to be
included in such registration hereunder, pro rata among the Holders of
Registrable Securities requesting such registration on the basis of the number
of shares of such securities owned by each such Holder.
4.4 Selection of Underwriters. In the case of an underwritten Piggyback
Registration, the Client will have the right to select the investment banker(s)
and manager(s) to administer the offering.
Section 5. Registration Procedures Section. Whenever the Holders of
Registrable Securities have requested that any Registrable Securities be sold
pursuant to this Registration Agreement, the Client will use its reasonable best
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof, and pursuant
thereto the Client will as expeditiously as possible.
5.1.1 Registration Statement. Prepared and file with the SEC a
registration statement with respect to such Registrable Securities and use
its reasonable best efforts to cause such registration statement to become
effective.
5.1.2 Amendments and Supplements. Promptly prepare and file with the
SEC 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 required by the intended method
of disposition and the terms of this Registration Agreement and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller thereof set
forth in such registration statement.
5.1.3 Provision of Copies. Promptly furnish to each seller of
Registrable Securities the number of copies of such registration statement,
each amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate the
disposition of Registrable Securities owned by such seller.
5.1.4 Blue Sky Laws. Use its reasonable best efforts to register or
qualify such Registrable Securities under the securities or blue sky laws
of such jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, provided, that the Client will not be required
to (a) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but this Section 5.1.4, (b) subject itself to
taxation in any such jurisdiction or (c) consent to general service of process
in any such jurisdiction.
5.1.5 Anti-fraud Rules. Promptly notify each seller of such Registrable
Securities 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 contains an untrue statement
of a material fact or omits any material fact necessary to make the statements
therein not misleading, and in such event, at the request of any such seller,
the Client will promptly prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not misleading,
provided, that the Client will not take any action which causes the prospectus
included in such registration statement to contain an untrue statement of
material fact or omit any material fact necessary to make the statements therein
not misleading, except as permitted by Section 5.5.
5.1.6 Securities Exchange Listings. Use its reasonable best efforts to
cause all such Registrable Securities to be listed on each securities exchange
on which securities of the same class issued by the Client are then listed and
use its reasonable best efforts to qualify such Registrable Securities for
trading on each system on which securities of the same class issued by the
Client are then qualified.
5.1.7 Underwriting Agreements. Enter into such customary agreements
(including underwriting agreements in customary form) and take all such other
actions as the holders of majority of the shares of Registrable Securities being
sold or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
5.1.8 Due Diligence. Make available for inspection by any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter, all
financial and other records, pertinent corporate documents and properties of the
Client, and cause the Client's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with such registration
statement.
5.1.9 Earning Statement. Otherwise use its best efforts to comply withal
applicable rules and regulations of the SEC, and make available to its
securities holders, as soon as reasonably practicable, an earning statement
covering the period of at least twelve months beginning with the first day of
the Client's first full calendar quarter after the effective date of the
registration statement, which earning statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.
5.1.10 Deemed Underwriters or Controlling Persons. Permit any Holder of
Registrable Securities which Holder, in such Holder's reasonable judgment might
be deemed to be an underwriter or a controlling person of the Client, to
participate in the preparation of such registration or comparable statement and
to require the insertion therein of material in form and substance satisfactory
to such Holder and to the Client and furnished to the Client in writing, which
in the reasonable judgment of such Holder and its counsel should be included.
5.1.11 Management Available. In connection with underwritten offerings,
make available appropriate management personnel for participation in the
preparation and drafting of such registration or comparable statement, for due
diligence meeting and for "road show" meetings.
5.1.12 Stop Orders. Promptly notify Holders of the Registrable
Securities of the threat of issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceeding for that purpose, and make every reasonable effort to prevent the
entry of any order suspending the effectiveness of the registration statement.
In the event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any Registrable Securities
included in such registration statement for sale in any jurisdiction, the Client
will use its reasonable best efforts promptly to obtain the withdrawal of such
order.
5.1.13 Opinions. At each closing of an underwritten offering, request
opinions of counsel to the Client and updates thereof (which opinions and
updates shall be reasonably satisfactory to the underwriters of the Registrable
Securities being sold) addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders or their counsel.
5.1.14 Comfort Letter. Obtain a cold comfort letter and related bring
down letters from the Client's independent public accountants addressed to
the selling Holders of the Registrable Securities in customary form and covering
such matters of the type customarily covered by cold comfort letters as the
Holders of a majority of the Registrable Securities being sold reasonably
request.
5.2 Further Information. The Client may require each Holder of Registrable
Securities to furnish to the Client in writing such information regarding the
proposed distribution by such Holder of such Registrable Securities as the
Client may from time to time reasonably request.
5.3 Notice to Suspend Offers and Sales. Each Investor severally agrees
that, upon receipt of any notice from the Client of the happening of any event
of the kind describing in Sections 5.1.5 or 5.1.12 hereof, such Investor will
forthwith discontinue disposition of shares of Common Stock pursuant to a
registration hereunder until receipt of the copies of an appropriate supplement
or amendment to the prospectus under Section 5.1.5 or until the withdrawal of
such order under Section 5.1.12.
5.4 Reference to Holders. If any such registration or comparable statement
refers to any Holder by name or otherwise as the holder of any securities of the
Client and if, in the Holder's reasonable judgment, such Holder is or might be
deemed to be a controlling person of the Client, such Holder shall have the
right to require (a) the insertion therein of language in form and substance
satisfactory to such Holder and the Client and presented to the Client in
writing, to the effect that the holdeing by such Holder of such securities is
not to be construed as a recommendation by such Holder of the investment quality
of the Client's securities covered thereby and that such holding does not imply
that such Holder will assist in meeting any future financial requirements of the
Client, or (b) in the event that such reference to such Holder by name or
otherwise is not required by the Securities Act or any similar Federal statute
then in force, the deletion of the reference to such Holder; provided that with
respect to this clause (b) such Holder shall furnish to the Client an opinion of
counsel to such effect, which opinion and counsel shall be reasonably
satisfactory to the Client.
5.5 Client's Ability to Postpone. Notwithstanding anything to the contrary
contained herein, the Client shall have the right twice in any twelve month
period to postpone the filing of any registration statement under Sections 3 or
4 hereof or any amendment or supplement thereto for a reasonable period of time
(all such postponements not exceeding 90 days in the aggregate in any twelve
month period) if the Client furnishes the Holders of Registrable Securities a
certificate signed by the Chairman of the Board of Directors (or the executive
committee thereof) has determined that effecting the registration at such time
would materially and adversely affect a material financing, acquisition,
disposition of assets or stock, merger or other comparable transaction, or would
require the Client to make public disclosure of information the public
disclosure of which would have a material adverse effect upon the Client.
Section 6. Registration Expenses Section.
6.1 Expenses Borne by Client. Except as specifically otherwise provided in
section 6.2 hereof, the Client will be responsible for payment of all expenses
incident to any registration hereunder, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, road show
expenses, advertising expenses and fees and disbursements of counsel for the
Client and all independent certified public accountants and other Persons
retained by the Client in connection with such registration (all such expenses
borne by the Client being herein called the "Registration Expenses").
6.2 Expenses Borne by Selling Securityholders. The selling securityholders
will be responsible for payment of their own legal fees (if they retain legal
cousel separate from that of the Client), underwriting fees and brokerage
discounts, commissions and other sales expenses incident to any registration
hereunder, with any such expenses which are common to the selling
securityholders divided among such securityholders (including the Client and
holders of the Client's securities other than Registrable Securities, to the
extent that securities are being registered on behalf of such Persons) pro rata
on the basis of the number of shares being registered on behalf of each such
securityholder, or as such securityholders may otherwise agree.
Section 7. Indemnification Section.
7.1 Indemnification by Client. The Client agrees to indemnify, to the
fullest extent permitted by law, each Holder of Registrable Securities and each
Person who controls (within the meaning of the Securities Act) such Holder
against all losses, claims, damages, liabilities and expenses in connection with
defending against any such losses, claims, damages and liabilities or in
connection with any investigation or inquiry, in each case caused by or based on
any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statement therein
not misleading or arise out of any violation by the Client of any rules or
regulation promulgated under the Securities Act applicable to the Client and
relating to action or inaction required of the Client in connection with such
registration, except insofar as the same are (i) contained in any information
furnished in writing to the Client by such Holder expressly for use therein,
(ii) caused by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto, or (iii)
caused by such Holder's failure to discontinue disposition of shares after
receiving notice from the Client pursuant to Section 5.3 hereof. In connection
with an underwritten offering, the Client will indemnify such underwriters,
their officers and directors and each Person who controls (within the meaning of
the Securities Act) such underwriters at least to the same extent as provided
above with respect to the indemnification of the Holders of Registrable
Securities.
7.2 Indemnification by Holders. In connection with any registration
statement in which a Holder of Registrable Securities is participating, each
such Holder will furnish to the Client in writing such information as the Client
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify the Client,
its directors and officers and each Person who controls (within the meaning of
the Securities Act) the Client against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in nay information so furnished in
writing by such Holder expressly for use in connection with such registration:
provided that the obligation to indemnify will be individual to each Holder and
will be limited to the net amount of proceeds received by such Holder from the
sale of Registrable Securities pursuant to such registration statement. In
connection with an underwritten offering, each such Holder will indemnify such
underwriters, their officers and directors and each Person who controls (within
the meaning of the Securities Act) such underwriters at least to the same extent
as provided above with respect to the indemnification of the Client.
7.3 Assumption of Defense by Indemnifying Party. Any Person entitled to
indemnification hereunder will (a) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (b) unless in such indemnification party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
7.4 Blinding Effect. The indemnification provided for under this
Registration Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Per4son of such indemnified party and will survive the
transfer of securities. The Client also agrees to make such provisions, as are
reasonably requested by any indemnified party, for contribution to such party in
the event the Client's indemnification is unavailable for any reason. Each
Holder of Registrable Securities also agrees to make such provisions, as are
reasonably requested by any indemnified party, for contribution to such party in
the event such Holder's indemnification is unavailable for any reason.
Section 8. Participation in Underwritten Registrations. No Person may
participate in any registation hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
Section 9. Miscellaneous.
9.1 No Inconsistent Agreements. The Client will not hereafter enter into
any agreement with respect to its securities which violates the rights granted
to the Holders of Registrable Securities in this Registration Agreement.
9.2 Remedies. Any Person having rights under any provision of this
Registration Agreement will be entitled to enforce such rights specifically to
recover damages caused by reason of any breach of any provision of this
Registration Agreement and to exercise all other rights granted by law. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Registration Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Registration Agreement.
9.3 Term. Except for the provisions of Section 7 or as specifically
otherwise provided herein, the provisions of this Registration Agreement shall
apply until such time as all Registrable Securities have ceased to be
Registrable Securities hereunder but in no event later than three years from the
date of this Registration Agreement.
9.4 Amendments and Waivers. Except as otherwise specifically provided
herein, this Registration Agreement may be amended or waived only upon the prior
written consent of the Client and of the Holders of a majority of the then
outstanding shares of Registrable Securities.
9.5 Successors and Assigns.. Subject to Section 2 hereof, all covenants and
agreements in this Registration Agreement by or on behalf of any of the parties
hereto will bind and inure to the benefit of (i) the respective successors and
assigns of the parties hereto whether so expressed or not and (ii) the persons
referred to in clause (iv) of the definition of Registrable Securities. In
addition, whether or not any express assignment has been made but subject in any
case to Section 2 hereof, the provisions o f this Registration Agreement which
are for the benefit of RAINBOW or Holders of Registrable Securities are also for
the benefit of, and enforceable by, any subsequent holder of such securities so
long as such securities continue to be restricted securities, as that term is
defined in Securities Act Rule 144.
9.6 Severability. Whenever possible, each provision of this Registration
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Registration Agreement is held to
be prohibitive by or invalid under applicable law, such provision will be
ineffective only to the extend of such prohibition or invalidity, without
invalidating the remainder of this Registration Agreement.
9.7 Counterparts. This Registration Agreement may be executed
simultaneously in multiple counterparts, any one of which need not contain the
signatures of more that one party, but all such counterparts taken together will
constitute one and the same Registration Agreement.
9.8 Descriptive Headings. The descriptive headings of this Registration
Agreement are inserted for convenience only and do not constitute a part of this
Registration Agreement. 9.9 Governing Law. All questions concerning the
construction, validity and interpretation of this Registration Agreement will be
governed by and construed in accordance with the domestic laws of the State of
Florida, without giving effect to any choice of law or conflict of law
provisions or rule (whether the State of Florida or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Florida.
9.10 Entire Agreement. This Registration Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
with respect of the subject matter contained herein. This Registration Agreement
supersedes all prior agreements and understanding between the parties with
respect to such subject matter.
9.11 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Registration Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by facsimile transmission,
sent to the recipient by reputable express courier service (charges prepaid) or
three business days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to each Holder at the address
indicated on the records of the Client and to the Client at the address set
forth in the Agreement or to such other address or to the attention of such
other person as the recipient party has specified by prior written notice to the
sending party.
9.12 Confidentiality. The Client shall hold in strict confidence and shall
not disclose information with respect to sales of Common Stock by any Holder,
including the fact of such sales, the amount of such sales and the timing of
such sales, except as such information shall become public without violation of
this Section 9.12, as may be required by applicable law, rules or regulations or
with the express written consent of such Investor.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Agreement as of the date first above written.
CLIENT XXXXXXXXXX.XXX CORP.
By: ____________________________
Xxxxxx Xxxxx, President
RAINBOW COMMUNICATIONS, INC.
By: _____________________________
Xxxxxxx X. Xxxxxx, President
