REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is
made as of the 2nd day of April, 2008, by and among Purple Beverage Company,
Inc., a Nevada corporation (the “Company”),
and
the individuals and entities who have executed this Agreement and are identified
on the signature page hereto (each, an “Investor,”
and
collectively, the “Investors”).
Recitals
WHEREAS,
in connection with a further equity investment of Common Stock of the Company
(the “March
Shares”)
by the
Investors pursuant to an Addendum to Subscription Agreement, of even date
herewith (the “Addendum”),
by
and between the Company and the Investors, the Investors have requested, and
the
Company has agreed to grant, certain registration rights in respect of certain
shares of the Company’s Common Stock, as set forth hereinbelow;
NOW,
THEREFORE, the parties agree as follows:
Agreement
1. Registration
Rights.
The
Company covenants and agrees as follows:
1.1 Definitions.
For
purposes of this Section 1:
(a) The
term
“1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
(b) The
term
“Common
Stock”
means
the common stock, par value $0.001, of the Company.
(c) The
term
“1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(d) The
term
“Filing
Deadline”
has
the
meaning set forth in Section 1.3(a) herein.
(e) The
term
“Effectiveness
Deadline”
means
June 30, 2008 (which date is 90 days following the date of this
Agreement).
(f) The
terms
“register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing a registration statement
or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement or
document.
(g) The
term
“Registrable
Securities”
means
(i) the March Shares (as subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations after the date hereof
(collectively, a “Recapitalization”))
and
(ii) any Common Stock issued as a dividend or other distribution with respect
to, or in exchange for, or in replacement of the shares referenced in (i) above,
excluding in all cases, however, any Registrable Securities that have been
sold
by a person publicly, pursuant to the provisions of Rule 144 without volume
or
further transfer restrictions, or pursuant to a registration statement under
the
1933 Act covering such Registrable Securities that has been declared effective
by the SEC.
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(h) The
term
“SEC”
means
the Securities and Exchange Commission or any successor thereto.
1.2 Reserved.
1.3 Mandatory
Registration; Liquidated Damages.
(a) The
Company shall file with the SEC a registration statement on Form SB-2 (or,
if
Form SB-2 is not then available to the Company, on such form of registration
statement as is then available to effect a registration for resale of the
Registrable Securities), registering all of the Registrable Securities for
resale not later than May 2, 2008 (which date is 30 days following the date
of
this Agreement; the “Filing
Deadline”).
If
Form SB-2 is not available at that time, then the Company will file a
registration statement on such form as is then available to effect a
registration of all of the Registrable Securities.
(b) If
a
registration statement covering the Registrable Securities is not filed with
the
SEC on or prior to the Filing Deadline, the Company will make pro rata payments
to each Investor, as liquidated damages and not as a penalty, in an amount
equal
to 1.5% of the aggregate amount paid by such Investor for the Registrable
Securities for each 30-day period or pro rata for any portion thereof following
the Filing Deadline for which no registration statement was filed with respect
to the Registrable Securities. For
clarity, none
of
the Registrable Securities shall be subject to any of the time-based contractual
limitations contained in Section 4(o) of the Subscription Agreement, dated
December 12, 2007, by and between the Company and each of the Investors, among
other parties thereto, (the “Original
Subscription Agreement”).
If
such
registration statement is not declared effective by the SEC on or prior to
the
Effectiveness Deadline, the Company will make pro rata payments to each of
the
Investors, as liquidated damages and not as a penalty, in an amount equal to
1.5% of the aggregate amount paid by such Investor for the Registrable
Securities for each
30-day period or pro rata for any portion thereof following the Effectiveness
Deadline.
Such
payments shall be in partial compensation to the Investors, and shall not
constitute such Investors’ exclusive remedy for such events. Such payments shall
be made to each such Investor in cash. Liquidated
damages for failure to file a registration statement on or prior to the Filing
Deadline shall be paid within ten days after the Effectiveness Deadline (unless
such registration statement shall have been declared effective by the SEC on
or
prior to the Effectiveness Deadline, in which event all such
liquidated damages payments for which the Company would otherwise have been
liable for its failure to file such registration statement on or prior to the
Filing Deadline shall be deemed automatically waived).
Liquidated damages for failure to have such registration statement declared
effective on or prior to the Effectiveness Deadline shall be paid within ten
days after each
30-day period or shorter period for which such
liquidated damages are payable, except for the first period, for which payment
shall be due 30 days after the Effectiveness Deadline. Liquidated damages shall
not continue to accrue or be payable from and after December 12, 2008 (twelve
months following the date of the Original Subscription Agreement). Notwithstanding
anything to the contrary herein, the Company shall be liable to make only one
such series of pro rata payments for any period wherein it is liable both for
a
failure to file a registration statement on or prior to the Filing Deadline
and
for a failure to have such registration statement declared effective on or
prior
to the Effectiveness Deadline.
1.4 Reserved.
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1.5 Obligations
of the Company. Whenever
required under this Section 1 to effect the registration of any Registrable
Securities, the Company, at its expense, shall, as expeditiously as reasonably
possible:
(a) Prepare
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 and, subject to the proviso in this Section
1.5(a), keep such registration statement effective until December 12, 2008;
provided,
however,
that
applicable rules under the 1933 Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
that (i) includes any prospectus required by Section 10(a)(3) of the 1933 Act,
or (ii) reflects facts or events representing a material or fundamental change
in the information set forth in the registration statement, the incorporation
by
reference of information required to be included in (i) and (ii) above to be
contained in periodic reports filed pursuant to Section 13 or 15(d) of the
1934
Act in the registration statement.
(b) Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus provided by Company in connection with such
registration statement as may be necessary to comply with the provisions of
the
1933 Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish
to the Investors such numbers of copies of a prospectus in conformity with
the
requirements of the 1933 Act, and such other documents as such Investors may
reasonably request from time to time in order to facilitate the disposition
of
the Registrable Securities owned by them.
(d) Use
its
best efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions
as
shall be reasonably requested by the Investors; provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify
to
do business or to file a general consent to service of process in any such
states or jurisdictions, unless the Company is already required to qualify
to do
business or subject to service in such jurisdiction and except as may be
required by the 1933 Act.
(e) Reserved.
(f) Promptly
notify
each Investor of Registrable Securities covered by such registration statement
at any time when a prospectus relating thereto is required to be delivered
under
the 1933 Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to
be
stated therein or necessary to make the statements therein not misleading in
the
light of the circumstances then existing, and, at
the
request of an Investor, prepare and furnish to such Investor a reasonable number
of supplements to, or amendment of, such prospectus as may be necessary so
that,
as thereafter delivered to the purchasers of such share, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in light of the circumstances then
existing.
(g) Use
its
reasonable best efforts to cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
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(h) Provide
a
transfer agent and registrar for all Registrable Securities registered pursuant
hereunder and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration statement.
(i) Reserved.
(j) Make
available to each Investor participating in such registration, upon the request
of such Investor a copy of all documents filed with and all correspondence
from
or to the SEC in connection with any such offering other than non-substantive
cover letters and the like.
(k) Otherwise
use its reasonable best efforts to comply with all applicable rules and
regulations of the SEC, and timely make available to its security Investors
an
earnings statement covering the period of at least 12 months, but not more
than
18 months, beginning with the first month after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of
Section 11(a) of the 1933 Act.
1.6 Furnish
Information.
It shall
be a condition precedent to the obligations of the Company to take any action
with respect to the Registrable Securities of any selling Investor that such
Investor shall furnish to the Company such information regarding itself, its
affiliates, the Registrable Securities held by it, and the intended method
of
disposition of such securities as shall be required to effect the registration
of such Investor’s Registrable Securities, provided such information is timely
requested by the Company.
1.7 Expenses
of Company Registration. The
Company shall bear and pay all expenses incurred by it in connection with any
registration, filing, or qualification of Registrable Securities with respect
to
the registrations pursuant to Sections 1.3 and 1.4 for the Investors and
compliance with the terms hereof, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto and the fees and disbursements of counsel
for
the Company, but excluding underwriting discounts and commissions relating
to
the Registrable Securities.
1.8 Reserved.
1.9 Delay
of Registration. The
Investors shall not have any right to obtain or seek an injunction restraining
or otherwise delaying any such registration as the result of any controversy
that might arise with respect to the interpretation or implementation of this
Section 1.
1.10 Indemnification.
In
respect of the Registrable Securities to be included in a registration statement
under this Section 1:
(a) To
the
extent permitted by law, the Company will indemnify and hold harmless the
Investors, each officer and director of the Investors, any underwriter (as
defined in the 0000 Xxx) of the Investors and each person, if any, who controls
the Investors or underwriter within the meaning of the 1933 Act or the 1934
Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the 1933 Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a “Violation”):
(i)
any untrue statement or alleged untrue statement of a material fact contained
in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (ii)
the
omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; or (iii) any violation
or alleged violation by the Company of the 1933 Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the 1933 Act, the
1934 Act or any state securities law; and the Company will pay to the Investors,
underwriter or controlling person any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided,
however,
that
the indemnity agreement contained in this Section 1.10(a) shall not apply to
(1)
an Investor if he is either an officer or director of the Company at the time
of
the statement, omission, or violation (a “Management
Investor”)
unless
such Management Investor has sold Registrable Securities included in the
registration statement, (2) amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), or (3) any
such loss, claim, damage, liability, or action to the extent that it arises
out
of or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by an Investor (including each officer and director of such
Investor), underwriter or controlling person.
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(b) To
the
extent permitted by law, the selling Investors will indemnify and hold harmless
the Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within
the
meaning of the 1933 Act, any underwriter and any controlling person of any
such
underwriter, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
1933 Act, the 1934 Act, or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of
or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Investors, or by an officer or director
of
the Investors expressly for use in connection with such registration; and the
Investors will pay any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this Section 1.10(b) in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided,
however,
that
the indemnity agreement contained in this Section 1.10(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Investor, which
consent shall not be unreasonably withheld; provided,
further,
that in
no event shall any indemnity under this Section 1.10(b) exceed the gross
proceeds from the offering received by the Investors, net of underwriters’
commissions and discounts.
(c) Promptly
after obtaining actual knowledge of any third party claim or action as to which
it may seek indemnification under this Section 1.10, an indemnified party will,
if a claim in respect thereof is to be made against any indemnifying party
under
this Section 1.10, deliver to the indemnifying party a written notice thereof
and the indemnifying party shall have the right to participate in, and, to
the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided,
however,
that an
indemnified party (together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the right to retain
one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, if, and to the extent that, such
failure is prejudicial to such indemnifying party’s ability to defend
such
action, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
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(d) If
the
indemnification provided for in this Section 1.10 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to
any loss, liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as
a
result of such loss, liability, claim, damage, or expense (including, without
limitation, legal and other expenses incurred by such indemnified party in
investigating or defending any such action or claim) in such proportion as
is
appropriate to reflect the relative fault of the indemnifying party on the
one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense
as
well as any other relevant equitable considerations. The relative fault of
the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties’
relative intent, knowledge, access to information, and opportunity to correct
or
prevent such statement or omission. Notwithstanding the provisions of this
Section 1.10, the Investors shall not be required to contribute any amount
or
make any other payments under this Agreement which in the aggregate exceed
the
net proceeds received by the Investors from the offering covered by the
applicable registration statement.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
(f) The
obligations of the Company and Investors under this Section 1.10 shall survive
the completion of any offering of the Registrable Securities in a registration
statement under this Section 1, and otherwise.
2. Miscellaneous.
2.1 Successors
and Assigns. Except
as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any shares of the Registrable
Securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this
Agreement.
2.2 Governing
Law. This
Agreement shall be governed by and construed under the laws of the State of
New
York as applied to agreements among New York residents entered into and to
be
performed entirely within New York.
2.3 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
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2.4 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
2.5 Notices. Any
notice required or permitted under this Agreement shall be given in writing
and
shall be deemed effectively given upon personal delivery to the party to be
notified or by telex or confirmed facsimile, or one delivery day after deposit
with a recognized overnight express delivery service or courier (for FedEx
Express Overnight or equivalent delivery to and from an address within the
United States of America) or three delivery days after deposit with a recognized
overnight express delivery service or courier (for FedEx Express International
Priority or equivalent delivery to and from an address outside the United States
of America), and addressed to the party to be notified at the address indicated
for such party below, or at such other address as such party may designate
by
ten days’ advance written notice to the other party:
(a) If
to the
Company:
Attention:
Chief Executive Officer
000
X.
Xxx Xxxx Xxxx #000
Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Fax
number:
000-000-0000
with
a
copy to:
(which
shall not constitute notice)
Xxxxx
Xxxx LLP
Attention:
Xxxxxxx X. Xxxx
0000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000-0000
Fax
number: 000-000-0000
(b) If
to an
Investor:
See
signature page to this Agreement
with
a
copy to:
(which
shall not constitute notice)
Grushko
& Xxxxxxx, P.C.
Attention:
Xxxxxx X. Xxxxxxx
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
number:
000-000-0000
or
to
such other person or address as any party shall specify by notice in writing
to
each of the other parties. All such notices, requests, demands, waivers, and
communications shall be deemed to have been received on the date of delivery
if
the date of transmission is electronically endorsed automatically on the media
or evidenced by courier service documentation. If notice is mailed or
transmitted in a manner in which date of delivery cannot be ascertained from
the
media used or courier service records, notice shall be deemed given on the
fifth
business day after the mailing or other
transmission or delivery thereof. A notice of a change of address shall be
effective only upon receipt.
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2.6 Expenses.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs, and necessary disbursements in addition to any other relief to
which such party may be entitled.
2.7 Amendments
and Waivers.
Any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investors of the Registrable Securities then outstanding. Any amendment
or waiver effected in accordance with this Section 2.7 shall be binding upon
each holder of any Registrable Securities then outstanding and the Company;
provided that, without the consent of the Company and all Investors of
Registrable Securities then outstanding, no amendment to this Agreement may
be
made that (i) modifies this Section 2.7, or (ii) would affect the Investors
of
the Registrable Securities in a disproportionate manner (other than any
disproportionate results that are due to a difference in the relative stock
ownership in the Company).
2.8 Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
2.9 Aggregation
of Stock.
All
shares of Registrable Securities held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.
2.10 Entire
Agreement.
This
Agreement constitutes the full and entire understanding and agreement between
the parties regarding the matters set forth herein. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit
of,
and be binding upon the successors, assigns, heirs, executors, and
administrators of the parties hereto.
2.11 Further
Assurances.
At any
time, and from time to time, each party will execute such additional instruments
and take such action as may be reasonably requested by any other party to carry
out the intent and purposes of this Agreement.
2.12 Arbitration.
Any
dispute, controversy, or claim arising out of or relating to this Agreement
or
the Registrable Securities will be resolved by binding arbitration before a
retired judge at JAMS in New York City, New York. Any interim or final
arbitration award by be enforced by any court of competent
jurisdiction.
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OF PAGE INTENTIONALLY LEFT BLANK.]
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IN
WITNESS WHEREOF, the
parties have executed this Registration Rights Agreement as of the date first
above written.
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By:
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Name:
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Xxxxxxxx
Xxxxxxxxxx
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Title:
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President
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INVESTORS:
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[name]
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[street]
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[city,
state, postal code, country]
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[facsimile
number]
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[name]
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[street]
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[city,
state, postal code, country]
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[facsimile
number]
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