REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March 31,
1999, by and among Nettaxi, Inc., a Nevada corporation, with its headquarters
located at 0000 X. Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (the "Company"),
and each of the undersigned (together with their respective affiliates and any
permitted assignee or transferee of all of their respective rights hereunder,
the "INITIAL INVESTORS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
the Company has agreed, upon the terms and subject to the conditions contained
therein, to issue and sell to the Initial Investors (i) convertible debentures
(the "DEBENTURES") in the aggregate principal amount of Five Million Dollars
($5,000,000) which are convertible into shares of the Company's common stock,
par value $0.001 per share (the "COMMON STOCK"), upon the terms and subject to
the limitations and conditions set forth in the Debentures; and (ii) warrants
(the "WARRANTS") to acquire 150,000 shares of Common Stock upon the terms and
conditions and subject to the limitations and conditions set forth in the
Warrants; and
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Initial Investors hereby agree as follows:
1. DEFINITIONS.
------------
a. As used in this Agreement, the following terms shall have the
following
meanings:
(i) "INVESTORS" means the Initial Investors and any transferee or
assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "REGISTER," "REGISTERED," AND "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement
or Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means (A) the Conversion Shares
issued or issuable upon conversion of or otherwise pursuant to the
Debentures (including, without -limitation, shares of Common Stock
issued or issuable upon exercise of the Investment Options (as defined
in the Debentures), Damage Shares (as defined in the Debentures) and
shares of Common Stock issued or issuable in respect of interest on or
in redemption of the Debentures in accordance with the terms thereof);
(B) the Warrant Shares issued or issuable upon exercise of or
otherwise pursuant to the Warrants; and (C) any shares of capital
stock issued or issuable as a dividend on or in exchange for or
otherwise with respect to any of the foregoing (including, without
limitation, any shares issued or issuable pursuant to Section 2(c)
hereof).
(iv) "REGISTRATION STATEMENT(S)" means a registration
statement(s) of the Company under the 0000 Xxx.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
-------------
a. MANDATORY REGISTRATION. The Company shall use its best efforts to
-----------------------
prepare and file with the SEC a Registration Statement on Form S- I
covering the resale of the Registrable Securities as soon as practicable
after the date hereof, but in any event not later than the date (the
"FILING DATE") -which is thirty (30) days after the date of the Closing
under the Securities Purchase Agreement (the "Closing Date"). Such
Registration Statement, to the extent allowable under the 1933 Act and the
rules and regulations promulgated thereunder (including Rule 416), shall
state that such Registration Statement also covers such indeterminate
number Of additional shares of Common Stock as may become issuable upon
conversion of or otherwise pursuant to the Debentures'(including, but not
limited to, shares issued or issuable upon exercise of the Investment
Options) and upon exercise of or otherwise pursuant to the Warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transactions. The number of shares of Common Stock initially included in
such Registration Statement shall be no less than two (2) times the sum of
(i) the aggregate number of Conversion Shares that are then issuable upon
conversion of or otherwise pursuant to the Debentures (including upon
exercise of the
- 2 -
Investment Options thereunder) (in each case based on the lesser of the Variable
Conversion Price and the Fixed Conversion Price (each as defined in the
Debentures) then in effect), and (ii) the number of Warrant Shares issuable upon
exercise of or otherwise pursuant to the Warrants, in each case without regard
to any limitation on the Investor's ability to convert the Debentures or
exercise the Warrants. The Company acknowledges that the number of shares
initially included in the Registration Statement represents a good faith
estimate of the maximum number of shares issuable upon conversion of or
otherwise pursuant to the Debentures (including upon exercise of the Investment
Options thereunder) and upon exercise of the Warrants. The Registrable
Securities included in the Registration Statement shall be allocated to the
Investors as set forth in Section 11 (k) hereof. The Registration Statement (and
each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval of) the
Initial Investors and its counsel prior to its filing or other submission.
B. UNDERWRITTEN OFFERING. If any offering pursuant to ~
-----------------------
Registration Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of a
majority-in-interest of the Initial Investors, shall have the right to select
one legal counsel and an investment banker or bankers and manager or managers to
administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company. In the event that any
Investors elect not to participate in such underwritten offering, the
Registration Statement covering all of the Registrable Securities shall contain
appropriate plans of distribution reasonably satisfactory to the Investors
participating in such underwritten offering and the Investors electing not to
participate in such underwritten offering (including, without limitation, the
ability of nonparticipating Investors to sell from time to time and at any time
during the effectiveness of such Registration Statement).
C. PAYMENTS BY THE COMPANY. The Company shall use its best efforts
-------------------------
to obtain effectiveness of the Registration Statement as soon as practicable,
but in any event not later than the 105' day after the Closing Date (the
"REGISTRATION DEADLINE"). If (i) the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) hereof is not filed with the SEC by the Filing Date or declared effective
by the SEC on or before the Registration Deadline, or (ii) after the
Registration Statement has been declared effective by the SEC, sales of all of
the Registrable Securities cannot be made pursuant to the Registration Statement
during the Registration Period (as defined in Section 3(a)), or (iii) the Common
Stock is not listed or included for quotation on the Nasdaq National Market (the
"NNM"), the Nasdaq SmallCap Market (the "NASDAQ SMALLCAP"), the New York Stock
Exchange (the "NYSE") OR the American Stock Exchange (the "AMEX") after being so
listed or included for quotation on one of such markets, or (iv) the Common
Stock ceases to be traded on the Over-the-Counter Bulletin Board (the "OTC BB")
prior to being listed or included for quotation on one of the aforementioned
markets, then the Company will make payments to the Investors in such amounts
and at such times as shall be determined pursuant to this Section 2(c) as
partial relief for the damages to the Investors by reason of any such delay in
or reduction of their ability to sell the Registrable Securities (which remedy
shall not be exclusive of any other remedies available at law or in equity). The
Company shall pay to each Investor an amount
- 3 -
equal to the product of (i) the aggregate principal amount of the Debentures
held by such Investor (including, without limitation, Debentures that have been
converted into Conversion Shares then held by such Investor) (the "AGGREGATE
PRINCIPAL AMOUNT"), multiplied by (ii) the Applicable Percentage (as defined
below), multiplied by (iii) the sum of (A) the number of months (prorated for
partial months) after the Filing Date and prior to the date the Registration
Statement required to be filed pursuant to Section 2(a) is filed with the SEC,
plus (B) the number of months (prorated for partial months) after the
Registration Deadline and prior to the date the Registration Statement filed
pursuant to Section 2(a) is declared effective by the SEC (provided, however,
that there shall be excluded from such period any delays which are solely
attributable to (i) the Investors' failure to review any Registration Statement
(or any amendment or supplement thereto, or any request for acceleration of
effectiveness thereof) and provide comments to the Company within three (3)
business days of receipt thereof pursuant to Section -2(a) hereof, (ii) the
Investors' failure to timely provide information to the Company in -accordance
with Section 4(a) hereof, or (iii) changes (other than corrections of Company
mistakes with respect to information previously provided by the Investors)
required by the Investors in the Registration Statement with respect to
information relating to the Investors, including, without limitation, changes to
the plan of distribution), plus (C) the number of months (prorated for partial
months) that sales of all of the Registrable Securities cannot be made pursuant
to the Registration Statement after the Registration Statement has been declared
effective and during the Registration Period (including, without limitation,
when sales cannot be made by reason of the Company's failure to properly
supplement or amend the prospectus included therein in accordance with the terms
of this Agreement (including Section 3(b) hereof or otherwise), but excluding
any days during an Allowed Delay (as defined in Section 3(f)); and (D) the
number of months (prorated for partial months) that the Common Stock is not
listed or included for quotation on the OTC BB, the NNM, Nasdaq Small Cap, NYSE
or AMEX or that trading thereon is halted after the Registration Statement has
been declared effective. The term "APPLICABLE PERCENTAGE" means two hundredths
(.02). For example, if the Registration Statement is not effective by the
Registration Deadline, the Company would pay $20,000 per month for each
$1,000,000 of Aggregate Principal Amount until the Registration Statement
becomes effective. Such amounts shall be paid in cash or, at each Investor's
option, may be added to the principal amount of the Debentures and thereafter be
convertible into Common Stock at the "CONVERSION PRICE" (as defined in the
Debentures) in accordance with the terms of the Debentures. Any shares of Common
Stock issued upon conversion of such amounts shall be Registrable Securities. If
the Investor desires to convert the amounts due hereunder into Registrable
Securities, it shall so notify the Company in writing within two (2) business
days of the date on which such amounts are first payable in cash and such
amounts shall be so convertible (pursuant to the mechanics set forth in the
Debentures), beginning on the last day upon which the cash amount would
otherwise be due in accordance with the following sentence. Payments of cash
pursuant hereto shall be made within five (5) days after the end of each period
that gives rise to such obligation, provided that, if any such period extends
for more than thirty (30) days, interim payments shall be made for each such
thirty (30) day period.
D. PIGGY-BACK REGISTRATIONS. Subject to the last sentence of this
--------------------------
Section 2(d), if at any time prior to the expiration of the Registration Period
(as hereinafter defined) the
- 4 -
Company shall determine to file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the 1933 Act
of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor who is entitled to registration rights under this Section
2(d) written notice of such determination and, if within fifteen (15) days after
the effective date of such notice, such Investor shall so request in writing,
the Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered, except that if,
in connection with any underwritten public offering for the account of the
Company the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock ' which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit. Any
exclusion of Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities in proportion to the number of
Registrable Securities sought to be included by such Investors; provided,
---------
howeverthat the Company shall not exclude any Registrable Securities unless the
-----------
Company has first excluded all outstanding securities, the holders of which are
not entitled to inclusion of such securities in such Registration Statement or
are not entitled to pro rata inclusion with the Registrable Securities; and
provided,further howeverthat, after giving effect to the immediately preceding
-------- ------- -----------
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement other than holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
rights. No right to registration of Registrable Securities under this Section
2(d) shall be construed to limit any registration required under Section 2(a)
hereof. If an offering in connection with which an Investor is entitled to
registration under this Section 2(d) is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering. Notwithstanding anything to the contrary set forth herein, the
registration rights of the Investors pursuant to this Section 2(d) shall only be
available in the event the Company fails to timely file, obtain effectiveness or
maintain effectiveness of any Registration Statement to be filed pursuant to
Section 2(a) in accordance with the terms of this Agreement.
E. ELIGIBILITY FOR FORM S-1. CONVERSION TO FORM S-3. The Company
----------------------------------------------------
represents and warrants that it meets the requirements for the use of Form S-1
for registration of the sale by the Initial Investors and any other Investors of
the Registrable Securities. Upon filing the Registration Statement required
pursuant to Section 2(a), the Company agrees to timely file a registration
statement on Form 9-A so as to obtain effectiveness thereof on or prior to the
declaration of effectiveness of the Registration Statement to be filed pursuant
hereto and at all
- 5 -
times following such effectiveness to file all reports required to be filed by
the Company with the SEC pursuant to Section 13 of the Securities Exchange Act
of 1934, as amended (the "1934 ACT"). The Company further agrees to file all
reports required to be filed by the Company with the SEC in a timely manner so
as to become eligible, and thereafter to maintain its eligibility, for the use
of Form S-3. Not later than ten (10) days after the Company first meets the
registration eligibility and transaction requirements for the use of Form S-3
(or any successor form) for registration of the offer and sale by the Initial
Investors and any other investor of Registrable Securities, the Company shall
file a Registration Statement on Form S-3 (or such successor form) with respect
to the Registrable Securities covered by the Registration Statement on Form S- I
filed pursuant to Section 2(a) (and include in such Registration Statement on
Form S-3 the information required by Rule 429 under the 0000 Xxx) or convert the
Registration Statement on Form S-1 filed pursuant to Section 2(a) to a Form S-3
pursuant to Rule 429 under the 1933 Act and use its best efforts to have such
Registration Statement (or such amendment) declared -effective as soon as
practicable thereafter.
3. OBLIGATIONS OF THE COMPANY.
------------------------------
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare promptly and file with the SEC the
Registration Statement required by Section 2(a) as soon as practicable
after the Closing Date (but in no event later than the Filing Date), and
thereafter cause such Registration Statement relating to Registrable
Securities to become effective as soon as possible after such filing (but
in no event later than the Registration Deadline), and keep the
Registration Statement (and, following the effectiveness of the
Registration Statement on Form S-3 referred to in Section 2(e), such later
Registration Statement) effective pursuant to Rule 415 at all times until
such date as is the earlier of (i) the date on which all of the Registrable
Securities have been sold and (H) the date on which the Registrable
Securities (in the opinion of counsel to the Initial Investors) may be
immediately sold to the public without registration or restriction
(including without limitation as to volume by each holder thereof) under
the 1933 Act (the "REGISTRATION PERIOD"), which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any 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.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statements and the prospectus used in connection with the Registration
Statements as may be necessary to keep the Registration Statements
effective at all times during the Registration Period, and, during such
period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statements until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statements. In the
- 6 -
event the number of shares available under a Registration Statement filed
pursuant to this Agreement is, on any trading day (such trading day being
the "REGISTRATION TRIGGER DATE"), INSUFFICIENT to cover 135% of the
Registrable Securities issued or issuable upon conversion of or otherwise
pursuant to the Debentures (including upon exercise of the Investment
Options thereunder) (in each case based on the lesser of the Variable
Conversion Price and the Fixed Conversion Price (each as defined in the
Debentures) then in effect) and upon exercise of or otherwise pursuant to
the Warrants, in each case without giving effect to any limitations on the
Investor's ability to convert the Debentures or exercise the Warrants, the
Company shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both,
so as to cover 200% of the Registrable Securities so issued or issuable
(without giving effective to any limitations on conversion or exercise
contained in the Debentures or Warrants, as applicable) as of the
Registration Trigger Date, in each case, as soon -as practicable, but in
any event within 15 days after the Registration Trigger Date (based on-the
market price of the Common Stock and other relevant factors on which the
Company reasonably elects to rely). The Company shall use its best efforts
to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing there of, but in any
event within 90 days after the Registration Trigger Date. The provisions of
Section 2(c) above shall be applicable with respect to the Company's
obligations under this Section 3(b).
c. The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and one legal counsel
for all of the Investors (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company, one
copy of each Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or supplement
thereto, and, in the case of the Registration Statement referred to in
Section 2(a), each letter written by or on behalf of the Company to the SEC
or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains information for which
the Company has sought confidential treatment), and (ii) such number of
copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such
Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Investor. The Company will
immediately notify each Investor by facsimile of the effectiveness of each
Registration Statement or any post-effective amendment. The Company will
promptly respond to any and all comments received from the SEC, with a view
towards causing each Registration Statement or any amendment thereto to be
declared effective by the SEC as soon as practicable and shall file an
acceleration request as soon as practicable following the resolution or
clearance of all SEC comments or, if applicable, following notification by
the SEC that any such Registration Statement or any amendment thereto will
not be subject to review,
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statements
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Investors who hold a majority in interest of the
Registrable Securities being offered reasonably request, (ii) prepare and
file in
- 7 -
those jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
-------- -------
connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (b) subject itself to general taxation
in any such jurisdiction, (c) file a general consent to service of process
in any such jurisdiction, (d) provide any undertakings that cause the
Company undue expense or burden, or (e) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders.
e. In the event Investors who hold a majority-in- interest of the
Registrable Securities being offered in the offering (with the approval of
a majority-in-interest of the Initial Investors) select underwriters for
the offering, the Company shall enter into and perform its obligations
under an underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution obligations,
with the underwriters of such offering.
f. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in
any Registration Statement, as then in effect, includes an untrue statement
of a material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and use its best efforts promptly to prepare a supplement or amendment to
any Registration Statement to correct such untrue statement or omission,
and deliver such number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request; provided that, for not
more than ten (10) consecutive trading days (or a total of not more than
thirty (3 0) trading days in any twelve (12) month period), the Company may
delay the disclosure of material non-public information concerning the
Company (as well as prospectus or Registration Statement updating) the
disclosure of which at the time is not, in the good faith opinion of the
Company, in the best interests of the Company (an "ALLOWED DELAY");
provided, further, that the Company shall promptly (i) notify the Investors
in writing of the existence of (but in no event, without the prior written
consent of an Investor, shall the Company disclose to such investor any of
the facts or circumstances regarding) material non-public information
giving rise to an Allowed Delay and (ii) advise the Investors in writing to
cease all sales under such Registration Statement until the end of the
Allowed Delay. Upon expiration of the Allowed Delay, the Company shall
again be bound by the first sentence of this Section 3(f) with respect to
the information giving rise thereto.
g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of any Registration
Statement, and, if such an order is issued, to obtain the withdrawal of
such order at the earliest possible moment and to notify each
- 8 -
Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance of
such order and the resolution thereof.
h. The Company shall permit a single firm of counsel designated by the
Initial Investors to review such Registration Statement and all amendments
and supplements thereto (as well as all requests for acceleration or
effectiveness thereof) a reasonable period of time prior to their filing
with the SEC, and not file any document in a form to which such counsel
reasonably objects and will not request acceleration of such Registration
Statement without prior notice to such counsel. The sections of such
Registration Statement covering information with respect to the Investors,
the Investor's beneficial ownership of securities of the Company or the
Investors intended method of, disposition of Registrable Securities shall
conform to the information provided to the Company by each of the
Investors.
i. The Company shall make generally available to its security holders
as soon as practicable, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 193 3 Act) covering a
twelve-month period beginning not later. than the first day of the
Company's fiscal quarter next following the effective date of the
Registration Statement.
j. At the request of any Investor, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if any,
for sale in connection with any Registration Statement or, if such
securities are not being sold by an underwriter, on the date of
effectiveness thereof (i) an opinion, dated as of such date, from counsel
representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the underwriters, if any, and the Investors and (ii)
a letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and the Investors.
k. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to
a Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Initial Investors, (iv) one
firm of attorneys and one firm of accountants or other agents retained by
all other Investors, and (v) one firm of attorneys retained by all such
underwriters (collectively, the "INSPECTORS") all pertinent financial and
other records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably
request for purposes of such due diligence; provided however that each
-------- -------
Inspector shall hold in confidence and shall not make any disclosure
(except to an Investor) of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (b) the
- 9 -
release of such Records is ordered pursuant to a subpoena or other order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in
such Records to any Inspector until and unless such Inspector shall have
entered into confidentiality agreements (in form and substance satisfactory
to the Company) with the Company with respect thereto, substantially in the
form of this Section 3(k). Each Investor agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or
in any other confidentiality agreement between the Company and any
Investor) shall be deemed to limit the Investor's ability to sell
Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
1. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such inf6rmation is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor prior to making such disclosure, and allow the Investor, at its
expense, to under-take appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
m. The Company shall (i) cause all the Registrable Securities covered
by the Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) to
the extent the securities of the same class or series are not then listed
on a national securities exchange, secure the designation and quotation of
all the Registrable Securities covered by the Registration Statement on the
NNM or the Nasdaq SmallCap or, if not eligible for the NNM or the Nasdaq
SmallCap, on the OTC BB and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities.
n. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
o. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if
any, to facilitate the
- 10 -
timely preparation and delivery of certificates (not bearing any
restrictive legends) representing Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the
transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
an instruction in the form attached hereto as EXHIBIT I and an opinion of
such counsel in the form attached hereto as EXHIBIT 2.
p. At the request of the holders of a majority-in-interest of the
Registrable Securities, the Company shall prepare and file with the SEC
such amendments (including post- effective amendments) and supplements to a
Registration Statement and any prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.
q. The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection
therewith (including without limitation the 1933 Act and the 1934 Act and
the rules and regulations promulgated by the SEC).
r. The Company shall not, and shall not agree to, allow the holders of
any securities of the Company to include any of their securities in any
Registration Statement under Section 2(a) hereof or any amendment or
supplement thereto under Section 3(b) hereof without the consent of the
holders of a majority-in-interest of the Registrable Securities. In
addition, the Company shall not offer any securities for its own account or
the account of others in any Registration Statement under Section 2(a)
hereof or any amendment or supplement thereto under Section 3(b) hereof
without the consent of the holders of a majority-in-interest of the
Registrable Securities.
s. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
--------------------------------
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of
- 11 -
a particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect the registration of such Registrable
Securities after shall execute such documents in connection with such
registration as the Company may reasonably request. At least three (3)
business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of the
Registration Statements hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statements.
c. In the event Investors holding a majority-in-interest of the
Registrable Securities being registered (with the approval of the Initial
Investors) determine to engage the services of an underwriter, each
Investor agrees to enter into and perform such Investor's obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with
the managing underwriter of such offering and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from such Registration Statement.
d. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3
(f) or 3 (g), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g)
and, if so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Investor's
possession, of the prospectus covering such Registrable Securities current
at the time of receipt of such notice.
e. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting
arrangements in usual and customary form entered into by the Company, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements, and (iii) agrees to pay its pro
rata share of all underwriting discounts and commissions and any expenses
in excess of those payable by the Company pursuant to Section 5 below.
- 12 -
5. EXPENSES OF REGISTRATION.
---------------------------
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualification fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one
counsel selected by the Initial Investors pursuant to Sections 2(b) and 3(h)
hereof shall be borne by the Company, provided that such fees and expenses shall
be counted against the maximum amount of fees and expenses to be reimbursed
pursuant to Section 4(f) of the Security Purchase Agreement. In addition, the
Company shall pay all of the costs and expenses (including legal fees) incurred
in connection with the enforcement of the Investors' rights hereunder.
6. INDEMNIFICATION.
----------------
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable
Securities, (ii) the directors, officers, partners, employees, agents and
each person who controls any Investor within the meaning of the 1933 Act or
the 1934 Act, if any, (iii) any underwriter (as defined in the 0000 Xxx)
for the Investors, and (iv) the directors, officers, partners, employees
and each person who controls any such underwriter within the meaning of the
1933 Act or the 1934 Act, if any (each, an "INDEMNIFIED PERSON"), against
any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any
regulatory or self- regulatory organization, whether commenced or
threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any
untrue statement or alleged untrue statement of a material fact in a
Registration Statement or the omission or alleged omission to state therein
a material fact required to be stated or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading;
or (iii) any violation or alleged violation by the Company of the 1933 Act,
the 1934 Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities (the matters in the foregoing clauses
(i) through (iii) being, collectively, "VIOLATIONS"). Subject to the
restrictions set forth in Section 6(c) with respect to the number of legal
counsel, the Company shall reimburse the Indemnified Person, promptly as
such expenses are incurred and are due and payable, for any reasonable
legal fees or other reasonable expenses incurred by them in
- 13 -
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out
of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by any
Indemnified Person or underwriter for such Indemnified Person expressly for
use in connection with the preparation of such Registration Statement or
any such amendment thereof or supplement thereto; (ii) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not
be unreasonably withheld; and (iii) with respect to any preliminary
prospectus, shall not inure to the benefit of any Indemnified Person if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then
amended or supplemented, such corrected prospectus was timely made
available by the Company pursuant to Section 3(c) hereof, and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor
is ' participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, each person, if any,
who controls the Company within the meaning of the 1933 Act or the 1934
Act, any underwriter and any other stockholder selling securities pursuant
to the Registration Statement or any of its directors or officers or any
person who controls such stockholder or underwriter within the meaning of
the 1933 Act or the 1934 Act (collectively and together with an Indemnified
Person, an "INDEMNIFIED PARTY"), against any Claim to which any of them may
become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation by such Investor,
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 to the Company by such Investor expressly for use in connection
with such Registration Statement; and subject to Section 6(c) such Investor
will reimburse any legal or other expenses (promptly as such expenses are
incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided however,that the
-------- -------
indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not
be unreasonably withheld; provided, further however that the Investor shall
-------- ------- -------
be liable under this Agreement (including this Section 6(b) and Section 7)
for only that amount as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained
in this Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if
- 14 -
the untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement 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 control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; providedhowever, that an Indemnified
Person or Indemnified Party shall have the right to retain its own counsel
with the fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as
applicable, and such legal counsel shall be selected by Investors holding a
majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of a
majority-in-interest of the Initial Investors), if the Investors are
entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The failure to
deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under
this Section 6, except to the extent that the indemnifying party is
actually prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. CONTRIBUTION.
-------------
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided howeverthat (i) no
-----------------
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the 193 3 Act) shall
be entitled to contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation, and (iii) contribution
(together with any indemnification or other obligations under this Agreement) by
- 15 -
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
8. REPORTS UNDER THE 1934 ACT.
-------------------------------
With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the investors to sell securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:
a. make and keep public 'information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's obligations under
Section 4(c) of the Securities Purchase Agreement) and the filing of such
reports and other documents is required for the applicable provisions of
Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
-------------------------------------
The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of Registrable Securities if.
(i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein, (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement, and (vi) such transferee shall be an "ACCREDITED INVESTOR" as that
term defined in Rule 501 of Regulation D promulgated under the 0000 Xxx.
- 16 -
10. AMENDMENT OF REGISTRATION RIGHTS.
------------------------------------
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, each of the Initial
Investors (to the extent such Initial Investor still owns Registrable
Securities) and Investors who hold a majority interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
--------------
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
b. Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by -courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five
days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case
addressed to a party. The addresses for such communications shall be:
If to the Company:
Nettaxi, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chairman and Chief Executive Officer
Facsimile: (000) 000-0000
With copy to:
Silicon Valley Law Group
00 Xxxx Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
Facsimile: (000) 000-0000
If to an Investor: to the ad-dress set forth immediately below such Investor's
name on the signature pages to the Securities Purchase Agreement.
- 17 -
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to agreements made and to
be performed in the State of Delaware (without regard to principles of
conflict of laws). Both parties irrevocably consent to the jurisdiction of
the United States federal courts and the state courts located in Delaware
with respect to any suit or proceeding based on or arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such
courts. Both parties irrevocably waive the defense of an inconvenient forum
to the maintenance, of such suit or proceeding. Both parties further agree
that service of process upon a party mailed by first class mail shall be
deemed in every respect effective service of process upon the party in any
such suit or proceeding. Nothing herein shall affect either party's right
to serve process in any other manner permitted by law. Both parties agree
that a final non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
e. This Agreement, the Securities Purchase Agreement, the Debentures
and the Warrants (including all schedules and exhibits thereto) constitute
the entire agreement among the parties hereto with respect to the subject
matter hereof and thereof. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the Securities Purchase Agreement, the Debentures
and the Warrants supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as. the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
- 18 -
j. Except as otherwise provided herein, all consents and other
determinations to be made by the Investors pursuant to this Agreement shall
be made by Investors holding a majority of the Registrable Securities
(determined as if all of the Debentures and Warrants then outstanding have
been 6onverted into or exercised for Registrable Securities) then held by
all Investors, as the case may be,
k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable
Securities included thereon shall be allocated pro rata among the Investors
based on the number of Registrable Securities held by each Investor at the
time of such establishment or increase, as the case may be. In the event an
Investor shall sell or otherwise transfer any of such holder's Registrable
Securities, each transferee shall be allocated a pro rata portion of the
number of Registrable Securities included on a Registration Statement for
such transferor. Any shares of Common Stock included on a Registration
Statement and which remain allocated to any person or entity which does not
hold any Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of shares of Registrable Securities
then held by such Investors. For the avoidance of doubt, the number of
Registrable Securities held by an Investor shall be determined as if all
Debentures and Warrants then outstanding and held by an Investor were
converted into or exercised for Registrable Securities.
1. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to each Investor by vitiating the
intent and purpose of the transactions contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law for breach of its
obligations hereunder will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of any of the provisions
hereunder, that each Investor shall be entitled, in addition to all other
available remedies in law or in equity, to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof.
m. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party.
n. In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule
of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other
provision hereof
- 19 -
IN WITNESS WHEREOF, the Company and the undersigned Initial Investors have
caused this Agreement to be duly executed as of the date first above written.
NETTAXI, INC.
By:
---------------------------
Xxxxxx Xxxxxxxx, Xx.
Chairman and Chief Executive Officer
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P., Investment Manager
By: RGC General Partner Corp., as General Partner ,
By:
---------------------------
Xxxxx Xxxxxxxxxx
Managing Director
- 20 -
