REGISTRATION RIGHTS TERMINATION AGREEMENT
Exhibit
10.5
REGISTRATION
RIGHTS TERMINATION AGREEMENT (this “Agreement”), dated as of December 11, 2007,
by and among SpiralFrog, Inc. (f/k/a/ Mohen, Inc.), a Delaware corporation
(the
“Company”), and the
undersigned buyers (each, a “Buyer”, and collectively,
the
“Buyers”).
WHEREAS:
A. In
connection with an Amended and Restated Securities Purchase Agreement by and
among the Company and the Buyers dated as of August 7, 2007, including the
Addendum thereto dated as of December 11, 2007 (the “Purchase Agreement”), the
Company, upon the terms and subject to the conditions set forth in the Purchase
Agreement, has issued and sold to each Buyer, common stock purchase warrants
of
the Company (the “Warrants”) exercisable to
purchase shares of common stock of the Company, $0.001 par value per share
(the
“Common Stock”) (as
exercised the “Warrants
Shares”) and convertible notes of the Company (the “Notes”) which are,
among other
things, be convertible into shares of the Company’s Common Stock (as converted,
the “Exchange Shares”)
in accordance with the terms of the Notes.
B. To
induce
the Buyers to execute and deliver the Purchase Agreement, the Company and the
Buyers entered into a Registration Rights Agreement dated as of April 19, 2007
which was amended and restated as of August 7, 2007 (the “Registration Rights
Agreement”).
C. The
Company and the Buyers wish to terminate their respective rights under the
Registration Rights Agreement and have this Agreement supersede and replace
the
Registration Rights Agreement and all subsequent oral and written agreements
between the Company and the Buyers through the date hereof involving the subject
matter of the Registration Rights Agreement.
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 Buyers hereby agree
as follows:
1. TERMINATION
OF REGISTRATION
RIGHTS AGREEMENT
The
Company and the Buyers agree that
this Agreement supersedes and replaces the Registration Rights Agreement which
is hereby terminated and of no further force or effect. The Company
and the Buyers further agree that this Agreement supersedes and replaces all
registration rights granted to Buyers under the Purchase Agreement, Warrants
and
Notes. The Company and the Buyers also agree that the rights granted to the
Buyers hereunder, with the exception of the rights contained in Section 2
hereof, extend to the Buyers of the last $2,000,000 of Notes and
1,090,910 Warrants sold under the Purchase Agreement.
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2. PAYMENT
OF
DAMAGES
The
Company failed to meet the filing deadline requirement under the Registration
Rights Agreement. In connection therewith, the Company shall issue
Senior Secured Promissory Notes (the “New Notes”) in the aggregate principal
amount of $575,666.67 to the Buyers, on a pro-rata basis. The New
Notes shall have a maturity date of April 19, 2008 and shall be identical,
in
all material respects, to the Notes.
3. DEMAND
AND PIGGYBACK
REGISTRATION RIGHTS.
Until
the Notes, including the New
Notes, are paid in full or until the underlying Exchange Shares and Warrant
Shares are saleable, in full, under Rule 144 (the “Effective Period”), the
Buyers shall have a one time demand registration right and unlimited piggyback
registration rights with respect to the Warrant Shares and Exchange Shares,
including the Exchange Shares underlying the New Notes. Until the
Registrable Securities (as such term is defined in Section 4(a) below) are
registered for resale or are otherwise freely tradeable, the Company should
not
file any registration statements without the prior written consent of the
holders of a majority of the principal amount of the Notes, including the New
Notes, which consent shall not be unreasonably withheld. In
connection with the demand right, upon written notice from persons holding
a
majority of the principal amount of the Notes, including the New Notes, the
Company shall, within 60 days thereafter (the “Filing Deadline”) prepare and
file a registration statement on Form SB-2, or such other form as shall be
available, registering the Warrant Shares and Exchange Shares and shall use
its
best efforts to have such registration statement declared effective as soon
as
practicable thereafter. If (i) a registration statement covering all
of the Registrable Securities (as such term is defined in Section 4(2) below)
required to be covered thereby and required to be filed by the Company pursuant
to the demand right granted under this Agreement is (A) not filed with the
SEC
on or before the Filing Deadline (a “Filing Failure”) or (B) not
declared effective by the SEC on or before the nintieth (90th)
day after the
date such registration statement is filed with the SEC (the
“Effectiveness Deadline”) (an “Effectiveness
Failure”; provided, however, that for thirty (30) days following the
Effectiveness Deadline there will be no Effectiveness Failure if the SEC is
reviewing the Registration Statement and the Company is using its best efforts
to have the Registration Statement declared effective; and there will be no
Effectiveness Failure for an indefinite period of time if the primary reason
for
the failure to meet the Filing Deadline is a Rule 415 comment from the SEC)
or
(ii) on any day after the effective date, sales of all of the Registrable
Securities required to be included on such registration statement cannot be
made
(other than during an Allowable Grace Period (as defined in Section 4(r))
pursuant to such registration statement (including, without limitation, because
of a failure to keep such registration statement effective, to disclose such
information as is necessary for sales to be made pursuant to such registration
statement or to register a sufficient number of shares of Common Stock) (a
“Maintenance Failure”)
then, as partial relief for the damages to any holder by reason of any such
delay in or reduction of its ability to sell the underlying shares of common
stock (which remedy shall not be exclusive of any other remedies available
at
law or in equity), the Company shall pay to each holder of Registrable
Securities relating to such registration statement an amount in cash equal
to
(i) one and one-half percent (1.5%) of the aggregate Purchase Price (as such
term is defined in the Purchase Agreement) of such Buyer's Notes relating to
the
Registrable Securities included in such Registration Statement three (3)
business days following the thirtieth (30th)
day after the
occurrence of a Filing Failure and (ii) two percent (2%) of the aggregate
Purchase Price (as such term is defined in the Purchase Agreement) of such
Buyer’s Notes relating to the Registrable Securities included in such
Registration Statement on each of the following dates: (A) three (3) business
days following the 60th day after an uncured Filing Failure has occurred, (which
covers the default period that commences on the 31st
day after the
occurrence of an uncured Filing Failure and concludes on the 60th
day after the
occurrence of an uncured Filing Failure) and on every thirtieth (30th) day
thereafter until such Filing Failure is cured; and (B) three (3) business days
following the thirtieth (30th)
day after the
occurrence of an Effectiveness Failure has occurred and on every thirtieth
(30th) day thereafter until such Effectiveness Failure is cured (provided that
the Company shall pay a pro-rata amount of any Registration Delay Payment for
any partial period covered in clause (A) or (B)). The payments to which a holder
shall be entitled pursuant to this Section 3(f) are referred to herein as “Registration Delay
Payments”. In the event the Company fails to make Registration
Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one and one-half percent (1.5%) per month (prorated
for
partial months) until paid in full. Notwithstanding anything herein to the
contrary, in no event shall the Registration Delay Payments exceed ten percent
(10%) of the aggregate Purchase Price for all Buyers (the "Registration Delay Payments
Cap"). Any amount in excess of the Registration Delay Payments Cap (the
"Excess Registration Delay
Payments") shall cause the Exchange Price of the Notes to be lowered by
an amount equal to the quotient of the amount of such Buyers Excess Registration
Delay Payments divided by the then outstanding amount of such Notes.
Notwithstanding anything to the contrary contained herein no Registration Delay
Payments shall be payable with respect to any Registrable Securities excluded
from a Registration Statement by election of a Buyer.
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The
piggyback registration rights will not apply to registration statements relating
solely to employee benefit plans or business combinations. Except as
otherwise provided herein, during the Effective Period, the Company shall not
file a registration statement without first offering to the Buyers the right
to
participate on a piggyback basis. For purposes of the majority
notices discussed in the preceding paragraph, a Buyer holding Exchange Shares
and/or Warrant Shares will be treated as still owning the principal amount
of
the Notes against which such Exchange Shares and Warrant Shares were
issued.
In
connection with the demand and piggyback registration rights provided for
herein, the Buyers acknowledge and agree that their participation may be cut
back due to underwriter or Rule 415 requirements. In such event, to
the extent practicable, the Buyer’s shall be treated in the same manner as all
other participants.
4. RELATED
OBLIGATIONS.
At
such time as the Company is
obligated to file a Registration Statement with the SEC pursuant to this
Agreement, the Company will use its commercially reasonable best efforts to
effect the registration of the Buyers’ Registrable Securities (as such term is
defined in Section 4(a) below) in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the following
obligations:
a. The
Company shall prepare and file with the SEC a registration statement with
respect to the Buyers’ Registrable Securities and use its best efforts to cause
such registration statement relating to the Buyers’ Registrable Securities to
become effective as soon as practicable after such
filing. Registrable Securities means (i) the Exchange Shares issued
or issuable upon exchange of the Notes, (ii) the Warrant Shares issued or
issuable upon exercise of the Warrants, and (iii) any capital stock of the
Company issued or issuable with respect to the Exchange Shares, the Warrant
Shares, the Notes or the Warrants as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise, without
regard to any limitations on exchanges of the Notes or exercise of the Warrants.
The Company shall keep each registration statement effective pursuant to
Rule 415 at all times until the earlier of (i) the date as of which
the Buyers may sell all of the Buyers’ Registrable Securities covered by such
registration statement without restriction pursuant to Rule 144(k) (or any
successor thereto) promulgated under the 1933 Act or (ii) the date on which
the Buyers shall have sold all of the Buyers’ Registrable Securities covered by
such registration statement (the “Registration Period”). The Company shall
ensure that each 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 (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading. The term “best efforts” shall mean, among other things, that the
Company shall submit to the SEC, within two (2) business days after the later
of
the date that (i) the Company learns that no review of a particular
registration statement will be made by the staff of the SEC or that the staff
has no further comments on a particular registration statement, as the case
may
be, and (ii) the approval of Buyer’s legal counsel has been obtained (which
approval shall be immediately sought), a request for acceleration of
effectiveness of such registration statement to a time and date not later than
48 hours after the submission of such request. Buyers shall have the
right to select one legal counsel (the “Legal Counsel”) to review and oversee,
as counsel for the Buyers, any registration pursuant to this Agreement, which
shall be Moomjian, Waite, Wactlar & Xxxxxxx, LLP or such other counsel as
designated by the holders of a majority of the Registrable
Securities.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a registration statement and
the
prospectus used in connection with such registration statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be necessary to keep such registration statement effective at all times (subject
to any Allowable Grace Period, as such term is defined in Section 4(r) hereof)
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 such registration statement until such
time
as all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller
or
sellers thereof as set forth in such registration statement.
c. The
Company shall (A) permit Legal Counsel to review and comment upon
(i) a registration statement at least five (5) business days prior to
its filing with the SEC and (ii) all amendments and supplements to all
registration statements (except for Annual Reports on Form 10-K or Form 10-KSB,
and Quarterly Reports on Form 10-Q or Form 10-QSB and any similar or successor
reports) within a reasonable number of days prior to their filing with the
SEC,
and (B) not file any registration statement or amendment or supplement
thereto in a form to which Legal Counsel reasonably objects. The Company shall
not submit a request for acceleration of the effectiveness of a registration
statement or any amendment or supplement thereto without the prior approval
of
Legal Counsel, which consent shall not be unreasonably withheld. The Company
shall furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the staff of the SEC to the Company or its representatives
relating to any registration statement, (ii) promptly after the same is
prepared and filed with the SEC, one copy of any registration statement and
any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by a Buyer, and all
exhibits and (iii) if the Company shall not have filed a final prospectus
in accordance with Rule 424 per Section 2(a), upon the effectiveness of any
registration statement, one copy of the prospectus included in such registration
statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with Legal Counsel in performing the Company’s obligations
pursuant to this Section 4.
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d. The
Company shall furnish to each Buyer whose Registrable Securities are included
in
any registration statement, without charge, (i) if the Company shall not
have filed a final prospectus in accordance with Rule 424 per
Section 2(a), upon the effectiveness of any registration statement, copies
of the prospectus included in such registration statement and all amendments
and
supplements thereto (in such number as such Buyer may reasonably request) and
(ii) such other documents, including copies of any preliminary or final
prospectus, as such Buyer may reasonably request from time to time in order
to
facilitate the disposition of the Registrable Securities owned by such
Buyer.
e. The
Company shall use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Buyers
of
the Registrable Securities covered by a registration statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in 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 (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 4(e), (y) subject itself to general taxation in
any such jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify Legal Counsel and
each Buyer who holds Registrable Securities of the receipt by the Company of
any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice
of
the initiation or threatening of any proceeding for such
purpose.
f. The
Company shall notify Legal Counsel and each Buyer in writing of the happening
of
any event, as promptly as practicable after becoming aware of such event, as
a
result of which the prospectus included in a 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, in the light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and, subject to Section 4(r), promptly prepare a
supplement or amendment to such registration statement to correct such untrue
statement or omission. The Company shall also promptly notify Legal
Counsel and each Buyer in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a registration
statement or any post-effective amendment has become effective (notification
of
such effectiveness shall be delivered to Legal Counsel and each Buyer by
facsimile or e-mail on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
registration statement or related prospectus or related information, and
(iii) of the Company’s reasonable determination that a post-effective
amendment to a registration statement would be appropriate.
g. The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a registration statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and
to
notify Legal Counsel and each Buyer who holds Registrable Securities being
sold
of the issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
h. At
the
reasonable request of any Buyer with respect to an underwritten offering
pursuant to a registration statement, the Company shall furnish, on the date
of
the effectiveness of the registration statement and thereafter from time to
time
on such dates as the managing underwriter may reasonably request (i) 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,
and (ii) an opinion, dated as of such date, of counsel representing the
Company for purposes of such registration statement, in form, scope and
substance as is customarily given in an underwritten public
offering.
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j. The
Company shall hold in confidence and not make any disclosure of information
concerning a Buyer 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 information 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 final,
non-appealable 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 Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning a Buyer sought in or by a court or governmental
body
of competent jurisdiction or through other means, give prompt written notice
to
such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
k. The
Company shall use its best efforts either to (i) cause all of the
Registrable Securities covered by a registration statement to be listed or
quoted on each securities exchange or quotation service on which securities
of
the same class or series issued by the Company are then listed or quoted (which
shall include the OTC Bulletin Board), if any, if the listing or quotation
of
such Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure designation and quotation of all of the Registrable
Securities covered by a registration statement on the OTC Bulletin Board and,
without limiting the generality of the foregoing, to use its commercially
reasonable best efforts to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc. (“NASD”) as such with respect
to
the Company’s common stock. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this
Section 4(k).
l. The
Company shall cooperate with the Buyers who hold the Buyer’s Registrable
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates representing the 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 Buyers may
reasonably request and registered in such names as the Buyer may
request.
m. If
requested by a Buyer, the Company shall within ten (10) business days of
receipt of notice from such Buyer (i) incorporate in a prospectus
supplement or post-effective amendment such information as a Buyer reasonably
requests to be included therein relating to the sale and distribution of
Registrable Securities, including, without limitation, information with respect
to the number of Registrable Securities being offered or sold, the purchase
price being paid therefor and any other terms of the offering of the Buyer
Registrable Securities to be sold in such offering; (ii) make all required
filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by a Buyer holding any
Registrable Securities.
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n. The
Company shall reasonably cooperate with the Buyers as may be necessary to
consummate the disposition of such Buyer’s Registrable Securities.
o. [Intentionally
left blank.]
p. The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
q. Within
two (2) business days after a registration statement which covers Buyer’s
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Buyer’s Registrable Securities (with copies to the Buyer
whose Registrable Securities are included in such registration statement)
confirmation that such registration statement has been declared effective by
the
SEC.
s. To
the
extent not inconsistent with applicable law, in connection with a public
offering of securities of the Company, upon the reasonable request of the
Company or, in the case of an underwritten public offering of the Company's
securities, the managing underwriters, each Buyer who beneficially owns (as
defined in Rule 13d-3 adopted by the SEC under the 0000 Xxx) at least 5% of
the
outstanding capital stock of the Company will not effect any sale or
distribution (other than those included in the registration statement being
filed with respect to such public offering) of, or any short sale of, or any
grant of option to purchase, or any hedging or similar transaction with respect
to, any securities of the Company, or any securities, options or rights
convertible into or exchangeable or exercisable for such securities during
the
14 days prior to and the 90-day period beginning on the effective date of such
public offering, unless the Company, or in the case of an underwritten public
offering, the managing underwriters otherwise agree to a shorter period of
time. At the request of the Company or the managing underwriters,
each such Buyer shall execute a customary "lock-up" agreement consistent with
the provisions of this Section 4(s); provided, however,
that no
Buyer shall be required to enter into such "lock-up" agreement unless and until
all of the Company's executive officers and directors execute substantially
similar "lock-up" agreements and the Company uses commercially reasonable
efforts to cause each holder of more than 5% of its outstanding capital stock
to
execute substantially similar "lock-up" agreements. Neither the
Company nor the managing underwriter shall terminate, materially amend or waive
the enforcement of any material provision under a "lock-up" agreement unless
each "lock-up" agreement with a Buyer is also amended or waived in a similar
manner or terminated, as the case may be. Notwithstanding anything
contained in this Agreement or the Purchase Agreement to the contrary, the
Company may impose stop-transfer instructions to enforce the restrictions
imposed by this Section 4(s).
5. OBLIGATIONS
OF THE
BUYERS.
a. At
least
ten (10) business days prior to the first anticipated filing date of a
registration statement, the Company shall notify each Buyer in writing of the
information the Company requires from each such Buyer if such Buyer elects
to
have any of such Buyer’s Registrable Securities included in such registration
statement. 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 a particular Buyer that such Buyer 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 and maintain the effectiveness
of the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably
request.
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b. Each
Buyer, by such Buyer’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 any registration statement hereunder, unless
such Buyer has
notified the Company in writing of such Buyer’s election to exclude all of such
Buyer’s Registrable Securities from such registration statement.
d. Each
Buyer covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to or an exemption therefrom it
in
connection with sales of Registrable Securities pursuant to the registration
statement.
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6.
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INDEMNIFICATION.
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In
the event any Registrable Securities
are included in a registration statement under this Agreement:
a. To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Buyer, the directors, officers, members, partners,
employees, agents and representatives of, and each Person, if any, who controls
any Buyer within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against
any losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint
or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is
or
may be a party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement of a material fact in a
registration statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which
Registrable Securities are offered, or the omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any 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 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, (iii) any 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 pursuant to a registration statement or
(iv) any violation of this Agreement (the matters in the foregoing clauses
(i) through (iv) being, collectively, “Violations”). Subject to
Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in 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 by an Indemnified Person
arising out of or based upon a Violation which occurs in conformity with
information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, and
(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 or delayed. 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 assignment of the
Registrable Securities by the Buyers.
b. In
connection with any registration statement in which a Buyer is participating,
each such Buyer agrees to severally and not jointly indemnify, hold harmless
and
defend, to the same extent and in the same manner as is set forth in
Section 6(a), the Company, its directors, officers employees, agents and
representatives and each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against
any Claim for Indemnified Damages to which any of them may become subject,
under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim for Indemnified
Damages arises out of or is 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 to the Company by such Buyer
expressly for use in connection with such registration statement; and, subject
to Section 6(c), such Buyer will reimburse any reasonable legal or other
expenses reasonably incurred by Indemnified Party in connection with
investigating or defending any such Claim; provided, however,
that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior
written consent of such Buyer, which consent shall not be unreasonably withheld
or delayed; provided, further,
however,
that each
Buyer shall be liable under this Section 6(b) for only that amount of a Claim
or
Indemnified Damages as does not exceed the net proceeds to such Buyer 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 assignment of the Registrable Securities
by the Buyer. 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 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.
7
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this
Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, 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; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its
own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party 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. In the case of
an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Buyers holding at least a majority in interest
of the Registrable Securities included in the registration statement to which
the Claim relates. The Indemnified Party or Indemnified Person shall cooperate
reasonably with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for
any
settlement of any action, claim or proceeding effected without its prior written
consent, provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of
a
release from all liability in respect to such Claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter
for
which indemnification has been made. 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 prejudiced in its ability to defend such
action.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
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, however, that: (i) no person involved in the sale of
Registrable Securities which person is guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) in connection with such
sale shall be entitled to contribution from any Person involved in such sale
of
Registrable Securities who was not guilty of fraudulent misrepresentation;
and
(ii) contribution by 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 pursuant to such Registration
Statement.
|
8.
|
REPORTS
UNDER THE 1934
ACT.
|
8
With
a view to making available to the
Buyers 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 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 Buyer so long as such Buyer owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, 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
Buyer 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 Buyers to any transferee of all or any
portion of such Buyer’s Registrable Securities if (i) the Buyer 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) immediately 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; and (v) such transfer
shall have been made in accordance with the applicable requirements of the
Purchase Agreement.
9
10. EXPENSES
OF
REGISTRATION.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
and
fees and disbursements of counsel for the Company related to registrations
shall
be paid by the Company.
11. GENERAL.
a. 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.
b. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
c. This
Agreement and the instruments referenced herein and therein 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 and the instruments referenced herein supersede all prior agreements
and understandings among the parties hereto with respect to the subject matter
hereof.
d. This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
e. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
f. This
Agreement may be executed in identical 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.
g. 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 any 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.
h. 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.
10
i. Except
as
otherwise provided herein, the obligations of each Buyer hereunder are several
and not joint with the obligations of any other Buyer, and no provision of
this
Agreement is intended to confer any obligations on any Buyer vis-à-vis any other
Buyer. Nothing contained herein, and no action taken by any Buyer pursuant
hereto, shall be deemed to constitute the Buyers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Buyers are in any way acting in concert or as a group
with
respect to such obligations or the transactions contemplated
herein.
[
SIGNATURE PAGE FOLLOWS
]
11
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Termination Agreement to be duly
executed as of the date first written above.
COMPANY:
/s/
Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
Corporate Secretary
BUYERS:
|
AGAPE
WORLD, INC.
|
|||
| /s/ Xxxxx X. Xxxxx | |||
|
Xxxxx
X. Xxxxx
|
By:
|
||
|
Name:
|
|||
|
Title:
|
|||
| /s/ Xxxx Xxxx | |||
|
Xxxx
Xxxx
|
|||
|
Xxxx
X. Xxxxx
|
|||
| /s/ Xxxx Xxxxx | |||
|
Xxxx
Xxxxx
|
|||
|
Xxxxxxx
Xxxxxx
|
|||
| /s/ Xxxxxx X. Xxxxx | |||
|
Xxxxxx
X. Xxxxx
|
|||
| /s/ Xxxxx X. Xxxxxx | |||
|
Xxxxx
X. Xxxxxx
|
|||
|
Xxxx
Xxxxxxxx
|
|||
|
Xxxxxx
XxXxxxx
|
|||
|
ANTAEUS
CAPITAL, INC.
|
|||
|
By:
|
Xxxxx
X. Xxxxx
|
||
|
Name:
|
|||
|
Title:
|
|||
|
Xxxxxx
X. Xxxxx
|
|||
|
Xxxxxx
Xxxxx
|
|||
|
DISTRESSED
HIGH YIELD TRADING OPPORTUNITIES FUND, LTD.
|
|||
|
GOLDEN
DEN CORP.
|
|||
|
By: Xxxxx
X.
Xxxxx
|
|||
|
Name:
Xxxxx X. Xxxxx
|
|||
|
By:
|
Title:
Trading Advisor
|
||
|
Name:
|
|||
|
Title:
|
12
