METHOD PRODUCTS CORP.
REGISTRATION RIGHTS AGREEMENT
dated October 6,2000, by and between Method Products Corp., a Florida
Corporation (the "Company") and the person whose name appears on the signature
page attached hereto (individually a "Holder" and collectively, with the holders
of other Shares issued in the Offering, the "Holders").
WHEREAS, a merger agreement with The Arielle Corp., a Delaware
corporation, was executed on January 12, 2000, and a post-effective amendment to
the Arielle Corp's registration statement on Form SB-2, which amendment was
declared effective by the Securities and Exchange Commission on April 6,1999;
and
WHEREAS, five inside shareholders of Arielle were issued a total of
400,000 shares in a private placement pursuant to Section 4(2) of the Securities
Act of 1933, as amended, between October 13, 1997 and March 30, 1998; and
WHEREAS, the holders of the 400,000 shares are as follows:
Xxxxx Xxxx- 95,000 shares Xxxxx X. Xxxxxx- 95,000 shares B.
Xxxxxx Xxxxxx- 95,000 shares Xxxxxxxxx & Xxxxxxxxx,
L.L.P.-95,000 shares Xxxxx X. Xxxxxxx- 20,000 shares.
These shareholders shall hereinafter be referred to as the "Holders."
WHEREAS, it is intended by the Company and the Holders that this
Agreement shall become effective immediately upon execution of this Agreement;
NOW, THEREFORE, in consideration or the premises and the mutual
covenants contained herein, the Company hereby agrees as follows:
A. REGISTRATION RIGHTS.
1. Registration Rights.
(a) "Piggyback Registration" If the Company at any time
proposes to register any of its securities under the
Securities Act of 1933, as amended (the "1933 Act")
(other than in connection with a merger or pursuant
to Form S-8 or other comparable form), the Company
shall request that the managing underwriter (if any)
of such underwritten offering include the holders'
common stock, referred to as the "Registerable
Securities") in such registration. If such managing
underwriter agrees to include any of the Registerable
Securities in the underwritten offering, the Company
shall at such time give prompt written
notice to all Holders of its intention to effect such
registration and of Holders' rights under such
proposed registration, and upon the request of any
Holder delivered to the Company within twenty (20)
days after giving such notice (which request shall
specify the Registerable Securities intended to be
disposed of by any such Holder and the intended
method of disposition thereof), the Company shall
include such Registerable Securities held by each
such Holder requested to be included in such
registration; provided, however, that:
(i) If, at any time after giving such written
notice of the Company's intention to
register any of the Holder's Registerable
Securities and prior to the effective date
of the registration statement filed in
connection with such registration, the
Company shall determine for any reason not
to register or to delay the registration of
such Registerable Securities, at its sole
election, the Company may give written
notice of such determination to each holder
and thereupon shall be relieved of its
obligation to register any Registerable
Securities issued or issuable in connection
with such registration (but not from its
obligation to pay registration expenses in
connection therewith or to register the
Registerable Securities in a subsequent
registration or its obligations pursuant to
Section 1(c) of this Agreement);
(ii) If the managing underwriter in such
underwritten offering shall advise the
Company that it declines to include a
portion or all of the Registerable
Securities requested by the Holders to be
included in the registration statement, then
all or a specified portion of the
Registerable Securities shall be excluded
from such registration statement (in case of
an exclusion as to a portion of such
Registerable Securities, such portion shall
be allocated among such Holders in
proportion to the respective numbers of
Registerable Securities requested to be
registered by each such Holder). In such
event the Company shall give Holder prompt
notice of the number of Registerable
Securities excluded.
(c) Option to include Registerable Securities in
Offering. The Holders, subject to all of the
provisions of this Section 1, shall have the option
to include their Registerable Securities in the
Company's underwritten offering. The Company shall
not be required to include any of the Holders'
Registerable Securities in an underwritten offering
of the Company's securities unless such Holders
accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by
it (provided such terms are usual and
customary for selling stockholders) and the Holders
agree to execute and/or deliver such documents in
connection with such registration as the Company or
the managing underwriter may reasonably request.
(d) Mandatory Registration. In the event the Holders have
not sold all of their Registerable Securities in
connection with a registration statement pursuant to
Section 1.a, the Company will file a registration
statement with the Securities and Exchange
Commission, and utilize its best efforts to register
all remaining Registerable Securities no later than
365 days from the date hereof; provided, however,
that such period may be extended or delayed by the
Company for one period of 90 days if, upon the advice
of counsel at the time such registration is required
to be filed, or at the time the Company is required
to exercise its best efforts to cause such
registration statement to become effective, such
delay is advisable and in the best interests of the
Company to complete any pending audit of its
financial statements.
(e) Cooperation with the Company. Holders will cooperate
with the Company in all respects in connection with
this Agreement, including, timely supplying all
information reasonably requested by the Company and
executing and returning all documents reasonably
requested in connection with the registration and
sale of the Registerable Securities.
2. Registration Procedures. If and whenever the Company is required by any
of the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registerable Securities under the 1933 Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement and shall use its
best efforts to cause such registration statement to become
effective until all the Registerable Securities are sold;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the 1933 Act with respect to the sale or other
disposition of all securities covered by such registration
statement whenever the Holder or Holders of such securities
shall desire to sell or otherwise dispose of the same
(including prospectus supplements with respect to the sales of
securities from time to time in connection with registration
statement pursuant to Rule 415 of the Commission);
(c) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectuses, including a preliminary
prospectus or any amendment or supplement to any prospectus,
in conformity with requirements of the 1933 Act, and such
other documents, as such Holder may be reasonably request in
order to facilitate the public or other disposition of the
securities owned by such Holder;
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each
Holder shall reasonably request, and do any and all other acts
and things which may be necessary or advisable to enable such
Holder to consummate the public sale or other disposition in
such jurisdictions of the securities owned by such Holder,
except that the Company shall not for any such purpose be
required to qualify to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified or to file
therein any general consent to service of process;
(e) use its best efforts to list such securities on any securities
exchange on which any securities of the Company is then
listed, if the listing of such securities is then permitted
under the rules of such exchange;
(f) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in
usual and customary form, with managing underwriter or
underwriters of such underwritten offering;
(g) notify each Holder of Registerable Securities covered by such
registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to
be delivered under the 1933 Act, of the happening of any event
of which it has knowledge as a result of which the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing;
(h) furnish, at the request of any Holder on the date such
Registerable Securities are delivered to the underwriters for
the sale pursuant to such registration or, if such
Registerable Securities are not being sold through
underwriters, on the date the registration statement with
respect to such Registerable Securities becomes effective, (i)
an opinion, dated such date, of the counsel representing the
Company for the purpose of such registration, addressed to the
underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration
in respect of which such opinion is being given as the Holder
of such Registerable Securities may reasonably request and are
customarily included in
such an opinion and (ii) letters, dated, respectively, (1) the
effective date of the registration statement and (2) the date
such Registerable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration,
from a firm of independent certified public accountants of
recognized standing selected by the Company, addressed to the
underwriters, if any, and to the Holder making such request,
covering such financial, statistical and accounting matters
with respect to the registration in respect of which such
letters are being given as the Holder of such Registerable
Securities may reasonably request and are customarily included
in such letters: and
(i) perform such other actions as shall be reasonably requested by
any Holder to facilitate the registration and the sale of the
Registerable Securities; provided, however, that the Company
shall not be obligate to take any actions not specifically
required elsewhere herein which in the aggregate would cost in
excess of $5,000.
3. Expenses. All expenses incurred in any registration of the Holders'
Registerable Securities under this Agreement shall be paid by the Company,
including, without limitation, printing expenses, fees and disbursements of
counsel for the Company, expenses of any audits to which the Company shall agree
or which shall be necessary to comply with governmental requirements in
connection with any such registration, all registration and filing fees for the
Holders' Registerable Securities under federal and state securities laws, and
expenses of complying with the securities and blue sky laws of any jurisdiction
pursuant to Section 2(h)(i): provided, however, the Company shall not be liable
for (a) any discounts or commissions to any underwriter; (b) any stock transfer
taxes incurred with respect to Registerable Securities sold in the Offering or
(c) the fees and expenses of the counsel for any Holder.
4. Indemnification. In the event any Registerable Securities are included
in a registration statement pursuant to this Agreement:
(a) Company Indemnity. Without limitation of any other indemnity
provided to any Holder, to the extent permitted by law, the
Company shall indemnify and hold harmless each Holder, the
affiliates, officers, directors and partners of each Holder,
any underwriter (as defined in the 0000 Xxx) for such Holder,
and each person, if any, who controls such Holder or
underwriter (within the meaning of the 1933 Actor the
Securities Exchange Act of 1934 (the "Exchange Act"), against
any losses, claims, damages or liabilities (joint or several)
to which they may become subject under the 1933 Act, the
Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions respect
thereof) arise out of are based upon any of the following
statements, omissions or violations (collectively a
"Violation"):
- Any untrue statement or alleged untrue statement of a
material fact contained in such registration
statements including any preliminary prospectus or
final prospectus contained therein or any amendments
or supplements thereto,
- The omission or alleged omission to state therein a
material fact required to be stated therein, or
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading,
- Any violation or alleged violation by the Company of
the 1933 Act, the Exchange Act, or
- Any state securities law or any rule or regulation
promulgated under the 1933 Act, the Exchange Act or
any state securities law, and the Company shall
reimburse each such Holder, affiliate, officer or
director or partner, underwriter or controlling
person for any legal or other expenses incurred by
them in connection with investigating or defending
any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be
liable to any Holder in any such case for any such
loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in
conformity with written information furnished
expressly for use in connection with such
registration by any such Holder or any other officer,
director or controlling person thereof.
(b) Holder Indemnity. Each Holder shall indemnify and hold
harmless the Company, its affiliates, its counsel, its
officers, directors, shareholders and representatives, any
underwriter (as defined in the 0000 Xxx) and each person, if
any, who controls the Company or the underwriter (within the
meaning of the 1933 Act or the Exchange Act), against any
losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the 1933 Act, the Exchange
Act or any state securities law, and the Holder shall
reimburse the Company and each such affiliate, officer or
director or partner, underwriter or controlling person for any
legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; insofar as such losses, claims, damages
or liabilities (or actions with respect thereof) arise out of
or are based upon any untrue statements of material facts
provided by such Holder to the Company in connection with the
offer or sale of Registerable Securities.
(c) Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Section 4 of notice of the
commencement of any action (including any governmental
action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under
this Section 4, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party
shall have the right to participate in and if the indemnifying
party agrees in writing that it will be responsible for any
costs, expenses, judgements, damages, and losses incurred by
the indemnified party with respect to such claim, jointly with
any other indemnifying party similarly noticed, to assume the
defense thereof with the counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonable
fees and expenses to be paid by the indemnifying party if the
indemnified party reasonably believes that representation of
such indemnified party by counsel retained by the indemnifying
party for the indemnified party would be inappropriate due to
actual or potential differing interests between such
indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of
the commencement of any such action shall relieve such
indemnifying party of any liability to the indemnified party
under this Agreement only if and to the extent that such
failure is prejudicial to its ability to defend such action,
and the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that
it may have to any indemnified party otherwise than under this
Agreement.
(d) Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such
loss, liability, claim, damage or expense in such proportion
as is appropriate to reflect the relative fault in the
indemnifying party on the one hand and of the indemnified
party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party
and the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
indemnifying party or by the indemnified party and the partys'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Notwithstanding any of the foregoing including Section 4(b)
hereof, the amount any Holder shall be obligated to contribute
pursuant to the Agreement shall be limited to an amount equal
to the proceeds received by such Holder of the Registerable
Securities sold to the pursuant to the registration statement
which gives rise to such obligation to contribute (less the
aggregate amount of any damages which the Holder has otherwise
been required to pay in respect of such loss, claim, damage,
liability or action or substantially similar loss, claim,
damage, liability or action arising from the sale of such
Registerable Securities).
(e) Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and
shall survive the registration and sale of any Registerable
Securities by any person entitled to indemnification hereunder
and the expiration or termination of this Agreement.
5. Assignment of Registration Rights. The rights of the Holders under this
Agreement, including the rights to cause the Company to register Registerable
Securities may not be assigned without the written prior consent of the Company,
not to be unreasonably withheld.
6. Limitation on Other Registration Rights. Except as otherwise set forth
in this Agreement, the Company shall not, without the prior written consent of
the Holders of Registerable Securities representing a majority thereof held by
all the Holders, file any registration statement on behalf of any person
(including the Company) other than a Holder to become effective during any
period when the Company is not in compliance with this Agreement.
7. Remedies.
(a) Time is of the Essence. The Company agrees that the time is of
the essence as to each of the covenants contained herein and
that, in the event of a dispute hereunder, this Agreement is
to be interpreted and construed in a manner that will enable
the Holders to sell their Registerable Securities as quickly
as possible after such Holders have indicated to the Company
that they desire their Registerable Securities to be
registered. Any material delay on the part of the Company not
expressly permitted under this Agreement shall be deemed a
material breach of this Agreement.
(b) Remedies Upon Default or Delay. The Company acknowledges that
the breach of any part of this Agreement may cause irreparable
harm to a Holder and that monetary damages alone may be
inadequate. The Company therefor agrees that the Holder shall
be entitled to injunctive relief or such other applicable
remedy as a court of competent jurisdiction may provide.
Nothing contained herein will be construed to limit a Holder's
right to any remedies at law, including recovery of damages
for breach of any part of this Agreement.
8. Notices.
(a) All communications under this Agreement shall be in writing
and shall be mailed by first class mail, postage prepaid or
telegraphed or telexed with confirmation of receipt or
delivered by hand or by overnight delivery service,
If to the Company:
METHOD PRODUCTS CORP.
C/O President or CEO
0000 XXXX XXXXXX XXXX, XXXXX X-0
XXXXXXX XXXXX, XX 00000
000-000-0000 Phone
000-000-0000 Telex
or at such other address as it may have furnished in writing
to the Holders of Registerable Securities at the time
outstanding or
If to any Holder of any Registerable Securities, to the
address of such Holder as it appears in the stock ledger
of the Company.
(b) Any notice so addressed, when mailed by registered or
certified mail shall be deemed to be delivered three days
after so mailed; when telegraphed or telexed shall be deemed
given when transmitted; or when delivered by hand or overnight
shall be deemed to be given when delivered.
9. Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of the Company and each of the Holders.
10. Amendment and Waiver. This Agreement may not be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holders of the securities representing a
majority of the Registerable Securities; provided, however, that no such
amendment or waiver shall take away any registration right of any Holder of
Registerable Securities or reduce the amount of reimbursable cost to any Holder
of Registerable Securities in connection with any registration hereunder without
the consent of any Holder of Registerable Securities, any Holder from time to
time enter into one or more agreements amending, modifying or waiving the
provisions of this Agreement if such action does not adversely affect the rights
or interests of any other Holder of Registerable Securities. No delay on the
part of any party in the exercise of any right, power or remedy shall operate as
a waiver thereof, nor shall any single or partial exercise by any party of any
right, power or remedy preclude any other or further exercise thereof, or the
exercise of any other right, power or remedy.
11. Counterparts. One or more counterparts of this Agreement may be signed
by the parties, each of which shall be an original but all of which together
shall constitute one and the same instrument.
12. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of Florida, without giving effect to
conflicts of law principles.
13. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
14. Headings. The headings in this Agreement are for your convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 6th
day of October, 2000.
METHOD PRODUCTS CORP.
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Signature of Holder
By:
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CEO / President
Printed Name of Holder
SS#
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Address of Holder
