REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement")dated as of August 20,
1999 among XxXXX.XXX, INC., a Delaware corporation (the "Company") and
XXXXXXXXXX.XXX, INC., a Pennsylvania corporation ("Lowestrate").
W I T N E S S T H:
WHEREAS, the Company has issued or is obligated to issue, subject to
certain terms and conditions, an aggregate of 1,400,000 shares of its common
stock (the "Shares") in connection with the sale by Lowestrate of certain of its
assets to the Company; and
WHEREAS, the parties desire to provide for the registration with the
Securities and Exchange Commission (the "SEC") of the Shares for resale.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the parties agree as follows:
1. Registration of Stock. The Company shall file with the SEC within seven
(7) business days from the date hereof and thereafter shall use its best efforts
to cause to be declared effective within ninety (90) days from the date hereof a
registration statement on the appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), providing for the registration of, and the
sale on a continuous or delayed basis by the holders of, all of the Shares,
pursuant to Rule 415 or any similar rule that may be adopted by the SEC (the
"Shelf Registration Statement"). The Company shall use its best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by the holders of the Shares for a
period ending on (i) the earlier of (x) October 1, 2001, (y) the expiration of
the period following the Closing after which Rule 144(k) under the Securities
Act becomes available to the holders of the Shares or (z) in the event the
Company has at any time suspended the use of the prospectus contained in the
Shelf Registration Statement pursuant to this paragraph, the date beyond the
earlier of the periods referred to in clauses (x) and (y) that reflects an
additional period of days equal to the number of days during all of the periods
from and including the dates the Company gives notice of such suspension
pursuant to this paragraph to and including the date when the holders of the
Shares receive an amended or supplemented prospectus necessary to permit resales
of Shares under the Shelf Registration Statement or to and including the date on
which the Company gives a resumption notice or (ii) such time as all of the
Shares covered by the Shelf Registration Statement have been sold under the
Shelf Registration Statement or pursuant to Rule 144 (in any such case, such
period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in holders of Shares covered thereby not being able to
offer and sell Shares during that period, unless such action, in the opinion of
the Company after consulting with legal counsel, is required by applicable law.
Notwithstanding any other provisions hereof, the Company will ensure that (i)
any Shelf Registration Statement and any amendment thereto and any prospectus
forming part thereof and any supplement thereto complies in all material
respects with the Securities Act and the rules and regulations thereunder, (ii)
any Shelf Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming part of any
Shelf Registration Statement, and any supplement to such prospectus does not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
2. Indemnification. In the event that Shares are included in a registration
statement under this Agreement, the Company will indemnify and hold harmless
Lowestrate and the holders of the Shares and each other person, if any, who
controls Lowestrate within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which Lowestrate or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement pursuant to which the Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or arise out of or are based upon the failure by the Company to file any
amendment or supplement thereto that was required to be filed under the
Securities Act, and will reimburse Lowestrate and each such controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action. Notwithstanding the foregoing, the Company will not be liable in any
such case to the extent that any such loss, claim, damage, or liability arises
out of or is based upon an untrue statement or omission made in such
registration statement, preliminary prospectus, final prospectus or amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of Lowestrate
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, or amendment or supplement. It shall
be a condition precedent to the obligation of the Company to take any action
pursuant to this Section 2 that the Company shall have received an undertaking
satisfactory to it from Lowestrate to indemnify and hold harmless the Company
(in the same manner and to the same extent as set forth in this Section 2), each
director of the Company, each officer who shall sign such registration
statement, and any persons who control the Company within the meaning of the
Securities Act, with respect to any statement or omission from such registration
statement, preliminary prospectus, or any final prospectus contained therein, or
any amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by the indemnifying party
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, or amendment or supplement. Promptly
following receipt by an indemnified party of notice of the commencement of any
action involving a claim referred to above in this Section 2, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action, but
the omission to so notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such indemnified
party. In case any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof.
3. Binding Provisions. The provisions of this Agreement shall be binding
upon, and inure to the benefit of, the parties and their respective heirs,
personal representatives and successors. In the event of a merger or
consolidation in which the Company is not the survivor, the Company or the
purchaser, as the case may be, shall assign and transfer, and successor shall
assume, the provisions of this Agreement.
4. Transfer of Registration Rights. The rights granted to Lowestrate by the
Company under this Agreement may be assigned by Lowestrate to any transferee or
assignee of a minimum of 30,000 of the Shares, provided that the Company is
given written notice by Lowestrate at the time of or within a reasonable time
after said transfer, stating the name and address of said transferee or assignee
and identifying the Shares with respect to which such registration rights are
being assigned.
5. Expenses of Registration. All expenses incurred by the Company in
connection with any registration pursuant to this Agreement, including without
limitation, all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for the Company, and expenses of any special
audits incidental to or required by such registration, shall be borne by the
Company.
6. Miscellaneous.
(a) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(b) Headings. The headings in this Agreement are included for
convenience of reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
(c) Waiver; Requirement of Writing. This Agreement cannot be changed
or any performance, term or condition waived in whole or in part except by a
writing signed by the party against whom enforcement of the change or waiver is
sought. Any term or condition of this Agreement may be waived at any time by the
party entitled to the benefit thereof. No delay or failure on the part of any
party in exercising any rights under this Agreement, and no partial or single
exercise thereof, will constitute a waiver of such rights or of any other rights
hereunder.
(d) Notices. Any notice, request, consent, waiver or other
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered or sent by prepaid cable or telecopy or
sent, postage prepaid, by registered, certified or express mail or reputable
overnight courier service and shall be deemed given when so delivered by hand,
cabled or telecopied, or if mailed, ten days after mailing (two business days in
the case of express mail or overnight courier service), as follows:
If to Lowestrate:
Xxxxxxxxxx.xxx, Inc.
000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxx
with a copy to:
Duane, Morris & Heckscher LLP
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Toner, Esq.
If to the Company:
XxXxx.xxx, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx, Chairman and Chief
Executive Officer
with a copy to:
D. Xxxxx Xxxxxxx, Esq.
XxXxx.xxx, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
and
Xxxxxxxx & Xxxxxx
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
or such other person or address as the addressee may have specified in a notice
duly given to the sender as provided herein.
7. Dispute Resolution.
(a) Any controversy, dispute or claim (whether lying in contract or
tort) between or among the parties arising out of or related to this Agreement
shall be submitted to arbitration in accordance with this Section 7.
(b) Each such controversy, dispute or claim submitted by a party to
arbitration shall be heard by an arbitration panel composed of three
arbitrators, in accordance with the following provisions. The Company and
Lowestrate shall each appoint one arbitrator within fifteen days after the
matter has been submitted to arbitration. If any party fails to appoint its
arbitrator within such fifteen day period, any party may apply to the American
Arbitration Association (the "AAA") to appoint an arbitrator on behalf of the
party that has failed to appoint its arbitrator. The two arbitrators appointed
by, or on behalf of, the parties shall jointly appoint a third arbitrator, who
shall chair the arbitration panel (the "Chairman"). If the arbitrators appointed
by, or on behalf of, the parties do not succeed in appointing a Chairman within
fifteen days after the latter of the two arbitrators appointed by, or on behalf
of, the parties has been appointed, the Chairman shall, at the request of either
party, be appointed by the AAA. If for any reason an arbitrator is unable to
perform his or her function, he or she shall be replaced, and a substitute shall
be appointed in the same manner as the arbitrator replaced.
(c) Except as otherwise stated in this Agreement, arbitration
proceedings shall be conducted in accordance with the Commercial Arbitration
Rules of the AAA. In any arbitration proceeding hereunder (i) proceedings shall,
unless otherwise agreed by the parties, be held in San Francisco, California; if
initiated by Lowestrate, and Philadelphia, Pennsylvania, if initiated by the
Company (ii) the arbitration panel shall have no power to award punitive
damages; and (iii) the decision of a majority of the arbitrators (or the
Chairman if there is no such majority) shall be final and binding on the parties
to this Agreement and shall be enforceable in any court specified in Section
7(f) below. The parties hereby waive any rights to appeal or to review of such
decision by any court or tribunal and also waive any objections to such
enforcement. THE PARTIES HEREBY AGREE TO WAIVE ALL RIGHTS TO TRIAL BY JURY WITH
RESPECT TO ANY CONTROVERSY, DISPUTE OR CLAIM SUBMITTED TO ARBITRATION UNDER THIS
AGREEMENT.
(d) Notice preliminary to, in conjunction with, or incident to any
arbitration proceeding may be sent to the parties by registered or certified
mail (return receipt requested) at the address set forth in Section 6(d), and
personal service is hereby waived.
(e) No provision of this Section 7 shall limit the right of any party
to this Agreement to exercise self-help remedies such as set-off or to obtain
provisional, equitable or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration.
8. Applicable Law; Consent to Jurisdiction. This Agreement will be
construed and interpreted in accordance with and governed by the internal laws
of the State of Delaware without regard to conflicts of laws principles. Each of
the parties irrevocably and unconditionally consents to submit to the
non-exclusive jurisdiction of the courts of the State of California or the
Commonwealth of Pennsylvania and of the United States of America located in the
City and County of San Francisco or in the City of Philadelphia, as the case may
be, for entry and enforcement of any award resulting from any arbitration
proceeding pursuant to Section 7.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be duly executed by their respective officers there
unto duly authorized, as of the date first above written.
Company:
XxXxx.xxx, Inc.
By: /s/ Xxxx X. Xxxxxx
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Its: Chairman and CEO
By:
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Its:
Seller:
Xxxxxxxxxx.xxx, Inc.
By: /s/ Xxxxxx X. Xxxx
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Its: President
By____________________________
Its ________________
