EXHIBIT 10.1
FORM OF
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), is made and
entered into this 5th day of March, 2002 (the "Effective Date") by and between
Reality Wireless Networks, Inc., a Nevada corporation (the "Company"), and
Reality Networks, Inc., a Delaware corporation (the "Investor"),
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company and the Investor have entered into an Asset
Purchase Agreement, dated March 5, 2001 (the "Asset Purchase Agreement"), which
provides for the sale of certain assets to the Company by the Investor in
exchange for eight million, four hundred and forty-nine thousand, three hundred
and twenty (8,449,320) shares of the Company's common stock, par value $0.001
per share (the "Shares");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties, intending to be legally
bound, hereby agree as follows:
1. Certain Definitions. Capitalized terms used but not otherwise
defined in this Agreement shall have the meanings ascribed in the Purchase
Agreements. The following terms shall have the following respective meanings:
(a) "SEC" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(b) "Exchange Act" shall mean the U.S. federal Securities Exchange Act
of 1934, as amended, or any similar federal statute and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at any
particular time.
(c) "Other Shareholders" shall mean persons, other than the Investor,
who, by virtue of agreements with the Company are entitled to include their
securities in a registration effected pursuant to this Agreement.
(d) The terms "register," "registered" and "registration" refer to the
effectiveness of a registration statement prepared and filed in compliance with
the Securities Act.
(e) "Registrable Securities" shall mean the Shares, together with any
capital stock of the Company issued with respect to the foregoing upon any stock
split, stock dividend, recapitalization or similar event, that have not
previously been sold by Investor pursuant to a registration statement or SEC
Rule 144 or otherwise transferred to a third party without the benefit of
assignment of rights under this Agreement pursuant to Section 5 hereof.
(f) "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 2 hereof, including, without limitation: all
registration and filing fees; printing expenses; fees and disbursements of
counsel for the Company; state "blue sky" fees and expenses; and accountants'
expenses, including without limitation any special audits incident to or
required by any such registration.
(g) "Securities Act" shall mean the U.S. federal Securities Act of
1933, as amended, or any similar federal statute and the rules and regulations
of the SEC thereunder, all as the same shall be in effect at any particular
time.
(h) "Selling Expenses" shall mean all underwriting discounts, selling
commissions and transfer taxes applicable to the sale of Registrable Securities
and any other securities of the Company being sold in the same registration as
the Registrable Securities by Other Shareholders.
(i) "SB-2 Blackout Period" shall mean, with respect to a Form SB-2
registration, a period not in excess of sixty (60) calendar days during which
the Company, in the good faith judgment of its Board of Directors, determines
(because of the existence of, or in anticipation of, any acquisition, financing
activity, or other transaction involving the Company, or the unavailability for
reasons beyond the Company's control of any required financial statements,
disclosure of information which is in its best interest not to publicly
disclose, or any other event or condition of similar significance to the
Company) that the registration and distribution of the Registrable Securities to
be covered by such SB-2 registration, if any, would be detrimental to the
Company or its shareholders.
2. Form SB-2 Registration. As promptly as reasonably practicable after
the Company becomes eligible to file a registration statement on Form SB-2 (or
any successor form to Form SB-2), the Company shall file a registration
statement on such form relating to the resale by the Investor of all of the
Investor' Registrable Securities; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance
pursuant to this Section 2 or keep such registration effective pursuant to
Section 4: (i) in any particular jurisdiction in which the Company would be
required thereby to qualify to do business as a foreign corporation or as a
dealer in securities under the securities or blue sky laws of such jurisdiction
or to execute a general consent to service of process in effecting such
registration, qualification or compliance; or (ii) during any SB-2 Blackout
Period.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2 of this Agreement shall be borne by the Company, and all Selling
Expenses shall be borne by the Investor pro rata on the basis of the number of
its shares so registered as compared to the total amount of shares included in
the registration for resale by the Investor and the Other Shareholders combined.
4. Effectiveness. Except as provided in Section 2 and in the next
sentence, the Company shall keep effective any registration or qualification
contemplated by Section 2 and shall from time to time amend or supplement each
applicable registration statement, preliminary prospectus, final prospectus,
application, document and communication for such period of time as shall be
required to permit the Investor to complete the offer and sale of the
Registrable Securities covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
longer than one year from the date the registration statement is declared
effective by the SEC; provided, however, that, if the Company is required to
keep any such registration or qualification in effect with respect to securities
other than the Registrable Securities beyond such period, then the Company shall
keep such registration or qualification in effect as it relates to the
Registrable Securities for so long as such registration or qualification remains
in effect in respect of such other securities.
5. Registration Statements.
(a) In the event of a registration pursuant to the provisions of
Section 2, the Company shall furnish to the Investor prior to filing any
registration statement or amendment or supplement thereto a copy of same and
shall furnish to the Investor such number of copies of the registration
statement and of each amendment and supplement thereto (in each case, upon
request, including all exhibits), such reasonable number of copies of each
prospectus contained in such registration statement and each supplement or
amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act and the rules and regulations
thereunder, and such other documents, as the Investor may reasonably request to
facilitate the disposition of the Registrable Securities included in such
registration.
(b) The Company shall notify the Investor promptly when any such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
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(c) At any time when a prospectus included in a registration statement
covering Registrable Securities is required to be delivered under the Securities
Act in connection with a sale, the Company shall notify the Investor of the
happening of any event a result of which would cause such prospectus to include
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the
reasonable request of the Investor promptly prepare, file with the SEC, use its
best efforts to have declared effective, and furnish to it such number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, or file such documents and reports under the Exchange Act that
are incorporated by reference after the initial filing of the registration
statement as may be necessary to accomplish the foregoing.
(d) The Investor shall not effect sales of shares covered by any
registration statement pursuant to such registration statement during an SB-2
Blackout Period or (until further notice) after receipt of telegraphic,
facsimile or other written notice from the Company to suspend sales to permit
the Company to correct or update a registration statement or prospectus.
(e) The person seeking to include Registrable Securities under this
Agreement in any registration shall furnish to the Company such information
regarding such person and the distribution proposed by such person as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in Section 2.
(f) Prior to any public offering of Registrable Securities under a
registration statement declared effective by the SEC, the Company shall use its
commercially reasonable efforts to register or qualify or cooperate with the
Investor in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States requested by the Investor and do
any and all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by the
registration statement.
(g) The Company shall cause all Registrable Securities covered by a
registration statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed or traded.
6. Transfer of Registration Rights. The rights of the Investor to cause
the Company to register securities granted under Section 2 of this Agreement may
not be assigned to any transferee or assignee of Registrable Securities or to
any other person without the prior written consent of the Company, and then only
if such person assumes in writing the obligations of the Investor with respect
to such securities under this Agreement.
7. Exchange Act Reporting. The Company agrees that until all the
Registrable Securities have been sold under a registration statement or pursuant
to Rule 144 under the Securities Act, during such time the Company has a
reporting obligation under Section 15(d) or Section 12 of the Exchange Act, it
shall use its best efforts to keep current in filing all reports, statements,
and other materials required to be filed with the SEC to permit the Investor to
sell such securities under the registration or under Rule 144.
8. Indemnification.
(a) If any action is brought against the Investor in connection with
any registration statement filed pursuant to this Agreement, the Company shall
indemnify and hold harmless the Investor or any underwriter employed by the
Investor against any losses, claims, damages, or liabilities, joint or several,
to which the Investor or such underwriter may become subject under the
Securities Act, the Exchange Act, state securities, or blue sky laws or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
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in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement under which such Stock was registered under the Securities Act, any
preliminary prospectus or final prospectus contain in such registration
statement, or any amendment or supplement to such registration statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse the Investor or such
underwriter for any legal or any other expenses reasonably incurred by the
Investor or such underwriter in connection with investigation or defending any
such loss, claim, damage, liability, or action; provided, however, that 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 any untrue statement
or omission made in such registration statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of the Investor or such underwriter specifically for use in the
preparation thereof.
(b) If any action is brought against the Company in connection with any
registration statement filed pursuant to this Agreement, the Investor shall
indemnify and hold harmless the Company, each of its directors and officers and
each underwriter (if any) and each person, if any, who controls the Company or
any such underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, or liabilities, joint or several, to
which the Company, such directors and officers, underwriter, or controlling
person may become subject under the Securities Act, Exchange Act, state
securities, or blue sky laws 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 a material fact
contained in any registration statement under which such Stock was registered
under the Securities Act, any preliminary prospectus or final prospectus
contained in such registration statement, or any amendment or supplement to such
registration statement, or arise out of or are based upon any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information relating
to the Investor furnished in writing to the Company by or on behalf of the
Investor specifically for use in connection with the preparation of such
registration statement, prospectus, amendment, or supplement.
(c) Each party entitled to indemnification under this Agreement (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement except to the extent that the Indemnifying
Party is adversely affected by such failure. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding; provided further
that in no event shall the Indemnifying Party be required to pay the expenses of
more than one law firm per jurisdiction as counsel for the Indemnified Party. No
Indemnifying Party will, except with the consent of the Indemnified Party,
consent to an entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
(d) If the indemnification provided for in this Section 8 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 herein, the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage or expense as is appropriate to
reflect (i) the proportionate relative fault of the Indemnifying Party on the
one hand and the Indemnified Party on the other (determined by reference to,
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among other things, whether the untrue or alleged untrue statement of a material
fact or omission relates to information supplied by the Indemnifying Party or
the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the Indemnified Party
than the amount hereinafter calculated, not only the proportionate relative
fault of the Indemnifying Party and the Indemnified Party, but also the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Party on the other, as well as any other relevant equitable considerations. No
Indemnified Party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Indemnifying Party who was not guilty of such fraudulent misrepresentation.
9. Termination of Registration Rights.
The Company's obligations pursuant to this Agreement (other than
pursuant to Sections 3, 8, 9, and 10 shall terminate as to the Investor on the
earliest of (i) such date when all of the Registrable Securities of the Investor
have been sold under the registration statement or transferred without consent
to assignment of rights under this Agreement, or (ii) such date when the
restrictive legend on the Registrable Securities may be removed pursuant to Rule
144(k) under the Securities Act (or any successor) and the Investor is entitled
to rely on Rule 144(k), or (iii) such time as all Registrable Securities of the
Investor may, in the opinion of counsel to the Company, currently be sold under
Rule 144 during any 90-day period.
10. Miscellaneous.
(a) Agreements and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
unless such amendment, modification or supplement is in writing and signed by
the parties hereto.
(b) Notices. All notices, requests, demands, claims, consents and other
communications required or permitted under this Agreement shall be in writing.
Any notice, request, demand, claim, communication or consent under this
Agreement shall be deemed duly given if (and shall be effective two business
days after) it is sent by certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to the Company: Reality Wireless Networks, Inc.
0000 Xxxxxxxx Xxxx. XX, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
If to the Investor: Reality Networks, Inc.
000 X. Xxxxxxxx Xxx., Xxxxx X
Xxxxxxxx, Xxxxxxxxxx 00000
or at any other address as any party may, from time to time, designate by notice
given in compliance with this section.
(c) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent holders of the Registrable Shares, subject to the terms hereof,
including the provisions of Section 6.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
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(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington without reference to its
conflicts of law provisions.
(g) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any other
provisions contained herein shall not be affected or impaired thereby.
(h) Entire Agreement. This Agreement, together with the Asset Purchase
Agreement, is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of this agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises warranties or undertakings, other
than those set forth or referred to herein, concerning the registration rights
granted by the Company pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
REALITY WIRELESS NETWORKS, INC.
By:
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Name: Xxxx X. Xxxxxxxxxx
Title: Director, President, Secretary and Treasurer
REALITY NETWORKS, INC.
By:
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Name: Xxxxxx Xxxxxx
Title: President Chief Operating Officer
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