EXHIBIT 10
SUBSCRIPTION AGREEMENT
By and Between
THE NATIONAL REGISTRY, INC.
A DELAWARE CORPORATION,
and
RMS LIMITED PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP
Dated as of November 9, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE 1 Purchase of Securities 1
1.1 Subscription 1
1.2 Purchase Price 1
ARTICLE 2 Closing 2
2.1 Closing of Subscription 2
ARTICLE 3 Representations and Warranties 2
3.1 Investor Representations and Warranties 2
3.2 Company Representations and Warranties 7
ARTICLE 4 Registration Rights 10
4.1 Registration 10
4.2 [Intentionally Omitted] 10
4.3 Precedence of Registration Rights 10
4.4 Registration Procedures 10
ARTICLE 5 Miscellaneous 17
5.1 Indemnity 17
5.2 Modification 17
5.3 Notices 17
5.4 Counterparts 18
5.5 Binding Effect 18
5.6 Entire Agreement 18
5.7 Assignability 18
5.8 Governing Law; Jurisdiction and Choice of Forum 18
5.9 Pronouns 18
5.10 Severability 18
5.11 Waiver 19
5.12 Further Assurances 19
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made and entered into
as of the 9th day of November, 1999 by and among The National Registry, Inc., a
Delaware corporation (the "Company"), with its principal office at 0000 Xxxxx
Xxxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxx and RMS Limited Partnership, a Nevada
limited partnership ("Subscriber"), with its principal office at 00 Xxxx Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxx, Xxxxxx 00000.
WITNESSETH
WHEREAS the Company desires to issue 100,000 shares of Series D
Preferred Stock, $.01 par value per share.
NOW, THEREFORE, in consideration of the premises and in further
consideration of the mutual covenants, promises and agreements hereinafter set
forth, it has been and IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I
PURCHASE OF SECURITIES
1.1 SUBSCRIPTION. The Subscriber, intending to be legally bound, hereby
irrevocably subscribes for and agrees to purchase One Hundred Thousand (100,000)
shares of Series D Preferred Stock. (the "Securities").
1.2 PURCHASE PRICE. The Company agrees to issue and sell to the
Subscriber the Securities for a purchase price of Five Million U.S. Dollars
($5,000,000) (the "Subscription Price"). Payment of the Subscription Price shall
be made by wire transfer or check payable to and delivered to the Company or, if
by wire transfer in accordance with the instructions of the Company, together
with an executed copy of this Agreement and any other documents required to be
executed under this Agreement.
ARTICLE II
CLOSING
2.1 CLOSING OF SUBSCRIPTION. The closing of the purchase and sale of
the Securities (the "Closing") shall take place at the offices of the Company on
such date as is mutually agreed to by the Company and the Subscriber. At the
Closing, the Company shall deliver to the Subscriber the Securities, duly
registered in the Subscriber's name against payment in full by the Subscriber of
the Subscription Price against execution by the Subscriber of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 INVESTOR REPRESENTATIONS AND WARRANTIES. The Subscriber hereby
acknowledges, represents and warrants to the Company as follows:
(a) The Subscriber is acquiring the Securities for its own
account as principal, not as a nominee or agent, for investment purposes only,
and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part and no other person has a direct or indirect
beneficial interest in the Securities. Further, the Subscriber does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person with
respect to any of the Securities for which it is subscribing.
(b) The Subscriber has full power and authority to enter
into this Agreement, the execution and delivery of this Agreement has been duly
authorized, and this Agreement constitutes a valid and legally binding
obligation of the Subscriber.
(c) The Subscriber acknowledges its understanding that the
offering and sale of the Securities is intended to be exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act"), by virtue
of Section 4(2) of the Securities Act and the provisions of Regulation D
promulgated thereunder ("Regulation D") and that it is an "accredited investor"
as that term is defined in Rule 501 of Regulation D. The Subscriber has the
financial ability to bear the economic risk of its investment, has adequate
means for providing for its current needs and personal contingencies and has no
need for liquidity with respect to its investment in the Company. The Subscriber
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Securities.
(d) The Subscriber will not sell or otherwise transfer the
Securities without registration under the Securities Act or an exemption
therefrom and the Subscriber fully understands and agrees that it must bear the
economic risk of its purchase because, among other reasons, the Securities have
not been registered under the Securities Act or under the securities laws of any
state and, therefore, cannot be resold, pledged, assigned or otherwise disposed
of unless they are subsequently registered under the Securities Act and under
the applicable securities laws of such states or unless exemptions from such
registration requirements are available. In particular, the Subscriber is aware
that the Securities are "restricted securities," as such term is defined in Rule
144 promulgated under the Securities Act ("Rule 144"), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
Subscriber also understands that, except as otherwise provided herein, the
Company is under no obligation to register the Securities on its behalf or to
assist him in complying with any exemption from the registration requirements of
the Securities Act or applicable state securities laws. The Subscriber further
understands that sales or transfers of the Securities are further restricted by
state securities laws and the provisions of this Agreement.
(e) No representations or warranties have been made to the
Subscriber by the Company, or any officer, employee, agent, affiliate or
subsidiary of the Company, other than the representations of the Company
contained herein, and in subscribing for Securities the Subscriber is not
relying upon any representations other than those contained herein or in the
documents filed
by the Company with the Securities and Exchange Commission ("SEC Filings").
(f) The Subscriber understands and agrees that the
certificates representing the Securities and the shares of Common Stock issued
upon conversion of the Securities shall bear the following legend until (i) such
securities shall have been registered under the Securities Act and effectively
been disposed of in accordance with the registration statement; or (ii) in the
opinion of counsel for the Company such securities may be sold without
registration under the Securities Act as well as any applicable "Blue Sky" or
similar state securities laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS
BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR
(ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION
IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS
WELL AS ANY APPLICABLE "BLUE SKY" OR OTHER STATE SECURITIES LAW.
(g) The Subscriber understands that an investment in the
Securities is a speculative investment which involves a high degree of risk of
loss of its entire investment.
(h) To the Subscriber's best knowledge, no consents,
approvals, authorizations, expiration of any statutory waiting periods, or
orders of any court or government agency relating to the Subscriber or its
business is required as a condition of the Subscriber's purchase of the
Securities in the manner contemplated herein, and receipt of the Securities in
exchange therefor, or the execution and delivery of this Agreement or
consummation of the transactions contemplated herein.
(i) The foregoing representations, warranties and agreements
shall survive the execution of this Agreement.
3.2 COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Subscriber as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has or
will have on or prior to Closing all requisite corporate power and authority (i)
to own and operate its properties and assets and to carry on its business as now
conducted; (ii) to execute and deliver this Agreement; (iii) to issue and sell
the Securities; (iv) upon the conversion of the Securities to issue shares of
Common Stock; and (v) to carry out the provisions of this Agreement.
(b) All corporate action on the part of the Company, its
officers and directors
necessary for the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder at the Closing, and the
authorization, issuance (or reservation for issuance, as applicable), sale, and
delivery of the Securities being sold hereunder has been taken or will be taken
prior to the Closing. This Agreement constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, or as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
(c) The authorized capital stock of the Company consists of
(i) 50,000,000 shares of Common Stock, of which 18,511,154 shares (including
shares held in treasury) are issued and outstanding as of September 30, 1999;
and (ii) 1,000,000 shares of preferred stock, of which 100,000 shares have been
designated Series A Preferred Stock and are issued and outstanding and are
convertible at the election of the holder thereof into 2,379,055 shares of
Common Stock (subject to adjustment pursuant to certain anti-dilution
provisions). In addition, the Company has granted (i) options to acquire up to
2,935,609 shares of Common Stock to certain former and current employees,
consultants and directors of the Company pursuant to stock option plans whereby
the Company has reserved for issuance up to 4,000,000 shares of Common Stock and
(ii) 1,152,522 Common Stock purchase warrants to investors, finders and others.
Except as set forth in this subsection (c) or otherwise provided in this
Agreement, there are no options, warrants or other rights to purchase any of the
Company's authorized but unissued capital stock.
(d) The Securities, when issued, sold and delivered in
accordance with the terms of this Agreement for the purchase price, will be duly
and validly issued, fully paid, non-assessable, not subject to any preemptive
rights, and free and clear of all liens, claims and encumbrances. When issued
upon the conversion of the Securities, the Common Stock will be duly and validly
issued, fully paid, non-assessable, not subject to any preemptive rights, and
free and clear of all liens, claims and encumbrances.
(e) To the best of the Company's knowledge, no consent,
approval, qualification, order or authorization of, or filing with, any local,
state, or federal governmental authority is required on the part of the Company
in connection with the Company's valid execution, delivery, or performance of
this Agreement, the offer, sale or issuance of the Securities.
(f) Subject in part to the truth and accuracy of the
Company's representations and warranties set forth in this Agreement, the offer,
sale and issuance of the Securities, as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act of 1933, as
amended ("Securities Act"). Neither the Company nor any authorized agent acting
on its behalf will take any action hereafter that would cause the loss of such
exemption.
(g) [Intentionally Omitted]
(h) The Company is not in violation or default of any
provision of its Certificate of Incorporation, Bylaws, or any mortgage,
indenture, agreement, instrument, or contract to which it is a party or by which
it is bound or, to the best of its knowledge, of any
federal or state judgment, order, writ, decree, statute, rule or regulation
applicable to the Company, except to the extent that the failure to do so would
not have a material adverse effect on the Company. The execution, delivery, and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby will not result in any such violation or be in
material conflict with or constitute, with or without the passage of time or
giving of notice, either a material default under any such provision or an event
that results in the creation of any material lien, charge, or encumbrance upon
any assets of the Company or the suspension, revocation, impairment, forfeiture,
or non-renewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of its assets or
properties.
(i) No representation or warranty of the Company contained
in this Agreement or any other such document furnished to the Subscriber by or
on behalf of the Company, including without limitation, the SEC Filings contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. The SEC Filings conformed
in all material respects as of the date each was filed with the SEC to the
disclosure requirements applicable to such filing.
(j) The Company has filed the required federal, state and
local tax returns required of it and has paid all material taxes shown on such
returns as they become due. No claim has been assessed and is unpaid with
respect to such taxes.
(k) Except as described in the SEC filings, there is no
action or proceeding pending or, to the knowledge of the Company, currently
threatened against the Company in any court or before any arbitration panel or
before or by any federal, state or other governmental department or agency which
may substantially affect the validity of this Agreement or the right of the
Company to enter into it, or to consummate the transactions contemplated hereby,
or which might result, either individually or in the aggregate, in any material
adverse change in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company.
(l) The Company owns its property and assets free and clear
of all mortgages, liens, claims, and encumbrances other than liens arising by
operation of law which do not affect the Company's use of such property and
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims, or encumbrances.
(m) Except as otherwise disclosed in the audited financial
statements at and for the year ended December 31, 1998, copies of which have
been previously delivered by the Company to the Subscriber (the "Financial
Statements") or in the SEC Filings, since December 31, 1998 there has not been
(i) any changes in the assets, liabilities, financial condition or operations of
the Company from that reflected in the Financial Statements except changes in
the ordinary course of business which have not been, either in any individual
case or in the aggregate, materially adverse; (ii) any material change, except
in the ordinary course of business, in the contingent obligations of the
Company, whether by way of guaranty, endorsement, indemnity, warranty or
otherwise; (iii) any damage, destruction or loss, whether or not covered by
insurance,
materially and adversely affecting the properties or business of the Company;
(iv) any declaration or payment of a dividend or other distribution of the
assets of the Company; or (v) to the best of the Company's knowledge, any other
event or condition of any character which materially and adversely affected the
Company's assets, liabilities, financial condition or operations. Subscriber has
been informed that the Company has received notice from the National Association
of Securities Dealers that the Company's securities will be delisted from The
Nasdaq SmallCap Market effective from the close of business on November 10,1999.
(n) The foregoing representations, warranties and agreements
shall survive the execution of this Agreement.
ARTICLE IV
REGISTRATION RIGHTS
4.1 REGISTRATION
(a) Upon the request of the Subscriber, the Company shall
use its best efforts to effect the registration under the Securities Act of the
Common Stock to the extent required to permit the disposition of the shares of
Common Stock in the manner specified by the Subscriber and shall keep such
registration statement effective until the time as such shares of Common Stock
are disposed of by the Subscriber; PROVIDED, however, that the Company shall not
be required to maintain the effectiveness of such registration at any time when
an exemption from registration is otherwise available to the Subscriber
affording the Subscriber the right to dispose of all of the shares of Common
Stock issued upon the conversion of the Securities and held by Subscriber. Any
registration requested pursuant to this Section 4.1 shall be effected by the
filing of a registration statement on Form X-0, X-0 or S-3 (or any other form
that includes substantially the same information as would be required to be
included in a registration statement on such forms as presently constituted,
other than a registration statement relating to offers to employees pursuant to
plans or of securities to be issued in business combinations).
4.2 [Intentionally Omitted]
4.3 PRECEDENCE OF REGISTRATION RIGHTS.
The Subscriber and the Company agree that the registration rights
contained in this Article IV are in addition to any and all registration rights
which Subscriber is entitled to under any other agreement with the Company.
4.4 REGISTRATION PROCEDURES.
(a) If, whenever and to the extent that the Company is
required to use its best efforts to register shares of Common Stock pursuant to
this Article IV, the Company shall as promptly as practicable:
(i) Prepare and file with the SEC a registration
statement with respect to such shares, and cause such registration statement to
comply as to form and content in all material respects with the SEC's forms,
rules and regulations and use its reasonable best efforts to cause such
registration statement to become effective;
(ii) Prepare and file with the SEC 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 Securities Act with respect
to the disposition of all securities covered by such registration statement
until such time as all of such shares have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof set forth
in such registration statement;
(iii) Furnish to the Subscriber such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits, except that the Company
shall not be obligated to furnish the Subscriber with more than three copies of
such exhibits), and such number of copies of the prospectus that is a part of
such registration statement (including each preliminary prospectus and any
summary prospectus), as the Subscriber may reasonably request in order to
facilitate the disposition of the shares of Common Stock issued upon the
conversion of the Securities;
(iv) Use its best efforts to register or qualify the
shares of Common Stock issued upon the conversion of the Securities for sale
under the securities or blue sky laws of such jurisdictions in the United States
as the Subscriber shall reasonably request in writing, and to keep such
registration or qualification in effect for so long as the period of
distribution contemplated thereby, and do any and all other acts and things
which may be necessary or advisable to enable the disposition in such
jurisdictions of the shares of Common Stock issued upon the conversion of the
Securities, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
(v) [Intentionally Omitted];
(vi) Notify the Subscriber, at any time when a
prospectus relating to a registration statement is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits 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 request
of the Subscriber prepare and furnish to the Subscriber a reasonable 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 shares, 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 light of the circumstances then existing;
(vii) Use its best efforts to list the shares of
Common Stock so registered on any securities exchange (including NASDAQ) on
which the Common Stock of the Company is then listed, if such shares are not
already so listed and if such listing is then permitted under the rules of such
exchange; and
(viii) Make available for inspection by the
Subscriber, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent retained by
such seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
the Subscriber, underwriter, attorney, accountant or agent in connection with
such registration statement.
(b) REQUIRED ACTIONS BY THE SUBSCRIBER. In connection with the
registration of shares of Common Stock issued upon the conversion of the
Securities pursuant to this Article IV, the Subscriber hereby agrees as follows:
(i) the Subscriber shall cooperate with the Company
and any underwriters to facilitate the timely preparation and filing of the
registration statement, and for so long as the Company is obligated to file and
keep effective the registration statement, shall provide to the Company, in
writing, for use in the registration statement, all such information regarding
the Subscriber and its plan of distribution of the shares of Common Stock as may
be necessary to enable the Company to prepare the registration statement and
prospectus covering such shares of Common Stock issued upon the conversion of
the Securities, to maintain the currency and effectiveness thereof and otherwise
to comply with all applicable requirements of law in connection therewith;
(ii) the Subscriber shall timely complete and execute
all questionnaires, powers of attorney, indemnities, hold-back agreements,
underwriting agreements and other documents required under the terms of any
underwriting arrangements or by the SEC or by any state securities regulatory
body;
(iii) during such time as the Subscriber may be
engaged in a distribution of the shares of Common Stock issued upon the
conversion of the Securities registered pursuant to this Article IV, the
Subscriber shall comply with Regulation M promulgated under the Exchange Act
(the "Rules"), to the extent applicable, and pursuant thereto it shall, among
other things: (w) not engage in any stabilization activity in connection with
the securities in contravention of the Rules; (x) distribute the shares solely
in the manner described in the registration statement; (y) cause to be furnished
to each broker through whom the shares may be offered, if any, or to the offeree
if an offer is not made through a broker, such copies of the prospectus and any
amendment or supplement thereto and documents incorporated by reference therein
as may be required by law; and (z) not bid for or purchase any securities of the
Company or attempt to induce any person to purchase any securities of the
Company other than as permitted under the Exchange Act;
(iv) upon receipt of a notice from the Company,
promptly discontinue any distribution of shares until notified by the Company
that the distribution of shares may re-commence;
(v) upon written notice from the Company that the
Company intends to proceed with a distribution of any of its shares and that in
connection therewith it requires the suspension by the Subscriber of the
distribution of its shares, to cease distributing such shares until such time as
the distribution by the Company has been completed; and
(c) REGISTRATION EXPENSES. The registration expenses incurred
in connection with any registration pursuant to this Article IV shall be paid in
full by the Company except that the Subscriber shall pay its own legal expenses
and all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of any shares of Common Stock owned by the
Subscriber and sold pursuant to a registration statement effected pursuant to
this Article IV.
(d) POSTPONEMENT. The Company shall be entitled to postpone
the filing of a registration statement otherwise required to be prepared and
filed by it pursuant to Section 4.1, for a reasonable period of time not to
exceed (x) with respect to clause (i) of this sentence, the date which is five
(5) days after the filing with the SEC of the Company's next regularly required
quarterly or annual report and (y) with respect to clauses (ii) and (iii) of
this sentence, 60 days, if, at the time it receives a registration request from
Subscriber, (i) such registration would require the public disclosure of
material non-public information concerning any transaction or negotiations
involving the Company or any affiliate (as defined in Rule 12b-2 under the
Exchange Act) that, in the opinion of counsel to the Company, is not yet
required to be publicly disclosed and the Board of Directors of the Company, in
good faith, determines that such disclosure would materially interfere with such
transaction or negotiations, (ii) such registration would interfere, in the good
faith judgment of the Board of Directors, with bona fide financing plans of the
Company or would otherwise require premature disclosure of information which
would adversely affect or otherwise be detrimental to the Company, or (iii) the
Company proposes to file a registration statement under the Securities Act for
the offering and sale of securities for its own account in an underwritten
offering and the managing underwriter therefor shall advise the Company in
writing that in its opinion the filing or effectuation of a registration
requested pursuant to Section 4.1 herein would materially adversely affect the
success of the offering of the securities proposed to be registered for the
account of the Company.
(e) HOLDBACK AGREEMENTS. If any registration of shares of
Common Stock issued upon the conversion of the Securities pursuant to this
Article IV shall be in connection with an underwritten public offering, the
Subscriber agrees not to effect any public sale or distribution, including any
sale under Rule 144 of any shares of Common Stock or any other security
convertible into or exchangeable or exercisable for any shares of Common Stock
(in each case, other than as part of such underwritten public offering) during
the ten (10) days prior to, and during the 90-day period (or such longer period
as any underwriter may reasonably request) beginning on, the effective date of
the related registration statement. The Company may impose stop-transfer
instructions with respect to the shares subject to the foregoing restrictions
during such period.
(f) TERM. The indemnification obligations contained in
subsections (g) and (h) shall survive for the period of the statute of
limitations with respect thereto.
(g) INDEMNIFICATION. Each of the Subscriber and the Company
agree to indemnify the other in connection with any registration effected
pursuant to this Article IV as follows:
(i) To the extent permitted by law, the Company will
indemnify the Subscriber, its officers, directors, partners, employees,
subcontractors, consultants, agents, legal counsel, and accountants and each
underwriter, broker or dealer, if any, of the Company's securities covered by
such a registration statement, and each person who controls the Subscriber or
such underwriter, broker or dealer within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages, and liabilities
(or actions, proceedings, or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other document (including any
related registration statement, notification, or the like) incident to any such
registration, qualification, or compliance, or based on any 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 any violation by the
Company of the Securities Act, the Exchange Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification, or
compliance, and will reimburse the Subscriber and its officers, directors,
partners, employees, subcontractors, consultants, agents, legal counsel, and
accountants, each such underwriter, broker or dealer, and each person who
controls the Subscriber or such underwriter, for any legal and other expenses
reasonably incurred in connection with investigating and defending or settling
any such claim, loss, damage, liability, or action, provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage, liability, or expense arises out of or is based on any untrue statement
or omission based upon written information furnished to the Company by or on
behalf of the Subscriber or such underwriter, broker or dealer and stated to be
specifically for use therein or any failure by the Subscriber or such
underwriter, broker or dealer to deliver a final prospectus or supplement or
amendment correcting earlier documents. It is agreed that the indemnity
agreement contained in this Article IV shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company.
(ii) To the extent permitted by law, the Subscriber
will indemnify the Company, each of its officers, directors, partners,
employees, subcontractors, consultants, agents, legal counsel, and accountants
and each underwriter, if any, of the Company's securities covered by such a
registration statement, and each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular, or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, each of its officers,
directors, partners, employees, subcontractors, consultants, agents, legal
counsel, and accountants, each such underwriter, and each such control person,
for any legal and other expenses reasonably incurred in connection with
investigating and defending or settling any such claim, loss, damage, liability,
or action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular, or other
document in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Subscriber; PROVIDED, HOWEVER, that the
Subscriber will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in strict conformity with information pertaining to
the Subscriber, as such, furnished in writing to the Company by the Subscriber
stated to be specifically for use in such registration statement and prospectus;
PROVIDED, FURTHER, HOWEVER, that the liability of the Subscriber hereunder shall
be limited to the proportion that the public offering price of the Shares of
Common Stock issued upon the conversion of the Securities sold by the Subscriber
under such registration statement bears to the total public offering price of
all securities sold thereunder, but not in any event to exceed the proceeds
received by the Subscriber from the sale of the Shares of Common Stock issued
upon the conversion of the Securities covered by such registration statement;
and PROVIDED, FURTHER, HOWEVER, that the obligations of the Subscriber hereunder
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Subscriber.
(iii) If the indemnification provided for in Section
4.5(g) is held by a court of competent jurisdiction to be unavailable to the
party seeking such indemnification (the "Indemnified Party") with respect to any
loss, liability, claim, damage, or expense referred to therein, then the party
which is required to provide indemnification pursuant to Section 4.5(g) (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 in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations, PROVIDED,
HOWEVER, that in any such case, (x) no such Indemnifying Party will be required
to contribute any amount in excess of the public offering price of all shares
offered by it pursuant to such registration statement; and (y) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation. The relative
fault of the Indemnifying Party and of 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 parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(iv) Notwithstanding the foregoing or Section 4.5(h)
below, to the extent that the provisions on indemnification contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(h) INDEMNIFICATION PROCEDURES. Each party entitled to
indemnification under Section 4.5(g) of 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 (if the claim is made by a
third party) 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 any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its indemnification obligations to
the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of the
Indemnified Party, consent to 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 to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(i) DELAY OF REGISTRATION. the Subscriber shall have no right
to take an action to restrain, enjoin or otherwise delay any registration as a
result of any controversy that might arise with respect to the interpretation or
implementation of this Article IV.
ARTICLE V
MISCELLANEOUS
5.1 INDEMNITY. Without prejudicing any other remedy available to the
parties at law or in equity and except as set forth in Article IV hereof, the
parties hereby covenant, immediately upon demand therefor, to indemnify, defend,
and hold each other (and their respective subsidiary, affiliated, or parent
entities, officers, directors, partners, stockholders, attorneys, employees,
agents, and representatives) harmless from and against any and all costs,
losses, damages, penalties, fines, or expenses (including without limitation
reasonable attorneys' fees, court costs, and associated expenses) suffered,
imposed upon, or incurred by them in any manner arising out of, relating to, or
in connection with the following:
(a) any representation or warranty of either of the parties
set forth herein being untrue or incorrect in any material respect or the
failure of either of the parties to materially observe or timely and fully
perform any of their respective obligations hereunder;
(b) any material misrepresentation in or material omission
from any information provided by the parties to each other in connection with
this Agreement or the consummation of the transactions contemplated herein; and
(c) any expenses, claims, costs, or other liabilities or
obligations of any description whatsoever arising from or in any way connected
with any claim that may be brought against either party by a stockholder of that
party.
5.2 MODIFICATION. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
5.3 NOTICES.
(a) Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (i) deposited, postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
addressed to such address as may be given herein, or (ii) delivered personally
at such address.
(b) Addresses:
If to the Company to:
The National Registry Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx
Attn: President
If to Subscriber to the address set forth on the
signature page hereof.
5.4 COUNTERPARTS. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.
5.5 BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. If the
Subscriber is more than one person, the obligation of the Subscriber shall be
joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and its heirs, executors, administrators and successors
5.6 ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and there are no representations, covenants or other agreements
except as stated or referred to herein.
5.7 ASSIGNABILITY. This Agreement is not transferable or assignable by
the Subscriber.
5.8 GOVERNING LAW; JURISDICTION AND CHOICE OF FORUM. Notwithstanding
the place where this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of Delaware.
5.9 PRONOUNS. The use herein of the masculine pronouns "him" or "his"
or similar terms shall be deemed to include the feminine and neuter genders as
well and the use herein of the singular pronoun shall be deemed to include the
plural as well.
5.10 SEVERABILITY. The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and
effect.
5.11 WAIVER. It is agreed that a waiver by either party of a breach of
any provision of this Agreement shall not operate, or be construed, as a waiver
of any subsequent breach by that same party.
5.12 FURTHER ASSURANCES. The parties agree to execute and deliver all
such further
documents agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first written above.
RMS LIMITED PARTNERSHIP THE NATIONAL REGISTRY, INC.,
a Nevada limited partnership a Delaware Corporation
/s/ XXXXXXX X. XXXXX /s/ XXXXXXX X. XXXXXXX
---------------------------- -----------------------------
By: Xxxxxxx X. Xxxxx By: Xxxxxxx X. Xxxxxxx
Its: Secretary/Treasuer of Crystal Its: President and CEO
Diamond Inc.
General Partner of
RMS Limited Partnership
Address:
00 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxx, Xxxxxx 00000
