Exhibit 10.13
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August 10,
2000, between e-commerce group, Inc., a Nevada company (the "Company"), and S.C.
Management Ltd., a Bahamian corporation (the "Investor").
RECITALS:
WHEREAS, the Investor has executed and delivered a Subscription Agreement,
dated as of the date hereof (the "Subscription Agreement"), by and among the
Company and the Investor providing for the issuance to the Investor of 300,000
shares (the "Subscription Shares") of the Company's common stock, par value
$.001 per share (the "Common Stock"); and
WHEREAS, the Company has executed and delivered to the Investor an Amended
and Restated Convertible Promissory Note, dated as of the date hereof (the "the
Convertible Note"), providing for the issuance to the Investor of Units (the
"Units") upon conversion of the outstanding principal and accrued interest, each
Unit consisting of one share of Common Stock (the "Conversion Shares") and a
warrant (the "Warrant") to purchase one share of Common Stock (the "Warrant
Shares"); and
WHEREAS, the Investor has executed and delivered a Consulting Agreement,
dated as of the date hereof (the "Consulting Agreement"), by and among the
Company and the Investor providing for the issuance to the Investor of options
(the "Options") to purchase up to 200,000 shares of Common Stock (the "Option
Shares");
WHEREAS, among the conditions to the consummation of the transactions
contemplated by each of the Subscription Agreement, the Convertible Note and the
Consulting Agreement is the execution and delivery of a Registration Rights
Agreement providing certain registration rights for the Investor; and
WHEREAS, each of the parties hereto desires to set forth in a single
document the registration rights of the Investor relating to the Subscription
Shares, the Conversion Shares, the Warrant Shares and the Option Shares
(together, the "Shares");
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and for other good and valuable consideration
the Company and the Investor hereby agree as follows:
1. Definitions
For purposes of this Agreement, the following terms have the meanings
indicated below.
Commission. The Securities and Exchange Commission or any other federal
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agency at the time administering the Securities Act.
Exchange Act. The Securities Exchange Act of 1934, as amended, and the
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rules and regulations promulgated thereunder.
OTCBB. The non-NASDAQ Over the Counter Bulletin Board.
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Registration statement. A registration statement filed with the Commission
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under the Securities Act.
Register, registration and registered. A registration effected by preparing
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and filing a Registration Statement or similar document with the Commission in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such Registration Statement or document.
Registrable Securities. The Subscription Shares, the Conversion Shares, the
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Warrant Shares and the Option Shares; provided, however, that those Shares as to
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which any of the following apply shall cease to be Registrable Securities: (a) a
registration statement with respect to the sale of such Shares shall have become
effective under the Securities Act and such Shares shall have been disposed of
under such registration statement; (b) such Shares shall have been transferred
pursuant to Rule 144 or any successor rule or provision promulgated under the
Securities Act ("Rule 144"); (c) such Shares shall have been transferred by the
Investor; or (d) the termination of this Agreement.
Securities Act. The Securities Act of 1933, as amended, and the rules and
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regulations promulgated thereunder.
Shares. The Subscription Shares, the Conversion Shares, the Warrant Shares
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and the Option Shares and, including, without limitation, Common Stock issued as
a stock dividend or pursuant to a stock split.
2. Demand Registration Rights
2.1 Shares
The Company shall prepare and file with the Commission a registration
statement under the Securities Act in such form as is available for such a
registration, registering the Shares (the "Share Registration Statement") for
resale by the Investor in the United States and shall have same declared
effective by the Commission no later than April 30, 2001 (the "Share
Registration Deadline"). The date on which the Share Registration Statement is
declared effective by the Commission shall be referred to herein as the "Share
Effective Date." Subject to Section 5.1(b) herein, the Company shall keep the
Subscription Share Registration Statement
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effective pursuant to Rule 415 under the Securities Act at all times until the
later of (i) the date as of which the Investor may sell all of the Shares,
without restriction pursuant to Rule 144(k) promulgated under the Securities Act
(or successor thereto) or (ii) the date on which the Investor shall have sold
all the Shares. If the Share Registration Statement is not effective by the
Share Registration Deadline, the Company shall be liable to the Investor for
damages for the period from May 1, 2001 until the Share Effective Date at a per
diem amount equal to $10,000 per day for each of the first 30 days following May
1, 2001; $15,000 per day for each of the next 30 days; and $20,000 per day for
each day thereafter.
2.2 Limitations on Registration Obligation
The Company's obligations under Section 2.1, shall be subject to the
following limitations:
(a) the Company shall not be obligated to effect more than one
registration with respect to the Shares, and
(b) in the event of an underwritten offering, the Investor shall
enter into an underwriting agreement in customary form and shall be entitled to
select the managing underwriters; provided, however, that if the Company
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participates in the registration pursuant to Section 2.3, it shall be entitled
to select the managing underwriters; and provided, further, that each managing
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underwriter selected shall be reasonably acceptable to the other party.
2.3 Inclusion of the Company's Securities in Registration
The Company, on its own behalf or on the behalf of its securityholders,
shall have the right to include any of the Company's securities in any
registration initiated by Investor relating to the Registrable Securities
pursuant to Section 2.1; provided, however, that if the managing underwriters of
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such underwritten offering shall advise the Company in writing that, in their
judgment, the distribution of all or a specified portion of the securities to be
registered on behalf of the Company or securityholders pursuant to this Section
2.3 concurrently with the Registrable Securities being distributed by such
underwriters will materially and adversely affect the distribution of such
Registrable Securities by such underwriters, then the Company will exclude all
or such specified portion of such securities (other than the Registrable
Securities) to be registered on behalf of the Company or its securityholders
from such underwritten offering and will select, in its sole discretion, the
securities (other than the Registrable Securities) to be so excluded from such
offering. Notwithstanding the foregoing, the right of the underwriters to
exclude Registrable Securities from the registration and underwriting as
described above shall be restricted such that all shares that are not
Registrable Securities and all shares that are held by persons who are employees
or directors of the Company (or any subsidiary of the Company) shall first be
excluded from such registration and underwriting before any Registrable
Securities are so excluded.
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3. Incidental Registration
3.1 Company Registration
In addition to the rights provided pursuant to Section 2 and subject to
the limitations set forth in Section 3.2, if the Company at any time proposes to
register any of its Common Stock under the Securities Act (other than on Form
S-4 or Form S-8 or their then equivalents relating to securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans), whether or not for sale for its own account, on a form and in a manner
that would permit registration of Registrable Securities for sale to the public
under the Securities Act, it will each such time give prompt written notice to
the Investor of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration and, upon the written request of Investor delivered to the
Company within 20 days after the Company has given written notice to the
Investor pursuant to this Section 3.1, the Company will use commercially
reasonable efforts to effect the registration under the Securities Act of all
Registrable Securities that the Company has been so requested to register by the
Investor, to the extent requisite to permit the disposition (in accordance with
the intended method thereof specified in such notice from the Company as
aforesaid) of the Registrable Securities so to be registered. No rights to
registration of the Shares under this Section 3.1 shall be construed to limit
any registration required under Section 2. The obligations of the Company under
this Section 3.1 may be waived by the Investor.
3.2 Limitations on Incidental Registration Rights
The Company's obligations under Section 3.1 shall be subject to the
following limitations:
(a) if, at any time after giving such written notice of its intention
to register any of such 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 such securities, the Company may,
at its election, give written notice of such determination to the Investor and
thereupon the Company shall be relieved of its obligation to register any
Registrable Securities in connection with such registration;
(b) if (i) the registration so proposed by the Company (either on
behalf of its own account or on behalf of another shareholder) involves a firm
commitment underwritten offering and (ii) the managing underwriters of such
underwritten offering shall advise the Company in writing that, in their
judgment, the distribution of all or a specified portion of such Registrable
Securities concurrently with the securities being distributed by such
underwriters will materially and adversely affect the distribution of such
securities by such underwriters, then the Company will promptly advise the
Investor thereof and may require, by written notice to the Investor accompanying
such advice, that all or a specified portion of such Registrable Securities be
excluded from such underwritten offering;
(c) the Company shall not be obligated to effect any registration of
Registrable Securities under this Section 3 incidental to the registration of
any of its securities in connection
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with mergers, acquisitions, exchange offers, distributions to its investors,
dividend reinvestment plans or stock option or other employee benefit plans; and
(d) if the registration so proposed by the Company (either on behalf
of its own account or on behalf of another shareholder) involves an underwritten
offering, the right of the Investor to include any or all of the Registrable
Securities in such registration shall be conditioned upon the following: (i) the
Investor shall participate in such underwriting and only such Registrable
Securities that are to be distributed pursuant to the underwriting shall be
included in such registration and (ii) the Investor shall enter into an
underwriting agreement in customary form with the underwriter or underwriters.
4. Registration Expenses
The Company will pay in connection with each of the registrations of
Registrable Securities effected by the Company pursuant to Section 2 or 3 all
expenses incident to the Company's performance of or compliance with Sections 2
and 3 (the "Registration Expenses"), including, without limitation, all
registration and filing fees (including filing fees with respect to the
Commission and to the National Association of Securities Dealers, Inc.), all
fees and expenses of complying with state securities or "blue sky" laws
(including fees and disbursements of underwriters' counsel in connection with
any "blue sky" memorandum or survey), all printing expenses, all registrars' and
transfer agents' fees, and all fees and disbursements of the Company's counsel
and independent public accountants. In all cases Registration Expenses shall
exclude (a) underwriting discounts and commissions and applicable transfer
taxes, if any, which shall be borne by the Investor in all cases, (b) any fees
and disbursements of counsel for the Investor, and (c) any fees and
disbursements of counsel for any underwriter of any Registrable Securities being
registered (other than as described above), including such fees and
disbursements of counsel which the parties expect to be paid by the underwriter.
5. Registration Procedures
5.1 The Company's Obligations
Whenever the Company is required to effect the registration of any
Registrable Securities under this Agreement, the Company will as expeditiously
as is reasonable:
(a) prepare and file with the Commission, on any appropriate form, a
registration statement with respect to such Registrable Securities and use
commercially reasonable efforts to cause such registration statement to become
effective;
(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 Securities Act with respect to the
disposition of all Registrable Securities and other securities covered by such
registration statement until the expiration of one year after such registration
statement first becomes effective or, if sooner, such time as all such
Registrable Securities have been disposed of in accordance with the intended
method of disposition by the Investor as set forth in such registration
statement;
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(c) furnish to the Investor such number of copies of the prospectus
and any supplements thereto included in such registration statement (including a
preliminary prospectus) and other documents such seller may reasonably request
in order to facilitate the sale or disposition of such Registrable Securities;
(d) use commercially reasonable efforts to register or qualify all
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as each seller or underwriter shall
reasonably request, and do any and all other acts and things that may be
necessary to enable the Investor or underwriter to consummate the disposition in
such jurisdictions of its Registrable Securities covered by such registration
statement, 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, or to subject itself to taxation in respect of
doing business in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(e) notify the Investor, at any time when a prospectus relating
thereto 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 light of the circumstances then
existing or if it is necessary to amend or supplement such prospectus to comply
with the law, and at the request of any such seller, prepare and furnish to such
seller 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 Registrable Securities or securities, such prospectus, as
amended or supplemented, will comply with the law; and
(f) issue to any underwriter to which Investor may sell such
Registrable Securities in connection with any such registrations (and to any
direct or indirect transferee of any such underwriter or to such holder, if such
registered offering is not underwritten) certificates evidencing such
Registrable Securities without any legend restricting the transferability of the
Registrable Securities.
5.2 Underwriting Requirements
If requested by the underwriters for any underwritten offering of
Registrable Securities on behalf of the Investor pursuant to a registration
requested under Section 2 or 3, the Company will enter into an underwriting
agreement with such underwriters for such offering, such agreement to contain
such representations and warranties by the Company and such other terms and
conditions as are customarily contained in underwriting agreements relating to
securities comparable to the Common Stock and with respect to secondary
distributions including, without limitation, opinions of counsel, "cold comfort"
letters signed by the independent public accountants who have issued a report on
the Company's financial statements included in such registration statement and
indemnities to the effect and to the extent provided in Section 8. The Investor
shall also enter into and perform its own obligations under such underwriting
agreement.
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6. Preparation; Reasonable Investigation
In connection with the preparation and filing of a registration statement
registering Registrable Securities under the Securities Act, the Company shall
give the Investor and its underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and shall afford
the Investor, underwriters, counsel and accountants reasonable access to the
Company's records and personnel.
7. Furnish Information
It is a condition precedent to the obligations of the Company to take any
action pursuant to this Agreement that the Investor furnishes to the Company
such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of such securities as may be reasonably required
to effect the registration of its Registrable Securities and to execute such
documents in connection with such registration as the Company may reasonably
request.
8. Indemnification and Contribution
In the event any Registrable Securities are included in a registration
statement under Section 2 or 3:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Investor, the officers, directors, partners, agents and
employees of the Investor, any underwriter (as defined in the Securities Act)
for the Investor and each person, if any, who controls the Investor or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein, or any amendments or supplements thereto, incident
to any such registration, qualification or compliance, (ii) 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, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and the Company shall pay for any
legal or other expenses reasonably incurred by the Investor, officer, director,
partner, agent, employee, underwriter or controlling person, as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
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in this Section 8(a) will 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 (which consent may not be unreasonably withheld), nor
will the Company be liable to the Investor, underwriter or
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controlling person 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 the Investor,
underwriter or controlling person; provided, further, that the indemnity
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agreement contained in this Section 8(a) with respect to any preliminary
prospectus shall not inure to the benefit of any underwriter from whom the
person asserting any such losses, claims, damages, liabilities or expenses
purchased Common Shares, or any person controlling such underwriter, if a copy
of the final prospectus (as then amended or supplemented, if the Company shall
have furnished any such amendments or supplements thereto) was not sent or given
by or on behalf of such underwriter to such person, if such is required by law,
at or prior to the written confirmation of the sale of such shares to such
person and if the final prospectus (as so amended or supplemented) would have
corrected the defect giving rise to such loss, claim, damage, liability or
expense.
(b) To the extent permitted by law, the Investor will indemnify and hold
harmless the Company, and each of its officers and directors, , who, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director or officer, may become subject, under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in connection with such
registration, and the Investor shall pay any legal or other expenses reasonably
incurred by the Company or any such director or officer, , as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
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in this Section 8(b) will 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 Investor, which consent may not be unreasonably withheld;
provided, further, that in no event shall any indemnity under this Section 8(b)
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exceed the net proceeds from the offering received by the Investor upon its sale
of Registrable Securities included in the registration.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
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have the right to retain its own counsel (together with appropriate local
counsel) with the fees and expenses to be paid by the indemnifying party, if the
indemnifying party fails to assume the defense within 20 days following notice
of a claim or 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 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 will not relieve such indemnifying party of any liability to the
indemnified party under this Section 8 unless such failure is prejudicial to the
indemnifying party's ability to defend such action, but the
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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 Section 8.
9. Transferability; Legend
(a) The rights to cause the Company to register Registrable
Securities pursuant to this Agreement may not be assigned by the Investor.
(b) The Investor understands and agrees that the certificates
evidencing the Shares will bear a legend in substantially the following form:
"The shares represented by this certificate have not
been registered under the United States Securities Act
of 1933, as amended (the "Act"), and may not be
offered, sold or otherwise transferred, pledged or
hypothecated unless and until such shares are
registered under the Act or, except as otherwise
permitted pursuant to Rule 144 under the Act or another
exemption from registration under the Act or an opinion
of counsel reasonably satisfactory to the issuer is
obtained to the effect that such registration is not
required. The Securities are also subject to transfer
restrictions as set forth in a [Subscription Agreement]
[Convertible Note] [Consulting Agreement] dated August
, 2000 and other operative documents entered into in
connection therewith, copies of which may be obtained
from the issuer."
10. Termination of Registration Rights
The registration rights granted pursuant to this Agreement shall terminate
at such time as all Registrable Securities may be sold within a three-month
period pursuant to Rule 144.
11. Miscellaneous
11.1 Amendment and Waivers
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Investor.
11.2 Notices
Unless otherwise provided, any notice or other communication required or
permitted to be given or effected under this Agreement shall be in writing and
shall be deemed effective upon personal or facsimile delivery to the party to be
notified or three business days after deposit with an internationally recognized
courier service, delivery fees prepaid, and addressed to the party to be
notified at the following respective addresses, or at such other addresses as
may be
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designated by written notice; provided, however, that any notice of change of
address shall be deemed effective only upon receipt:
If to the Company: 000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx X0X 6HHUnited Kingdom
With a copy to: Xxxxx Xxxxxxx Xxxxx & Gesmer
00-00 Xx. Xxxxx'x Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Attn: Xxxxx Xxxxxxx
If to the Investor: Suite L, King's Court
Nassau, Bahamas
With a copy to: Clarke, Wilson, Barristers and Solicitors
000-000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
Xxxxxx X0X 0X0
Attn: Xxxxxxx Xxxxxx
11.3 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada applicable to contracts made and to be performed
entirely within such State, excluding the body of law relating to choice of
laws, and the federal laws of the United States applicable herein and the
parties agree to attorn to the jurisdiction of the courts thereof.
11.4 Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which together constitute one
and the same instrument.
11.5 Successors and Assigns
Subject to the restrictions set forth herein, this Agreement will inure
to the benefit of, and be binding upon, the respective successors and assigns of
the parties.
11.6 Waiver of Jury Trial
Each party hereto hereby waives its rights to a jury trial of any claim
or cause of action based upon or arising out of this Agreement, the Common Stock
or the subject matter hereof. The scope of this waiver is intended to be all-
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including,
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without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. This section 11.6 has been fully
discussed by each of the parties hereto and these provisions shall not be
subject to any exceptions. Each party hereto hereby further warrants and
represents that such party has reviewed this waiver with its legal counsel, and
that such party knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. This waiver shall apply to any subsequent
amendments, supplements or modifications to (or assignments of) this Agreement.
In the event of litigation, this Agreement may be filed as a written consent to
a trial (without a jury) by the court.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
e-commerce group, Inc.. S.C. Management Ltd.
By: By:
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Name: Name:
Title: Title:
E-commerce/SC Mgt/Registration Rights Act
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