EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 15th day of
October, 1999, by XXXXXXXX.XXX, INC., a Nevada corporation (the "Company"), for
the benefit of each Purchaser (individually a "Purchaser" and collectively the
"Purchasers") entering into that certain Common Stock Purchase Agreement (the
"Purchase Agreement") with the Company.
BACKGROUND
Pursuant to the Purchase Agreement, the Company has offered for sale up to
2,195,000 shares (the "Shares") of the Company's Common Stock, par value $.001
per share (the "Common Stock"). In order to induce the Purchasers to purchase
the Shares, the Company has agreed to provide the registration rights set forth
in this Agreement.
1. SECURITIES LAWS REPRESENTATIONS AND COVENANTS OF PURCHASER.
This Agreement is made for the benefit of the Purchasers in reliance upon each
Purchaser's representations to the Company, as the same are set forth in Section
4 of the Purchase Agreement.
2. REGISTRATION RIGHTS.
2.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
(b) "FORM S-1, FORM SB-1, FORM S-2, FORM SB-2 AND FORM S-3" shall
mean Form S-1, Form SB-1, Form S-2, Form SB-2 or Form S-3, respectively,
promulgated by the Commission or any substantially similar form then in effect.
(c) The terms "REGISTER", "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such Registration Statement.
(d) "REGISTRABLE SECURITIES" shall mean the Shares, Warrant Shares
and the Placement Agent Warrant Shares, so long as such shares are ineligible
for sale under subparagraph (k) of Rule 144.
(e) "REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Section 2, including, without limitation, all federal
and state registration, qualification and filing fees, printing expenses, fees
and disbursements of
counsel for the Company, blue sky fees and expenses and, the expense of any
special audits incident to or required by any such Registration.
(f) "REGISTRATION STATEMENT" shall mean Form S-1, Form SB-1, Form
S-2, Form SB-2 or Form S-3, whichever is applicable, unless otherwise specified
herein.
(g) "RULE 144" shall mean Rule 144 promulgated by the Commission
pursuant to the Securities Act.
(h) "PURCHASERS" shall mean, collectively, the Purchasers, their
permitted assignees and transferees and, individually, a Purchaser and any
permitted assignee or transferee of such Purchaser.
(i) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(j) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities pursuant to
this Agreement.
(k) "SELLING SHAREHOLDER" shall mean a holder of Registrable
Securities who requests Registration under Section 2.3 hereof or whose shares of
Common Stock become Registered pursuant to Section 2.2 hereof.
(l) "WARRANT SHARES" shall mean the shares of capital stock of the
Company underlying the Warrant for the Purchase of Shares of Common Stock, and
the Placement Agent Warrant.
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Purchase Agreement.
2.2 REQUIRED REGISTRATION.
(a) On or before thirty (30) days after the date of the Closing, the
Company shall file with the Commission a Registration Statement for the purpose
of Registering, upon the effectiveness of such Registration Statement, the
Shares and the Warrant Shares.
(b) The Company shall use its best efforts to maintain with the
Commission a Registration Statement that is effective, as of one hundred twenty
(120) days after the Closing, and otherwise cause the Shares and Warrant Shares
to be Registered under the Securities Act until the date on which the Shares and
Warrant Shares are eligible for resale or other disposition under Rule 144
without regard to the volume limitations thereof.
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(c) If a Registration Statement is not filed on or before thirty
(30) days after Closing, or is not effective on or before one hundred twenty
(120) days after Closing (the "Target Date"), as required above, then the
Company shall pay to Purchaser, as liquidated damages, an amount equal to two
percent (2%) of the total Offering Price of such Shares (without reference to
the Warrant Shares or the Placement Agent Warrant Shares) for each thirty (30)
day period following the applicable Target Date until such time as the
registration statement is declared effective or, in the case of a late filing,
is filed. Such payment shall be made to the Purchaser by cashier's check or wire
transfer in immediately available funds to an account designated, in writing, by
Purchaser.
2.3 PIGGYBACK REGISTRATION.
(a) Until the time set forth in Section 2.3(g) hereof, each time
that the Company proposes to Register a public offering of its Common Stock,
other than (i) pursuant to a Registration Statement on Form S-4 or Form S-8 or
similar or successor forms or (ii) on a Registration Statement filed in
connection with an exchange offer or other offer of Common Stock solely to the
then-existing shareholders of the Company, the Company shall promptly give
written notice of such proposed Registration to all holders of Shares and
Warrant Shares, which shall offer such holders the right to request inclusion of
any Registrable Securities in the proposed Registration.
(b) Each holder of Shares or Warrant Shares shall have ten (10) days
or such longer period as shall be set forth in the notice from the receipt of
such notice to deliver to the Company a written request specifying the number of
shares of Registrable Securities such holder intends to sell and the holder's
intended plan of disposition.
(c) The Company shall have the right to select all underwriters for
any underwritten public offering of securities of the Company, including all
Shares and Warrant Shares; provided, however, the Purchaser may nominate
underwriters, subject to the Company's approval, which will not be unreasonably
withheld. In the event that the proposed Registration by the Company is, in
whole or in part, an underwritten public offering of securities of the Company,
any request under Section 2.3(b) shall contain the holder's agreement that the
Registrable Securities will be included in the underwriting on the same terms
and conditions as the shares of Common Stock, if any, otherwise being sold
through underwriters under such Registration.
(d) Upon receipt of a written request pursuant to Section 2.3(b),
the Company shall promptly use its best efforts to cause all such Registrable
Securities to be Registered, to the extent required to permit sale or
disposition as set forth in the written request.
Notwithstanding the foregoing, if the managing underwriter of an underwritten
public offering determines and advises in writing that the inclusion of all
Registrable Securities proposed to be included in the underwritten public
offering, together with any shares proposed to be sold by the Company for its
own account and any other issued and
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outstanding shares of Common Stock proposed to be included therein by holders
other than the holders of Registrable Securities (such other holders' shares
hereinafter collectively referred to as the "Other Shares"), would interfere
with the successful marketing of the securities proposed to be included in the
underwritten public offering, including the price at which such securities can
be sold, then any holder of Registrable Securities who shall have requested
registration of his or its Shares or Warrant Shares shall not have such shares
or Warrant Shares included in such Registration Statement.
(e) The registration rights provided by this Agreement shall not apply if
(i) a Registration Statement including the Registrable Security is currently
effective; the Registrable Security is eligible for resale under Rule 144
without regard to the volume limitations thereof; and (iii) five years from the
date hereof have elapsed.
2.4 PREPARATION AND FILING. If and whenever the Company is under an
obligation pursuant to the provisions of this Section 2 to use its best efforts
to effect the Registration of any Registrable Securities, the Company shall, as
expeditiously as practicable:
(a) prepare and file with the Commission a Registration Statement
with respect to such Registrable Securities, using such form of available
Registration Statement as is reasonably selected by the Company (unless
otherwise specified herein), and use its best efforts to cause such Registration
Statement to become and remain effective, keeping each Selling Shareholder
advised as to the initiation, progress and completion of the Registration;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statements and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for, in the case of a Required Registration under Section 2.2, the
period set forth in Section 2.2(b) and, in the case of a Piggyback Registration
under Section 2.3, six months, and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Registrable
Securities covered by such Registration Statement;
(c) furnish to each Selling Shareholder such number of copies of any
summary prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Selling Shareholder may reasonably request in order to facilitate the
public sale or other disposition of such Registrable Securities; provided,
however, that no such prospectus need be furnished more than, in the case of a
Required Registration under Section 2.2, six months after the conclusion of the
period set forth in Section 2.2(b) and, in the case of a Piggyback Registration
under Section 2.3, six months after the effective date of the Registration
Statement related thereto;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such Registration Statement under the securities or blue
sky laws of such
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jurisdictions as each Selling Shareholder shall reasonably request and do any
and all other acts or things which may be reasonably necessary or advisable to
enable such holder to consummate the public sale or other disposition in such
jurisdictions of such Registrable Securities; provided, however, that the
Company shall not be required to consent to general service of process, qualify
to do business as a foreign corporation where it would not be otherwise required
to qualify or submit to liability for state or local taxes where it is not
liable for such taxes; and
(e) at any time when a prospectus covered by such Registration
Statement is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 2.2(b) or Section 2.3(b) hereof, as the
case may be, notify each Selling Shareholder 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 a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and, at
the request of such seller, prepare, file 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 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 statement therein not misleading in the light
of the circumstances then existing. The Company may delay amending or
supplementing the prospectus for a period not to exceed 60 days in the aggregate
in any two year period if the Company is then engaged in negotiations regarding
a material transaction that has not otherwise been publicly disclosed, and the
Selling Shareholders shall suspend their sale of Shares until an appropriate
supplement or prospectus has been forwarded to them or the proposed transaction
is abandoned.
Notwithstanding the foregoing, with respect to the proposed
Registration of Registrable Securities pursuant to Section 2.3 hereof, the
Company may withdraw or cease proceeding with any proposed Registration of
Registrable Securities if it has withdrawn or ceased proceeding with the
proposed Registration of Common Stock of the Company with which the Registration
of such Registrable Securities was to be included.
2.5 EXPENSES. The Company shall pay all Registration Expenses incurred by
the Company in complying with this Section 2.
2.6 INFORMATION FURNISHED BY PURCHASER. It shall be a condition precedent
to the Company's obligations under this Agreement as to any Selling Shareholder
that each Selling Shareholder furnish to the Company in writing such information
regarding such Selling Shareholder and the distribution proposed by such Selling
Shareholder as the Company may reasonably request in preparing the Registration
Statement.
2.7 INDEMNIFICATION.
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2.7.1 COMPANY'S INDEMNIFICATION OF PURCHASERS. The Company shall
indemnify each Selling Shareholder, each of its officers, directors and
constituent partners, and each person controlling (within the meaning of the
Securities Act) such Selling Shareholder, against all claims, losses, damages or
liabilities (or actions in respect thereof) suffered or incurred by any of them,
to the extent such claims, losses, damages or liabilities arise out of or are
based upon any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus or any related Registration Statement incident to
any such Registration, 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, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and
relating to actions or inaction required of the Company in connection with any
such Registration; and the Company will reimburse each such Selling Shareholder,
each of its officers, directors and constituent partners and each person who
controls any such Selling Shareholder, for any reasonable, documented legal and
other expenses incurred in connection with investigating or defending any such
claim, loss, damage, liability or action; provided, however, that the indemnity
contained in this Section 2.7.1 shall not apply to amounts paid in settlement of
any such claim, loss, damage, liability or action if settlement is effected
without the consent of the Company (which consent shall not unreasonably be
withheld); and provided, further, 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 upon any untrue (or alleged untrue) statement or
omission based upon written information furnished to the Company by such Selling
Shareholder, underwriter, placement agent, controlling person or other
indemnified person and stated to be for use in connection with the offering of
securities of the Company.
2.7.2 SELLING SHAREHOLDER'S INDEMNIFICATION OF COMPANY. Each Selling
Shareholder shall indemnify the Company, each of its directors and officers,
each underwriter, if any, of the Company's securities covered by a Registration
Statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other Selling Shareholder, each of its
officers, directors and constituent partners and each person controlling such
other Selling Shareholder, against all claims, losses, damages and liabilities
(or actions in respect thereof) suffered or incurred by any of them and arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in such Registration Statement or related prospectus, 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, such other Selling Shareholders, such directors,
officers, partners, persons, underwriters and controlling persons for any
reasonable, documented legal and other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that such indemnification and reimbursement shall be 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 or prospectus in reliance upon and in conformity with written
information furnished to the Company by such Selling Shareholder and stated to
be for use in
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connection with the offering of Registrable Securities; provided,
further, that Selling Shareholder's liability hereunder shall be limited to any
amount received by Selling Shareholder upon disposition of the Shares or Warrant
Shares.
2.7.3 INDEMNIFICATION PROCEDURE. Promptly after receipt by an
indemnified party under this Section 2.7 of notice of the commencement of any
action which may give rise to a claim for indemnification hereunder, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 2.7, notify the indemnifying party in
writing of the commencement thereof and generally summarize such action. The
indemnifying party shall have the right to participate in and to assume the
defense of such claim, and shall be entitled to select counsel for the defense
of such claim with the approval of any parties entitled to indemnification,
which approval shall not be unreasonably withheld. Notwithstanding the
foregoing, the parties entitled to indemnification shall have the right to
employ separate counsel (reasonably satisfactory to the indemnifying party) to
participate in the defense thereof, but the fees and expenses of such separate
counsel shall be at the expense of such indemnified parties unless the named
parties to such action or proceedings include both the indemnifying party and
the indemnified parties and the indemnifying party or such indemnified parties
shall have been advised by counsel that there are one or more legal defenses
available to the indemnified parties which are different from or additional to
those available to the indemnifying party (in which case, if the indemnified
parties notify the indemnifying party in writing that they elect to employ
separate counsel at the reasonable expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
or proceeding on behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection with any such
action or proceeding or separate or substantially similar or related action or
proceeding in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable, documented fees and expenses of
more than one separate counsel at any time for all indemnified parties, which
counsel shall be designated in writing by the Purchasers of a majority of the
Registrable Securities).
2.7.4 CONTRIBUTION. If the indemnification provided for in this
Section 2.7 from an indemnifying party is unavailable to an indemnified party
hereunder in respect to any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified party in connection with the statements
or omissions which result in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and 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 or alleged omission to state a material fact
relates to information supplied by such indemnifying party or indemnified party
and the parties' relative intent, knowledge, access to information supplied by
such indemnifying party or indemnified party and opportunity to
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correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any documented legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action, suit, proceeding or claim, or in collecting such
indemnity or reimbursement from the indemnifying party.
3. COVENANTS OF THE COMPANY.
The Company agrees to:
(a) Notify the holders of Registrable Securities in writing included in a
Registration Statement of (i) the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement and (ii) upon
learning of the initiation of any proceedings for the purpose of suspending such
effectiveness, the existence of such proceedings. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible time.
(b) If the Common Stock is then listed on a national securities exchange,
use its best efforts to cause the Registrable Securities to be listed on such
exchange. If the Common Stock is not then listed on a national securities
exchange, use its best efforts to facilitate the reporting of the Registrable
Securities on Nasdaq.
(c) Take all other reasonable actions necessary to expedite and facilitate
disposition of the Registrable Securities by the holders thereof pursuant to the
Registration Statement.
(d) With a view to making available to the holders of Registrable
Securities the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the Commission that may at any time permit the
Purchasers to sell securities of the Company to the public without registration,
the Company agrees to:
(i) make and keep adequate current public information with respect
to the Company available, as those terms are understood and defined in Rule 144,
at all times after 90 days after the effective date of the first Registration
Statement filed by the Company for the offering of its securities to the general
public;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934 (the "1934 Act"); and
(iii) furnish to each holder of Shares, so long as such holder of
Shares owns any Shares, forthwith upon written request (a) a written statement
by the Company as to whether it has complied with the reporting requirements of
Rule 144, the Securities Act and the 1934 Act, (b) a copy of the most recent
annual or quarterly report of the
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Company and such other reports and documents so filed by the Company and (c)
such other information as may be reasonably requested and as is publicly
available in availing the holders of Shares of any rule or regulation of the
Commission which permits the selling of any such securities without
registration.
(e) Prior to the filing of a Registration Statement or any amendment
thereto (whether pre-effective or post-effective), and prior to the filing of
any prospectus or prospectus supplement related thereto, the Company will
provide each Selling Shareholder with copies of all pages thereto, if any, which
reference such Selling Shareholder.
4. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed under the laws of
the State of Delaware without regard to any otherwise applicable principles of
conflicts of laws.
(b) This Agreement may not be assigned by a Purchaser other than to the
purchaser or transferee of all of the Purchaser's Shares, which purchaser or
transferee shall be a permitted assign hereunder and under the Purchase
Agreement. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, permitted
assigns, heirs, executors and administrators of the parties hereto.
(c) This Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other party in any manner by any representations, warranties, covenants or
agreements except as specifically set forth herein or therein. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto and their respective successors and permitted assigns, any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided herein.
(d) In the event that any provision of this Agreement shall be invalid,
illegal or unenforceable, it shall, to the extent practicable, be modified so as
to make it valid, legal and enforceable and to retain as nearly as practicable
the intent of the parties, and the validity legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby. To
the extent permitted by law, the parties waive the benefit of any provision of
law that renders any provision of the Agreement invalid or unenforceable in any
respect.
(e) Except as otherwise provided herein, any term of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance, either retroactively or prospectively,
and either for a
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specified period of time or indefinitely), with the written consent of the
Company and the Purchaser.
(f) All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed effectively given upon personal
delivery, on the first business day following mailing by overnight courier, or
on the fifth day following mailing by registered or certified mail, return
receipt requested, postage prepaid, addressed to the Company at its address as
set forth in the Purchase Agreement and to the Purchaser at its address as shown
on the books of the Company.
(g) The titles of the paragraphs and subparagraphs of this Agreement are
for convenience of reference only and are not to be considered in construing
this Agreement.
(h) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
(i) No waiver by any party to this Agreement of any one or more defaults
by any other party or parties in the performance of any of the provisions hereof
shall operate or be construed as a waiver of any future default or defaults,
whether of a like or different nature. Except as expressly provided herein, no
failure or delay on the part of any party in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
[SIGNATURE PAGE FOLLOWS]
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