[DRAFT - 7/18/03]
ANNEX IV
TO
COMMON STOCK AND WARRANT PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July___________, 2003
(this "Agreement"), is made among NATIONAL MANAGEMENT CONSULTING, INC., a
Delaware corporation, with headquarters located at 000 Xxxxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), each entity named on a
signature page hereto (each, an "Investor"), and vFINANCE, INC. ("VFIN") (each
agreement with an Investor being deemed a separate and independent agreement
between the Company and such Investor, except that each Investor acknowledges
and consents to the rights granted to each other Investor under such agreement).
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the Common Stock
and Warrant Purchase Agreement, dated as of July_____________, 2003, between the
Investor and the Company (the "Purchase Agreement," terms not otherwise defined
herein shall have the meanings ascribed to them in the Purchase Agreement), the
Company has agreed to issue and sell to the Investors the Common Stock of the
Company (the "Common Stock"); and
WHEREAS, the Company has agreed to issue the Warrants to Investors and
VFIN in connection with the issuance of the Common Stock, and the Warrants may
be exercised for the purchase of shares of Common Stock (the "Warrant Shares")
upon the terms and conditions of the Warrants; and
WHEREAS, to induce the Investor to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
(a) "Effective Date" means the date the SEC declares a Registration
Statement covering Registrable Securities and otherwise meeting the conditions
contemplated hereby to be effective.
(b) "Held Shares Value" means the Purchase Price for shares of
Common Stock acquired by the Investor and not yet sold.
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(c) "Investor" means the Investor and any permitted transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof and who holds Registrable Securities.
(d) "Potential Material Event" means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by a determination in good
faith by the Board of Directors of the Company that disclosure of such
information in the registration statement would be detrimental to the business
and affairs of the Company or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a registration statement
at such time; in each case where such determination shall be accompanied by a
good faith determination by the Board of Directors of the Company that the
registration statement would be materially misleading absent the inclusion of
such information.
(e) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the Commission.
(f) "Registrable Securities" means the Common Stock, the Warrants,
and the Warrant Shares.
(g) "Registration Statement" means a registration statement of the
Company under the Securities Act covering Registrable Securities on Form S-3, if
the Company is then eligible to file using such form, and if not eligible, on
Form SB-2 or other appropriate form.
(h) "Required Filing Date" means ninety (90) days from the date of
the Purchase Agreement.
(i) "Restricted Sale Date" means the first date, other than a date
during a Permitted Suspension Period (as defined below), on which the Investor
is restricted from making sales of Registrable Securities covered by any
previously effective Registration Statement.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Common Stock Purchase Agreement or in
the Rules of the SEC.
2. Registration.
(a) Mandatory Registration.
(i) The Company shall prepare and file with the SEC, no later
than the Required Filing Date (or the next business day following the Required
Filing Date should such date fall on a weekend), an amendment to an existing
Registration Statement or a new Registration Statement, in either event
registering for resale by the Investor and VFIN a sufficient number of shares of
Common Stock for the Investors to sell all of the Registrable Securities. The
Registration Statement shall also state that, in accordance with Rules 416 and
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457 under the Securities Act, it also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon exercise of the
Warrants to prevent dilution resulting from stock splits, or stock dividends.
(ii) The aggregate number of shares registered for the
Investors in each Registration Statement or amendment thereto shall be allocated
among the Investors on a pro rata basis among them according to their relative
Registrable Shares included in such Registration Statement.
(b) Payments by the Company.
(i) [RESERVED]
(ii) If the Registration Statement covering the Registrable Securities is
not filed with the SEC by the relevant Required Filing Date or if there is a
Restricted Sale Date within ninety (90) days after the Initial Required
Effective Date, then the Company will make payments to the Investor in such
amounts and at such times as shall be determined pursuant to this Section 2(b).
The Company will use its reasonable best efforts to cause such Registration
Statement to be declared effective on a date (the "Initial Required Effective
Date") which is no later than five (5) days after oral or written notice by the
SEC that it may be declared effective.
(iii) The amount (the "Periodic Amount") to be paid by the
Company to the Investor shall be determined as of each Computation Date (as
defined below) and such amount shall be equal to the Periodic Amount Percentage
(as defined below) of the Purchase Price for the Common Stock for the period (X)
commencing on the date following the Required Filing Date, or (Y) the date
following a Restricted Sale Date, as the case may be, to the first relevant
Computation Date, and thereafter to each subsequent Computation Date. The
"Periodic Amount Percentage" means (A) with respect to the Required Filing Date,
one percent (1%) of the Purchase Price of the Common Stock each Computation
Date.[subsection (b) to be reinserted} discusses what if the Registration
Statement is suspended within 90 days after it is effective.and (b) with the
Restricted Sale Date one (1%)percent of the Held Shares Value from the
Restricted Sale Date to each Computation Date thereafter. Anything in the
preceding provisions of this paragraph (iii) to the contrary notwithstanding,
after the Initial Required Effective Date, the Purchase Price shall be deemed to
refer to the sum of the Held Shares Value. By way of illustration and not in
limitation of the foregoing, if the Registration Statement is not filed ninety
(90) days after the Required Filing Date, the Periodic Amount (assuming no
Periodic Amounts were previously paid) will aggregate three (3%) percent of the
Purchase Price.
(iv) Each Periodic Amount will be payable by the Company,
except as provided in the other provisions of this subparagraph (iv), in cash or
other immediately available funds to the Investor (1) thirty (30) days after the
Required Filing Date or a Restricted Sale Date, as the case may be, and (2) on
the earlier of (A) each thirtieth day thereafter, (B) the third business day
after the date the Registration Statement is filed or is declared effective, or
(C) the third business day after the Registration Statement has its restrictions
removed after the relevant Effective Date, in each case without requiring demand
therefor by the Investor. Notwithstanding the provisions of the first sentence
of this subparagraph (iv), at the mutual agreement of the Company and the
Investor, any time before the Periodic Amount is paid, all or a portion of the
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Periodic Amount can be paid by the issuance of additional shares of Common Stock
to the Investor ("Periodic Amount Shares") in an amount equal to the Periodic
Amount being paid thereby divided by 90% of the average Closing Bid Price for
the last five (5) trading days prior to the Computation Date.
(v) Notwithstanding the foregoing, the amounts payable by the
Company pursuant to this provision shall not be payable to the extent any delay
in the effectiveness of the Registration Statement occurs because of an act of,
or a failure to act or to act timely by the Investor or its counsel.
(vi) "Computation Date" means (A) the date which is the
earlier of thirty (30) days after the Required Filing Date or a Restricted Sale
Date, or when the shares of Common Stock are listed on the Principal Trading
Market (with respect to payments due as contemplated by Section 2(b)(iii)
hereof), as the case may be, and (B) each date which is the earlier of (1)
thirty (30) days after the previous Computation Date or (2) the date after the
previous Computation Date on which the Registration Statement is declared
effective or has its restrictions removed or the shares of Common Stock are
listed on the Principal Trading Market (with respect to payments due as
contemplated by Section 2(b)(iii) hereof), as the case may be.
3. Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the following:
(a) Prepare and file, with the SEC by the Required Filing Date a
Registration Statement with respect to not less than the number of Registrable
Securities provided in Section 2(a) above, and thereafter use its reasonable
best efforts to cause such Registration Statement relating to Registrable
Securities to become effective by the Initial Required Effective Date and keep
the Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earlier of (i) the date when the
Investors may sell all Registrable Securities under Rule 144(k) without volume
or other restrictions or limits, (ii) the date the Investors no longer own any
of the Registrable Securities, which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any 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, in
light of the circumstances in which they were made, not misleading, or (iii) two
(2) years after the Effective Date of the Registration Statement;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
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(c) Permit a single firm of counsel designated by the Investors and
VFIN (which, until further notice, shall be deemed to be Xxxxxxx & Xxxxxx LLP,
Attn: Xxxxxx Xxxxxxx, Esq.) ("Investor's Counsel") (which Investor's Counsel has
agreed to receive such notification) to review the Registration Statement and
all amendments and supplements thereto for a reasonable period of time (but not
less than three (3) business days) prior to their filing with the SEC, and not
file any document in a form to which such counsel reasonably objects;
(d) Notify the Investors and VFIN and, if applicable, the Investors'
Counsel immediately (and, in the case of (i)(A) below, not less than three (3)
business days prior to such filing) and (if requested by any such person)
confirm such notice in writing no later than one (1) business day following the
day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed; (B) whenever
the SEC notifies the Company whether there will be a "review" of such
Registration Statement; (C) whenever the Company receives (or a representative
of the Company receives on its behalf) any oral or written comments from the SEC
in respect of a Registration Statement, copies or, in the case of oral comments,
summaries of such comments (as such comments relate to the Investor) shall be
promptly furnished by the Company to the Investors; and (D) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) if at any time any of the representations
or warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated hereby ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose; and (vi) of the
occurrence of any event that to the best knowledge of the Company makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In addition, the
Company shall furnish the Investor's Counsel with copies of all intended written
responses to the comments contemplated in clause (C) of this Section 3(d) that
relate to Investors not later than one (1) business day in advance of the filing
of such responses with the SEC so that the Investors shall have the opportunity
to comment thereon;
(e) Furnish to Investors and/or Investors' Counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one (1) copy of the Registration Statement, each
preliminary prospectus and prospectus, and each amendment or supplement thereto,
all correspondence to, with, or from the SEC, and (ii) such number of copies of
a prospectus, and all amendments and supplements thereto (as contemplated in
Section 3(d) above) and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;
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(f) As promptly as practicable after becoming aware thereof, notify
each Investor of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included in the 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, in light of the circumstances under which they were made,
not misleading, and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement or other appropriate filing with the SEC
to correct such untrue statement or omission, and deliver a number of copies of
such supplement or amendment to each Investor as such Investor may reasonably
request;
(g) As promptly as practicable after becoming aware thereof, notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance by the SEC
of a Notice of Effectiveness or any notice of effectiveness or any stop order or
other suspension of the effectiveness of the Registration Statement at the
earliest possible time;
(h) Notwithstanding the foregoing, if at any time or from time to
time after the date of effectiveness of the Registration Statement, the Company
notifies the Investors in writing of the existence of a Potential Material
Event, the Investors shall not offer or sell any Registrable Securities, or
engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until such Investor receives written notice from the Company that
such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event; provided, however, that the
Company may not so suspend the right to such holders of Registrable Securities
during the periods the Registration Statement is required to be in effect other
than during a Permitted Suspension Period (and the applicable provisions of
Section 2(b) shall apply with respect to any such suspension other than during a
Permitted Suspension Period). The term "Permitted Suspension Period" means up to
two such suspension periods, each of which suspension period shall not either
(i) be for more than fifteen (15) business days or (ii) begin less than ten (10)
business days after the last day of the preceding suspension (whether or not
such last day was during or after a Permitted Suspension Period); provided
further that the Company shall, if lawful to do so, provide the Investor with at
least two (2) business days' notice of the existence (but not the substance of)
a Potential Material Event. Investor shall treat any information with respect to
Potential Material Event as confidential. The Investor shall indemnify and hold
harmless the Company, its employees, officers, directors, agents, and partners,
and their respective Affiliates, from and against all claims, losses, damages,
costs (including the costs of preparation and attorney's fees) and expenses
suffered regarding any trades by the Investor, its affiliates or any person(s)
acquiring information from the Investor as a tippee or otherwise.
(i) Use its reasonable efforts to secure and maintain the
designation and listing of all the Registrable Securities covered by the
Registration Statement on the Principal Trading Market within the meaning of
Rule 11Aa2-1 of the SEC under the Exchange Act and the quotation of the
Registrable Securities on the Principal Trading Market;
(j) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the initial Effective
Date;
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(k) Cooperate with the Investors who hold Registrable Securities
being offered to facilitate the timely preparation and delivery of certificates
for the Registrable Securities to be offered pursuant to the Registration
Statement and enable such certificates for the Registrable Securities to be in
such denominations or amounts as the case may be, as the Investors may
reasonably request, and, within five (5) business days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and opinion of such counsel, which shall
include, without limitation, directions to the transfer agent to issue
certificates of Registrable Securities (including certificates for Registrable
Securities to be issued after the Effective Date and replacement certificates
for Registrable Securities previously issued) without legends or other
restrictions, except as required by any applicable state securities laws;
(l) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement; and
(m) Comply with all applicable rules and regulations of the
Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date of
the Registration Statement, which statement shall cover said 12-month period, or
end shorter periods as is consistent with the requirements of Rule 158.
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
(a) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
(b) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and, if
so directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
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(c) Investor specifically acknowledges that the Company reserves the
right (but is not otherwise obligated) to sell additional securities on terms
determined by the board of directors of the Company at any time before,
contemporaneous with or after the execution of this Purchase Agreement or from
time to time and in any manner whatsoever pursuant to applicable federal and
state securities laws.
5. Expenses of Registration. All reasonable expenses (other than
underwriting discounts and commissions of the Investor) incurred in connection
with registrations, filings or qualifications pursuant to Section 3, but
including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company
6. Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person" or
"Indemnified Party"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
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 under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to clause (b) of this Section 6, the
Company shall reimburse the Investors, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (I) apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto,
after such prospectus was made available by the Company pursuant to Section 3(c)
hereof; (II) be available to the extent such Claim is based on a failure of the
Investor to deliver or cause to be delivered the prospectus made available by
the Company or the amendment or supplement thereto made available by the
Company; (III) be
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available to the extent such Claim is based on the delivery of a prospectus by
the Investor after receiving notice from the Company under Section 3(f), (g) or
(h) hereof (other than a notice regarding the effectiveness of the Registration
Statement or any amendment or supplement thereto), or (IV) apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed. Each Investor will indemnify the Company and its officers, directors
and agents (each, an "Indemnified Person" or "Indemnified Party") against any
claims arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company, by or on
behalf of such Investor, expressly for use in connection with the preparation of
the Registration Statement or the amendment or supplement thereto, subject to
such limitations and conditions as are applicable to the indemnification
provided by the Company to this Section 6. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9.
(b) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, 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
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be. In case any such action is brought against any Indemnified Person
or Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such Indemnified Person or
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Person or Indemnified
Party under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently incurred by such Indemnified Person or Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action to its
final conclusion. The Indemnified Person or Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and reasonable out-of-pocket expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the Indemnified Person or Indemnified Party provided such
counsel is of the opinion that all defenses available to the Indemnified Party
can be maintained without prejudicing the rights of the indemnifying party. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
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7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
except where the seller has committed fraud (other than a fraud by reason of the
information included or omitted from the Registration Statement as to which the
Company has not given notice as contemplated under Section 3 hereof) or
intentional misconduct, contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. Reports under Securities Act and Exchange Act. With a view to making
available to Investor the benefits of Rule 144 promulgated under the Securities
Act or any other similar rule or regulation of the SEC that may at any time
permit Investor to sell securities of the Company to the public without
Registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to Investor so long as Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company and (iii)
such other information as may be reasonably requested to permit Investor to sell
such securities pursuant to Rule 144 without Registration.
(d) The Company will, at the request of any Holder of Registrable
Securities, upon receipt from such Holder of a certificate certifying (i) that
such Holder has held such Registrable Securities for a period of not less than
one (1) year, (ii) that such Holder has not been an affiliate (as defined in
Rule 144) of the company for more than the ninety (90) preceding days, and (iii)
as to such other matters as may be appropriate in accordance with such Rule,
remove from the stock certificate representing such Registrable Securities that
portion of any restrictive legend which relates to the registration provisions
of the Securities Act.
9. Assignment of the Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities only if the Company is, within a reasonable time after such transfer
or assignment, furnished with written notice of (a) the name and address of such
transferee or assignee and (b) the securities with respect to which such
registration rights are being transferred or assigned.
10
10. Amendment of Registration Rights. 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 Investors who hold a fifty (50%) percent
interest of the Held Shares Value as of such date. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be
given in the manner contemplated by the Purchase Agreement, (i) if to the
Company or to the Investor, to their respective address contemplated by the
Purchase Agreement, and (ii) if to any other Investor, at such address as such
Investor shall have provided in writing to the Company, or at such other address
as each such party furnishes by notice given in accordance with this Section
11(b).
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be deemed to be a contract made under the
laws of the State of Delaware for contracts to be wholly performed in such state
and without giving effect to the principles thereof regarding the conflict of
laws. Each of the parties consents to the jurisdiction of the federal courts and
state courts whose districts encompass any part of the State of New York, New
YorkCounty in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
(e) The Company and each Investor hereby waive a trial by jury in
any action, proceeding or counterclaim brought by either of the parties hereto
against the other in respect of any matter arising out of or in connection with
this Agreement or any of the other Transaction Agreements.
(f) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(g) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
11
(h) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(i) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
(j) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
(k) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
NATIONAL MANAGEMENT CONSULTING, INC.
By:_____________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
INVESTORS:
Name of Investor:_______________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
