REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of October 10, 2005, by and among CENUCO,
INC.,
a
Delaware corporation (the “Company”),
and
the undersigned investors listed on Schedule I attached hereto (each, an
“Investor”
and
collectively, the “Investors”).
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto, dated as of October 10, 2005 (the “Securities
Purchase Agreement”),
the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Investors 6,578,947
units (the “Units”),
each
Unit consisting of (i) one ten thousandth of a share of the Company’s Series B
Junior Participating Convertible Preferred Stock, par value $0.001 per share
(the “Preferred
Shares”),
convertible into shares of the Company’s common stock, par value $0.001 per
share (the “Common
Stock”),
and
(ii) a warrant, (the “Warrants”),
to
acquire 0.3 shares of Common Stock. Capitalized terms not defined herein shall
have the meaning ascribed to them in the Securities Purchase
Agreement.
B. To
induce
the Investors to execute and deliver the Securities Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations there under, or any
similar successor statute (collectively, the “Securities
Act”),
and
applicable state securities laws.
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 Investors hereby agree as
follows:
1. DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following
meanings:
(a) "Closing
Bid Price"
means,
on any date, the closing bid price (as reported by Bloomberg L.P.) of the Common
Stock on the Principal Market or if the Common Stock is not traded on a
Principal Market, the highest reported bid price for the Common Stock, as
published by the National Association of Securities Dealers, Inc.
(b) “Market
Price”
means
the higher of $3.80 or the Closing Bid Price of a share of Common
Stock.
(c) “Person”
means
a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
(d) "Principal
Market"
means
the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock
Exchange, the OTC Bulletin Board or the New York Stock Exchange, whichever
is at
the time the principal trading exchange or market for the Common
Stock.
(e) “Register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) 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 or delayed basis (“Rule
415”),
and
the declaration or ordering of effectiveness of such Registration Statement(s)
by the United States Securities and Exchange Commission (the “SEC”).
(f) “Registrable
Securities”
means
the Conversion Shares and the Warrant Shares, as such terms are defined in
the
Securities Purchase Agreement.
(g) “Registration
Statement”
means
a
registration statement under the Securities Act which covers Registrable
Securities.
(h) "Standby
Distribution Agreement"
means
that certain Standby Equity Distribution Agreement of even date herewith by
and
between the Company and Cornell Capital Partners, LP, a Delaware limited
partnership.
2. REGISTRATION.
(a) Piggyback
Registration.
At any
time after the date hereof, if the Company proposes to file a Registration
Statement under the Securities Act with respect to the resale of the Company's
Common Stock, the Company shall send to each Investor written notice of such
determination and, if within fifteen (15) days after the date of such notice,
such Investor shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities such
Investor requests to be registered[, except that if, in connection with any
underwritten public offering, the managing underwriter(s) thereof shall impose
a
limitation on the number of shares of Common Stock which may be included in
the
Registration Statement because, in such underwriter(s)' judgment, marketing
or
other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities
with respect to which such Investor has requested inclusion hereunder as the
underwriter shall permit. Any exclusion of Registrable Securities shall be
made
pro rata among the Investors seeking to include Registrable Securities, in
pro
rata among the Investors seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be included by
such
Investors; provided,
however
that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not
contractually entitled to inclusion of such securities in such Registration
Statement or are not contractually entitled to pro rata inclusion with the
Registrable Securities; and provided, further however that after giving effect
to the immediately preceding proviso, any exclusion of Registrable Securities
shall be made pro rata with holder of other securities having the contractual
right to include such securities in the Registration Statement other than holder
of securities contractually entitled to inclusion of their securities in such
Registration Statement by reason of demand registration rights.] In an offering
in connection with which an Investor is entitled to registration under this
Section 2(a), if such offering is an underwritten offering, then each Investor
whose Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter(s) and subject
to the provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock include in such underwritten offering.
2
(b) Demand
Registration.
If by
September 15, 2006, the Company has not filed a Registration Statement with
respect to the resale of Common Stock which (i) includes all of the Investors'
Registrable Securities which the Investors have requested be included in such
Registration Statement pursuant to Section 2(a), (ii) has been declared
effective by the SEC (other than as a result of actions or failures to act
of
the Investors or the other parties to the Standby Distribution Agreement,
including the failure to provide information required by the rules and
regulations of the SEC), and (iii) remains in effect unless all Registrable
Securities have been sold, then Investors will have the right to require the
Company to file a Registration Statement for the resale the Investors'
Registrable Securities. Subject to the terms and conditions of this Agreement,
the Company shall prepare and file, no later than sixty (60) days after it
has
received the written request of the Investors under this Section 2(b), (the
“Scheduled
Filing Deadline”),
with
the SEC a registration statement on Form S-1 (or, if the Company is then
eligible, on Form S-3) under the Securities Act (the “Demand
Registration Statement”)
for
the resale by the Investors of the number of Registrable Securities specified
by
the Investors. The Company shall retain, and pay at its sole expense, a law
firm
to file each Demand Registration Statement from a list of approved law firms
provided by the Investor including but not limited to Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP, Xxxxxxxxx Xxxxxxx, LLP and Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx
Xxxxxx LLP. Prior to the filing with the SEC of an initial Registration
Statement which includes Investors' Registrable Securities, the Company shall
furnish a copy of such initial Registration Statement to the Investors whose
shares are so included for their review and comment. The Investors shall furnish
comments on such initial Registration Statement to the Company with twenty-four
(24) hours of the receipt thereof from the Company.
(c) Effectiveness
of each Demand Registration Statement.
Subject
to the terms and conditions of this Agreement, the Company shall use its best
efforts to: (i) have each Demand Registration Statement declared effective
by
the SEC no later than one hundred twenty (120) days after the date filed (the
“Scheduled
Effective Deadline”)
and
(ii) insure that such Demand Registration Statement and any subsequent
Registration Statement remains in effect until all of the Registrable Securities
have been sold, subject to the terms and conditions of this Agreement. It shall
be an event of default hereunder if a Demand Registration Statement is not
declared effective by the SEC within one hundred twenty (120) days after filing
thereof.
(d) Failure
to File or Obtain Effectiveness of a Demand Registration
Statement.
In the
event the Registration Statement is not filed by the Scheduled Filing Deadline
or is not declared effective by the SEC on or before the Scheduled Effective
Deadline (other than as a result of actions or failures to act of any of the
Investors, including the failure to provide information required by the rules
and regulations of the SEC), or if after a Demand Registration Statement has
been declared effective by the SEC, sales cannot be made pursuant to such
Registration Statement (whether because of a failure to keep such Demand
Registration Statement effective, failure to disclose such information as is
necessary for sales to be made pursuant to such Demand Registration Statement,
failure to register sufficient shares of Common Stock or otherwise then as
partial relief for the damages to any holder of Registrable Securities by reason
of any such delay in or reduction of its ability to sell the underlying shares
of Common Stock (which remedy shall not be exclusive of any other remedies
at
law or in equity), the Company will pay as liquidated damages (the “Liquidated
Damages”)
and
not as a penalty, to the holder, a cash amount equal to two percent (2%) per
month of (i) an amount equal to the product of (x) the number of Registrable
Securities which Investors have requested be registered pursuant to such Demand
Registration Statement and (y) the Market price of Common Stock on the Scheduled
Effective Deadline. The initial payment of Liquidated Damages shall be made
within three (3) business days from the end of the month in which the Scheduled
Filing Deadline or Scheduled Effective Deadline occurred, and shall continue
thereafter until a Demand Registration Statement is filed or declared effective
as the case may be.
3
(e) Liquidated
Damages.
The
Company and the Investors hereto acknowledge and agree that the sums payable
under subsection 2(c) above shall constitute liquidated damages and not
penalties and are in addition to all other rights of the Investor, including
the
right to call a default. The parties further acknowledge that (i) the amount
of
loss or damages likely to be incurred is incapable or is difficult to precisely
estimate, (ii) the amounts specified in such subsection bear a reasonable
relationship to, and are not plainly or grossly disproportionate to, the
probable loss likely to be incurred in connection with any failure by the
Company to file a Demand Registration Statement or to obtain or maintain the
effectiveness of a Demand Registration Statement, (iii) one of the reasons
for
the Company and the Investors reaching an agreement as to such amounts was
the
uncertainty and cost of litigation regarding the question of actual damages,
and
(iv) the Company and the Investors are sophisticated business parties and have
been represented by sophisticated and able legal counsel and negotiated this
Agreement at arm’s length.
(f) Certain
Parameters of Registrations.
(i) The
Company shall not be required to: (A) effect more than two (2) registrations
under Section 2(b); (B) effect the registration of Registrable Securities
pursuant to Section 2(b) at any time that the Investors may sell their Company
securities pursuant to Rule 144 (k); or (C) file a Demand Registration Statement
if the aggregate price to the public (calculated as the Market Price of
Registrable Securities Scheduled Filing Deadline of the filing of the applicable
Demand Registration) of the Registrable Securities included in such Registration
Statement) is less than US $5,000,000. A demand registration request pursuant
to
Section 2(b) hereof shall be deemed to have been made and satisfied if the
Company offers to all holders of its unregistered Common Stock, including the
Investors with respect to all of Registrable Securities, the opportunity to
have
their unregistered Common Stock (including all Investors' Registrable
Securities) included in a Registration Statement, which is filed,
and declared
effective by the SEC and remains in effect until all securities registered
thereunder have been sold.
(ii) Any
request for registration under Section 2(b) that is received by the Company
during the period between the end of a calendar quarter and the release of
the
Company's earnings for such calendar quarter shall be deemed to have been
received by the Company on the date of the earnings release; provided that
there
shall be not more than seventy -five (75) days between the end of a calendar
quarter and the date of the earnings release for such calendar quarter..
4
(iii) Investors
shall have an unlimited right to request registration of their Registrable
Securities pursuant to Section 2(a).
(iv) In
connection with an Investors' demand under Section 2(b) and notwithstanding
anything herein to the contrary, the Company shall have the right to delay
the
Scheduled Filing Deadline and the related Scheduled Effective Deadline: (i)
for
a period of not more than sixty (60) days; provided that such deferral may
not
be applied more than one time in any twelve (12) successive month period; (ii)
for a period of not more than thirty (30) days to attempt to arrange for the
sale of all of the Investors' Common Shares and Warrant Shares requested to
be
registered; and (iii) shall not be combined with any extension in Section
2(f)(ii). The Scheduled Effective Deadline shall be extended to the extent
of
any delays in the filing of a Demand Registration Statement pursuant to the
terms of this Section 2(f)(iv).
3. RELATED
OBLIGATIONS.
(a) Unless
and until Rule 144(k) becomes available with respect to the Registrable
Securities, the Company shall keep any Registration Statement which includes
Investors' Registrable Securities effective pursuant to Rule 415 at all
times until the date on which the Investors shall have sold all the Registrable
Securities covered by such Registration Statement (the “Registration
Period”),
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.
(b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
may
be necessary to keep such Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the provisions
of
the Securities Act with respect to the disposition of all Registrable Securities
of the Company covered by such Registration Statement until such time as all
of
such Registrable Securities shall have been disposed of in accordance with
the
intended methods of disposition by the seller or sellers thereof as set forth
in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company’s filing a
report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
the
Company shall incorporate such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the Exchange Act report is filed which created
the
requirement for the Company to amend or supplement the Registration Statement.
5
(c) The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) at least one (1) copy of
such
Registration Statement as declared effective by the SEC and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, all exhibits and each preliminary prospectus,
(ii) ten (10) copies of the final prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number
of
copies as such Investor may reasonably request) and (iii) such other documents
as such Investor may reasonably request from time to time in order to facilitate
the disposition of the Registrable Securities owned by such
Investor.
(d) The
Company shall use its reasonable best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of such jurisdictions in the United States as any
Investor reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not
be
required in connection therewith or as a condition thereto to (w) make any
change to its articles of incorporation or by-laws, (x) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but
for
this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
(e) As
promptly as practicable after becoming aware of such event or development,
the
Company shall notify each Investor in writing of the happening of any event
as a
result of which the prospectus included in a Registration Statement, as then
in
effect, includes an untrue statement of a material fact or omission 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 (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to each Investor.
Notwithstanding any provision of this Agreement to the contrary, if the Company
makes such a notification, the Company may suspend the use of any prospectus
contained in any Registration Statement for periods not to exceed forty five
(45) business days in any three month period or two periods not to exceed an
aggregate of ninety (90) business days in any 12 month period in the event
that
the Company determines, in the exercise of its reasonable discretion, confirmed
by a legal opinion from outside counsel, that sales of Registrable Securities
thereunder could constitute violations of the Securities Act due to the
Registration Statement containing an untrue statement of a material fact or
omission 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. In each case the Company shall use commercially reasonable
efforts to remedy the deficiency in the Registration Statement within thirty
(30) business days. The Company shall also promptly notify each Investor in
writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to each Investor by facsimile on the same
day
of such effectiveness), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
6
(f) The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify each Investor who
holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
(g) At
the
reasonable request of any Investor, the Company shall furnish to such Investor,
on the date of the effectiveness of the Registration Statement and thereafter
from time to time on such dates as an Investor may reasonably request (i) a
letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as
is
customarily given in an underwritten public offering, addressed to the
Investors.
(h) The
Company shall make available for inspection by (i) any Investor and
(ii) one (1) firm of accountants or other agents retained by the Investors
(collectively, the “Inspectors”)
all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree
in
writing, and each Investor hereby agrees, to hold in strict confidence and
shall
not make any disclosure (except to an Investor) or use any Record or other
information which the Company determines in good faith to be confidential,
and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission
in
any Registration Statement or is otherwise required under the Securities Act,
(b) the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction,
or
(c) the information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other agreement
of
which the Inspector or the Investor has knowledge. Each Investor agrees that
it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
7
(i) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(j) The
Company shall use its reasonable best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be listed
on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) to be
included for quotation on the National Association of Securities Dealers, Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).
(k) The
Company shall cooperate with the Investors who hold Registrable Securities
being
offered and, to the extent applicable, to facilitate the timely preparation
and
delivery of certificates to a transferee of an Investor (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in
such
denominations or amounts, as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request.
(l) The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be
necessary to consummate the disposition of such Registrable
Securities.
(m) The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of
Rule 158 under the Securities Act) covering a twelve (12) month period beginning
not later than the first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement.
(n) The
Company shall otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
8
(o) Within
two (2) business days after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent
for
such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.
(p) The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investors of Registrable Securities pursuant
to a
Registration Statement.
4. OBLIGATIONS
OF THE INVESTORS.
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 the first
sentence of Section 3(e), such Investor will immediately discontinue disposition
of Registrable Securities pursuant to any Registration Statement(s) covering
such Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt
of
notice from the Company that no supplement or amendment is required.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended certificates for shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to
the
Investor’s receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(f) or the first sentence of 3(e) and for which
the Investor has not yet settled.
5. EXPENSES
OF REGISTRATION.
All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3 (other than underwriting discounts and selling
commissions), including, without limitation, all registration, listing and
qualifications fees, printers, legal and accounting fees shall be paid by the
Company.
6. INDEMNIFICATION.
With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:
9
(a) To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls
any
Investor within the meaning of the Securities Act or the Exchange Act (each,
an
“Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue
Sky Filing”),
or
the omission or alleged omission to state 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
any
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 other law, including, without
limitation, any state securities law, or any rule or regulation there under
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, “Violations”).
The
Company shall reimburse the Investors and each such controlling person promptly
as such expenses are incurred and are due and payable, for any legal fees or
disbursements 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): (x) shall not apply to a Claim by an Indemnified Person 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 such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
be
available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant
to
Section 3(c); and (z) shall not 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. 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.
(b) In
connection with a Registration Statement, each Investor agrees to severally
and
not jointly indemnify, hold harmless and defend, to the same extent and in
the
same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers, employees, representatives, or agents and each Person,
if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (each an “Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or is 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 to the
Company by such Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(d), such Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only
that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds
to
such Investor as a result of the sale of Registrable Securities pursuant to
such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected and such
new
prospectus was delivered to each Investor prior to such Investor’s use of the
prospectus to which the Claim relates.
10
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, 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; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not
more than one (1) counsel for such Indemnified Person or Indemnified Party
to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for
any
settlement of any action, claim or proceeding effected without its prior written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of
a
release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter
for
which indemnification has been made. 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.
11
(d) 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 and
when bills are received or Indemnified Damages are incurred.
(e) The
indemnity agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
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: (i) 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
fraudulent misrepresentation; and (ii) 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 THE EXHANGE ACT.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that
may
at any time permit the Investors 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 so long as the Company
remains subject to such requirements (it being understood that nothing herein
shall limit the Company’s obligations under Section 4(c) of the Securities
Purchase Agreement) and the filing of such reports and other documents as are
required by the applicable provisions of Rule 144; and
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon written request, (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the Securities Act and
the
Exchange Act unless the Company has not so complied, (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 the Investors to sell such securities pursuant
to
Rule 144 without registration.
12
9. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
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
then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 9 shall be binding upon
each Investor and the Company. No such amendment shall be effective to the
extent that it applies to fewer than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend
or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.
10. MISCELLANEOUS.
(a) A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two (2) or more Persons
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) Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party
to
receive the same. The addresses and facsimile numbers for such communications
shall be:
|
If
to the Company, to:
|
Cenuco,
Inc.
|
|
000
Xxxxx Xxxxx
|
|
|
Xxxxxxxxxxxxx,
XX 00000
|
|
|
Attention:
Xxxxxx
X. Xxxxxxxx
|
|
|
Telephone:
000-000-0000
|
|
|
Facsimile:
000-000-0000
|
|
|
With
a copy to:
|
Wolf,
Block, Xxxxxx and Xxxxx-Xxxxx LLP
|
|
000
Xxxx Xxxxxx
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Attention:
Xxxxxxx Xxxxxxxx
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
If
to an
Investor, to its address and facsimile number on the Schedule of Investors
attached hereto, with copies to such Investor’s representatives as set forth on
the Schedule of Investors or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to
the
effectiveness of such change. Written confirmation of receipt (A) given by
the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
13
(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) The
parties hereto acknowledge that the transactions contemplated by this Agreement
and the exhibits hereto bear a reasonable relation to the State of New York.
The
parties hereto agree that the internal laws of the State of New York shall
govern this Agreement and the exhibits hereto, including, but not limited to,
all issues related to usury. Any action to enforce the terms of this Agreement
or any of its exhibits shall be brought exclusively in the state and/or federal
courts situated in the County and State of New York. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. 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 in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(e) This
Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
Agreement and related documents including the Convertible Debenture, the
Warrants, and the Security Agreement dated the date hereof (the “Security
Agreement”)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and
therein. This Agreement, the Irrevocable Transfer Agent Instructions, the
Securities Purchase Agreement and related documents including the Convertible
Debenture, the Warrants, and the Security Agreement supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(f) This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
14
(g) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(h) This
Agreement may be executed in identical 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 facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
(i) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
(j) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
15
IN
WITNESS WHEREOF,
the
parties have caused this Registration Rights Agreement to be duly executed
as of
day and year first above written.
|
COMPANY:
|
||
|
Cenuco,
Inc.
|
||
|
By:
|
||
| Name: Xxxxxx X. Xxxxxxxx | ||
| Title: President and Chief Executive Officer | ||
16
SCHEDULE
I
SCHEDULE
OF INVESTORS
|
Name
|
Signature
|
Address/Facsimile
Number
of Investors
|
|||
|
Prencen,
LLC
|
By: |
|
000
Xxxxx Xxxxxx, 00xx
Xx.
|
||
| Name: |
|
Xxx
Xxxx, XX 00000
|
|||
| Its: |
|
Telephone:
(212)
|
|||
|
Facsimile:
(000) 000-0000
|
|||||
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Attention:
|
Re:
|
CENUCO,
INC.
|
Ladies
and Gentlemen:
We
are
counsel to Cenuco, Inc., a Delaware corporation (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities
Purchase Agreement”)
entered into by and among the Company and the investors named therein
(collectively, the “Investors”)
pursuant to which the Company issued to the Investors shares of its Common
Stock, par value $0.001 per share (the “Common
Stock”).
Pursuant to the Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Investors (the “Investor
Registration Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the “Securities
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ____, the Company filed a Registration Statement
on
Form ________ (File No. 333-_____________) (the “Registration
Statement”)
with
the Securities and Exchange SEC (the “SEC”)
relating to the Registrable Securities which names each of the Investors as
a
selling stockholder there under.
In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and we
have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.
|
Very
truly yours,
|
|||
|
[Law
Firm]
|
|||
|
By:
|
|||
|
cc:
|
[LIST
NAMES OF INVESTORS]
|
