EX-10.3
REGISTRATION RIGHTS AGREEMENT
Exhibit 10.3
[Registration Rights Agreement]
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is by and between CAPE
COASTAL TRADING CORPORATION, a New York corporation (the "Company"), and
_________________ (the "Holder") dated as of _____________.
WITNESSETH:
WHEREAS, the Company has issued Holder _______ shares of the Company's common
stock (the "Shares" or "Common Stock") at $.10 per Share.
WHEREAS, the Company desires to grant to the Holder certain registration
rights in respect of the issuance or resale of the Shares and the Shares
which are also referred to herein as "the Securities".
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 is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE ONE
Registration Rights Agreement
Section 1.1 Piggyback Registration Rights. The Company covenants and
agrees with any holder of the Securities that if, at any time within the
period commencing on the date hereof and ending on December 31, 2002, it
proposes to file a registration statement with respect to any class of equity
or equity-related security (other than in connection with an offering to the
Company's employees or in connection with an acquisition, merger or similar
transaction) under the Securities Act in a primary registration on behalf of
the Company and/or in a secondary registration on behalf of holders of such
securities and the registration form to be used may be used for registration
of the Securities, the Company will give prompt written notice to the holders
of Securities at the addresses appearing on the records of the Company of its
intention to file a registration statement and will offer to include in such
registration statement, subject to paragraphs i and ii of this Section 1.1
such number of Securities with respect to which the Company has received
written requests for inclusion therein within twenty (20) days after the
giving of notice by the Company. All registrations requested pursuant to
this Section 1.1 are referred to herein as "Piggyback Registrations". All
Piggyback Registrations pursuant to this Section 1.1 will be made solely at
the Company's expense. This Section is not applicable to a registration
statement filed by the Company on Forms S-4 or S-8 or any successor forms.
i. Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on behalf of the
Company and the underwriter(s) for such offering determines in good faith
and advises the Company in writing that in its/their opinion the number of
Securities requested to be included in such registration exceeds the number
that can be sold in such offering without materially adversely affecting the
distribution of such securities by the Company, the Company will include in
such registration (A) first, the securities that the Company proposes to sell
and (B) second, the Securities requested to be included in such registration,
apportioned pro rata among the holders of the Securities and holders of other
securities requesting registration.
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ii. Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration on behalf
of holders of securities of the Company, and the underwriter(s) for such
offering advises the Company in writing that in its/their opinion the number
of Securities requested to be included in such registration exceeds the number
which can be sold in such offering without materially adversely affecting the
distribution of such securities, the Company will include in such registration
(A) first, the securities requested to be included therein by the holders
requesting such registration, and (B) second, the Securities requested to be
included in such registration and securities of holder of other securities
requested to be included in such registration statement, pro rata among
all such holders on the basis of the number of shares requested to be included
by each such holder, provided, however, the Company will use its best efforts to
include not less than 20% of the Securities.
Notwithstanding the foregoing, if any such underwriter shall determine
in good faith and advise the Company in writing that the distribution of the
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect
the distribution of such securities by the Company, then the holders of such
Securities shall delay their offering and sale for such period ending on the
earliest of (1) 90 days following the effective date of the Company's
registration statement, (2) the day upon which the underwriting syndicate, if
any, for such offering shall have been disbanded or, (3) such date as the
Company, managing underwriter and holders of Securities shall otherwise agree.
In the event of such delay, the Company shall file such supplements, post-
effective amendments and take any such other steps as may be necessary to
permit such holders to make their proposed offering and sale for a period of
120 days immediately following the end of any such period of delay. If any
party disapproves the terms of any such underwriting, it may elect to withdraw
therefrom at any time prior to the effective date of such underwriting by
written notice to the Company, the underwriter, and the holder. Notwithstanding
the foregoing, the Company shall not be required to file a registration
statement to include shares pursuant to this Section 1 if independent counsel,
reasonably satisfactory to the Company and the Holder, renders an opinion to the
Company and the Holder that all of the Securities proposed to be disposed of may
be transferred pursuant to the provisions of Rule 144 under the Securities Act
or otherwise without registration under the Securities Act. The Company hereby
undertakes and covenants to take all steps reasonably necessary to facilitate
the resale of Securities pursuant to Rule 144. Neither the failure of the
Holder to exercise its Piggyback Registration Rights hereunder on any one or
more occasions nor the Holder's election to withdraw from an underwriting shall
be deemed to waive or modify the Holder's Piggyback Registration Rights
hereunder in the future.
Section 1.2 Actions to be taken by the Company. In connection with the
registration of Securities hereunder, the Company agrees to (i) bear the
expenses of any registration; provided, however, that in no event shall the
Company be obligated to pay (A) any fees and disbursements of any special or
other counsel for holders of Securities, (B) any underwriters' discount or
commission in respect of such Securities, and (C) any stock transfer taxes
attributable to the sale of the Securities; (ii) use its best efforts to
register or qualify the Securities for offer or sale under state securities or
Blue Sky laws of such jurisdictions in which such holders shall reasonably
request, provided, however, that no qualification shall be required in any
jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction to which it is not then subject; (iii) enter
into a cross-indemnity agreement, in customary form, with each underwriter, if
any, and each holder of securities included in such registration statement; and
(iv) prepare and file with the SEC a registration statement with respect to
such Securities and use commercially reasonable efforts to cause such
registration statement to become effective as soon thereafter as possible, and
promptly notify Holder in writing, (a) when such registration statement becomes
effective, (b) when any post-effective amendment to such registration statement
becomes effective, and (c) of any request by the SEC for any amendment or
supplement to such registration statement or any final prospectus relating
thereto or for additional information; (v) prepare and file with the SEC such
amendments and supplements to such registration statement and the final
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for at least 120 days or until the Holder has
completed the distribution described in the registration statement relating
thereto, whichever occurs first, and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by Holders set forth in such registration statement;
(vi) furnish to Holder such number of copies of such registration statement
and of each such amendment and supplement thereto, as well as such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as Holder may
reasonably request in order to facilitate the sale or distribution of the
Securities by Holder; and (vii) promptly notify Holder, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of Company becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing; and, at the request of Holder, promptly prepare
and furnish to Holder a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
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Section 1.3 Action to be Taken by the Holders. The Company's obligations
under this Section 1 shall be conditioned upon a timely receipt by the Company
in writing of: (i) information as to the terms of such public offering
furnished by or on behalf of each holder of Securities intending to make a
public offering of his, her or its Securities, and (ii) such other information
as the Company may reasonably require from such holders, or any underwriter for
any of them, for inclusion in such registration statement.
Section 1.4 Exclusive Rights. The Holder shall have no registration
rights except as expressly set forth herein.
ARTICLE TWO
Indemnification
SECTION 2.1 Indemnification by the Company. In the event of any registration
of the Securities of the Company under the Act, the Company agrees to indemnify
and hold harmless Holder and each other person who participates as an
underwriter in the offering or sale of such Securities against any and all
claims, demands, losses, costs, expenses, obligations, liabilities, joint or
several, damages, recoveries and deficiencies, including interest, penalties
and attorneys' fees (collectively, "Claims"), to which Holder or underwriter
may become subject under the Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based on any untrue statement or alleged untrue statement
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of any material fact contained in any registration statement under which
Holder's Securities were registered under the Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company will reimburse Holder and
each such underwriter for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such Claim (or
action or proceeding in respect thereof); provided that the Company shall not
be liable in any such case to the extent that any such Claim (or action or
proceeding in respect thereof) or expense arises out of or is based on an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance on and in
conformity with written information furnished to the Company through an
instrument duly executed by Holder specifically stating that it is for use in
the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any such
underwriter and shall survive the transfer of the Securities by Holder.
SECTION 2.2 Indemnification by Holder. The Company may require, as a
condition to including the Securities in any registration statement filed
pursuant to this Agreement, that the Company shall have received an
undertaking satisfactory to it from Holder, to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 2.1) the
Company, each director of the Company, each officer of the Company and each
other person, if any, who controls the Company, within the meaning of the Act,
with respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus
contained therein, or any amendment or supplement thereto, if such statement
or alleged statement or omission or alleged omission was made in reliance on
and in conformity with written information furnished to the Company through an
instrument duly executed by Holder specifically stating that it is for use in
the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Notwithstanding the
foregoing, the maximum liability hereunder which any holder shall be required
to suffer shall be limited to the net proceeds to such Holder from the
Securities sold by such Holder in the offering. Such indemnity shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling person and shall
survive the transfer of the Securities by Holder.
SECTION 2.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a Claim referred to in this Article Two, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under this Article Two,
except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought against an
indemnifying party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such Claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
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indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such Claim.
SECTION 2.4 Indemnification Payments. The indemnification required by this
Article Two 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
expense, loss, damage or liability is incurred.
ARTICLE THREE
Miscellaneous
SECTION 3.1 Consent to Amendments. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or waived only by the
written agreement of the Company and the Holder of 51% or more of the shares
of Common Stock and shall be effective only to the extent specifically set
forth in such writing.
SECTION 3.2 Term of the Agreement. This Agreement shall terminate with
respect to Holder on the earlier to occur of (i) all of the Securities having
been registered as provided in Article One or (ii) December 31, 2002.
SECTION 3.3 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto are transferable and will bind and inure
to the benefit of the respective successors and assigns of the parties hereto,
but only if so expressed in writing.
SECTION 3.4 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
SECTION 3.5 Delays or Omissions. No failure to exercise or delay in the
exercise of any right, power or remedy accruing to Holder on any breach or
default of the Company under this Agreement shall impair any such right,
power or remedy nor shall it be construed to be a waiver of any such breach
or default.
SECTION 3.6 Remedies Cumulative. All remedies under this Agreement, or by
law or otherwise afforded to any party hereto shall be cumulative and not
alterative.
SECTION 3.7 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement. Unless clearly denoted otherwise, any reference to Articles or
Sections contained herein shall be to the Articles or Sections of this
Agreement.
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SECTION 3.8 Notices. Any notices required or permitted to be sent hereunder
shall be delivered personally or mailed, certified mail, return receipt
requested, to the following addresses, and shall be deemed to have been
received on the day of personal delivery or within three business days after
deposit in the mail, postage prepaid:
If to the Company, to:
CAPE COASTAL TRADING CORPORATION
C/o Xxxxx Xxxxxxxx, Esq.
000 Xxxx 00xx Xxxxxx, 0X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Kwajo Sarfoh
If to Holder, to:
____________________________
____________________________
____________________________
____________________________
SECTION 3.9 Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of New
York applicable to contracts made and to be performed in that state.
SECTION 3.10 Final Agreement. This Agreement, together with those documents
expressly referred to herein, constitutes the final agreement of the parties
concerning the matters referred to herein, and supersedes all prior agreements
and understandings.
SECTION 3.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
The parties hereto have executed this Agreement as of the date first
set forth above.
COMPANY:
CAPE COASTAL TRADING CORPORATION
By________________________________________
Kwajo Sarfoh, President
HOLDER:
__________________________________________
