Q COMM INTERNATIONAL, INC. REGISTRATION RIGHTS AGREEMENT June __, 2005
Q
COMM INTERNATIONAL, INC.
June
__, 2005
TABLE
OF CONTENTS
| Page | |||
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Section
1 Definitions
|
1
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||
|
1.1
|
Certain
Definitions
|
1
|
|
|
Section
2 Registration Rights
|
3
|
||
|
2.1
|
Company
Registration
|
3
|
|
|
2.2
|
Registration
on Form S-3
|
4
|
|
|
2.3
|
Expenses
of Registration
|
6
|
|
|
2.4
|
Registration
Procedures
|
6
|
|
|
2.5
|
Indemnification
|
8
|
|
|
2.6
|
Information
by Holder
|
9
|
|
|
2.7
|
Restrictions
on Transfer
|
10
|
|
|
2.8
|
Rule
144 Reporting
|
11
|
|
|
2.9
|
Delay
of Registration
|
12
|
|
|
2.10
|
Transfer
or Assignment of Registration Rights
|
12
|
|
|
2.11
|
Limitations
on Subsequent Registration Rights
|
12
|
|
|
2.12
|
Termination
of Registration Rights
|
12
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|
|
Section
3 Miscellaneous
|
12
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||
|
3.1
|
Amendment
|
12
|
|
|
3.2
|
Notices
|
12
|
|
|
3.3
|
Governing
Law
|
13
|
|
|
3.4
|
Successors
and Assigns
|
13
|
|
|
3.5
|
Entire
Agreement
|
13
|
|
|
3.6
|
Delays
or Omissions
|
13
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3.7
|
Severability
|
14
|
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|
3.8
|
Titles
and Subtitles
|
14
|
|
|
3.9
|
Counterparts
|
14
|
|
|
3.10
|
Telecopy
Execution and Delivery
|
14
|
|
|
3.11
|
Jurisdiction;
Venue
|
14
|
|
|
3.12
|
Further
Assurances
|
15
|
|
|
3.13
|
Attorneys’
Fees
|
15
|
|
|
3.14
|
Aggregation
|
15
|
|
|
3.15
|
Obligation
of Company
|
15
|
|
i
Q
COMM INTERNATIONAL, INC.
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of June __, 2005, by and among Q Comm International,
Inc., a Utah corporation (the “Company”),
and
the persons and entities (each, an “Investor”
and
collectively, the “Investors”)
listed
on Exhibit A
hereto.
Unless otherwise defined herein, capitalized terms used in this Agreement
have
the meanings ascribed to them in Section
1.
RECITALS
Whereas
the Company has sold Shares of the Company’s Common Stock to the Investors
listed on Exhibit
A
hereto
pursuant to the Purchase Agreements; and
Whereas,
in connection with the sale of these Shares, the Company desires to grant
registration rights to the Investors, which will allow the Investors to resell
the shares in the public market upon certain conditions;
NOW,
THEREFORE:
In
consideration of the mutual promises and covenants set forth herein, and
other
consideration, the receipt and adequacy of which is hereby acknowledged,
the
parties hereto agree as follows:
Section 1
Definitions
1.1 Certain
Definitions.
As
used
in this Agreement, the following terms shall have the meanings set forth
below:
(a) “Commission”
shall
mean the Securities and Exchange Commission or any other federal agency at
the
time administering the Securities Act.
(b) “Common
Stock”
means
the Common Stock of the Company.
(c) “Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, or any similar successor
federal statute and the rules and regulations thereunder, all as the same
shall
be in effect from time to time.
(d) “Holder”
shall
mean any Investor who holds Registrable Securities and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have
been
duly and validly transferred in accordance with Section
2.10
of this
Agreement.
(e) “Indemnified
Party”
shall
have the meaning set forth in Section 2.5(c)
hereto.
(f) “Indemnifying
Party”
shall
have the meaning set forth in Section 2.5(c)
hereto.
(g) “Investors”
shall
mean the persons and entities listed on Exhibit
A
hereto.
1
(h) “Purchase
Agreements”
shall
mean the Stock Purchase Agreements, dated the same date as this Agreement,
that
have been entered into severally between the Company and each of the
Investors.
(i) “Registrable
Securities”
shall
mean (i) shares of Common Stock issued pursuant to the Purchase Agreements
and (ii) any Common Stock issued as a dividend or other distribution
with
respect to or in exchange for or in replacement of the shares referenced
in
(i) above; provided,
however,
that
Registrable Securities shall not include any shares of Common Stock described
in
clause (i) or (ii) above which have previously been registered or which have
been sold to the public either pursuant to a registration statement or
Rule 144, or which have been sold in a private transaction in which
the
transferor’s rights under this Agreement are not validly assigned in accordance
with this Agreement.
(j) The
terms
“register,”“registered”
and
“registration”
shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and the applicable rules
and
regulations thereunder, and the declaration or ordering of the effectiveness
of
such registration statement.
(k) “Registration
Expenses”
shall
mean all expenses incurred in effecting any registration pursuant to this
Agreement, including, without limitation, all registration, qualification,
and
filing fees, printing expenses, escrow fees, blue sky fees and expenses,
and
expenses of any regular or special audits incident to or required by any
such
registration, but shall not include Selling Expenses and the compensation
of
regular employees of the Company.
(l) “Restricted
Securities”
shall
mean any Registrable Securities required to bear the legend set forth in
Section 2.7(c)
hereof.
(m) “Rule 144”
shall
mean Rule 144 as promulgated by the Commission under the Securities
Act, as
such Rule may be amended from time to time, or any similar successor rule
that
may be promulgated by the Commission.
(n) “Rule
145”
shall
mean Rule 145 as promulgated by the Commission under the Securities
Act, as
such Rule may be amended from time to time, or any similar successor rule
that
may be promulgated by the Commission
(o) “Securities
Act”
shall
mean the Securities Act of 1933, as amended, or any similar successor federal
statute and the rules and regulations thereunder, all as the same shall be
in
effect from time to time.
(p) “Selling
Expenses”
shall
mean all underwriting discounts, selling commissions, and stock transfer
taxes
applicable to the sale of Registrable Securities and fees and disbursements
of
counsel for any Holder.
(q) “Shares”
shall
mean the shares
of
Common Stock held by the Investors.
2
Section 2
Registration
Rights
2.1 Company
Registration.
(a) Company
Registration.
If the
Company shall determine to register any of its securities either for its
own
account or the account of a security holder or holders, other than a
registration pursuant to Section
2.2
herein,
a registration relating solely to employee benefit plans, a registration
relating to the offer and sale of debt securities, a registration relating
to a
corporate reorganization or other Rule 145 transaction, or a registration
on any
registration form that does not permit secondary sales, the Company
will:
(i) promptly
give written notice of the proposed registration to all Holders;
and
(ii) use
its
reasonable best efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), except as set forth
in
Section 2.1(b)
below,
and in any underwriting involved therein, all of such Registrable Securities
as
are specified in a written request or requests made by any Holder or Holders
received by the Company within fifteen (15) days after such written notice
from
the Company is mailed or delivered. Such written request may specify all
or a
part of a Holder’s Registrable Securities for inclusion in such
registration.
(b) Underwriting.
If the
registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Holders
as a
part of the written notice given pursuant to Section 2.1(a)(i).
In such
event, the right of any Holder to registration pursuant to this Section 2.1
shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other
holders
of securities of the Company proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form
with
the representative of the underwriter or underwriters selected by the
Company.
Notwithstanding
any other provision of this Section 2.1,
if the
underwriters advise the Company in writing that marketing factors require
a
limitation on the number of shares to be underwritten, the underwriters may
(subject to the limitations set forth below) limit the number of Registrable
Securities to be included in the registration and underwriting. The Company
shall so advise all holders of securities requesting registration, and the
number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated, as follows: (i) first,
to the
Company for securities being sold for its own account, (ii) second, to the
Holders requesting to include Registrable Securities in such registration
statement based on the pro
rata
percentage of Registrable Securities held by such Holders, (iii) third, to
the
other selling stockholders requesting to include other shares in such
registration statement based on the pro rata percentage of other shares held
by
such other selling stockholders. If a person who has requested inclusion
in such
registration as provided above does not agree to the terms of any such
underwriting, such person shall also be excluded therefrom by written notice
from the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall also be withdrawn
from such registration. If shares are so withdrawn from the registration
and if
the number of shares of Registrable Securities to be included in such
registration was previously reduced as a result of marketing factors pursuant
to
Section
2.1(b),
the
Company shall then offer to all persons who have retained the right to include
securities in the registration the right to include additional securities
in the
registration in an aggregate amount equal to the number of shares so withdrawn,
with such shares to be allocated among the persons requesting additional
inclusion in the manner set forth above.
3
(c) Right
to Terminate Registration.
The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Section 2.1
prior to
the effectiveness of such registration, whether or not any Holder has elected
to
include securities in such registration.
2.2 Registration
on Form S-3
.
(a) Request
for Form S-3 Registration.
The
Company shall use its reasonable best efforts to qualify itself to register
it
securities on Form S-3 or any comparable or successor form or forms of the
Commission. Subject to the conditions set forth in this Section 2.2,
if the
Company shall receive from a Holder or Holders of Registrable Securities
a
written request that the Company effect any registration on Form S-3 or any
similar short form registration statement with respect to all or part of
the
Registrable Securities (with such request stating the number of shares of
Registrable Securities to be disposed of and the intended methods of disposition
of such shares by such Holder or Holders), the Company will:
(i) promptly
give written notice of the proposed registration to all other Holders;
and
(ii) as
soon
as practicable, file and use its reasonable best efforts to effect such
registration (including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state securities
laws, and appropriate compliance with the Securities Act) and to permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within twenty
(20)
days after such written notice from the Company is mailed or
delivered.
If,
at
the time the Holder(s) make a request for a registration on Form S-3 pursuant
to
this Section
2.2, the
Company does not qualify to use Form S-3 pursuant the qualification requirements
of that form (or cannot reasonably be expected to so qualify within sixty
(60)
days of such request), then the Company shall be required to file a registration
on Form S-1 or such other form of the Commission that would allow the Holders
to
sell the Registrable Securities in a registered offering. In such instance,
all
the provisions of this Section
2.2 shall
continue to apply to such alternative form of registration.
(b) Limitations
on Form S-3 Registration.
The
Company shall not be obligated to effect, or take any action to effect, any
such
registration pursuant to this Section 2.2:
(i) Prior
to
three hundred and sixty five (365) days from the date of this
Agreement.
(ii) In
any
particular jurisdiction in which the Company would be required to execute
a
general consent to service of process in effecting such registration,
qualification, or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;
4
(iii) If
the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) on Form S-3 at an aggregate
price
to the public of less than Five Hundred Thousand Dollars ($500,000);
or
(iv) If,
in
any twelve-month period, the Company has already effected two (2) such
registrations in such period.
(c) Deferral.
If
(i) in the good faith judgment of the Board of Directors of the Company
(the “Board”),
the
filing of a registration statement covering the Registrable Securities would
be
materially detrimental to the Company and the Board concludes, as a result,
that
it is in the best interests of the Company to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish
to
such Holders a certificate signed by the President of the Company, stating
that,
in the good faith judgment of the Board, it would be materially detrimental
to
the Company for such registration statement to be filed in the near future
and
that it is, therefore, in the best interests of the Company to defer the
filing
of such registration statement, then the Company shall have the right to
defer
such filing for a period of not more than ninety (90) days after receipt
of the
request of the Holder or Holders under this Section
2.2;
provided
that the Company shall not defer its obligation in this manner more than
once in
any twelve-month period.
(d) Underwriting.
If the
Holder(s) intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company as
a part
of their request made pursuant to this Section 2.2
and the
Company shall include such information in the written notice given pursuant
to
Section 2.2(a)(i).
In such
event, the right of any Holder to include all or any portion of its Registrable
Securities in such registration pursuant to this Section 2.2
shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in such registration to the
extent provided herein. The Company shall (together with all Holders and
other
persons proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected for such underwriting by such
Holders that hold a majority in interest of the Registrable Securities to
be
registered in such registration, which underwriters are reasonably acceptable
to
the Company.
Notwithstanding
any other provision of this Section 2.2,
if the
underwriters advise the Initiating Holders in writing that marketing factors
require a limitation on the number of shares to be underwritten, the number
of
Registrable Securities and other Shares that may be so included shall be
allocated as follows: (i) first, among all Holders requesting to include
Registrable Securities in such registration statement based on the pro rata
percentage of Registrable Securities held by such Holders; (ii) second, to
the
Company, for its own account; and (iii) to other selling stockholders holding
other Shares.
If
a
person who has requested inclusion in such registration as provided above
does
not agree to the terms of any such underwriting, such person shall be excluded
therefrom by written notice from the Company, the underwriter, or the Holder(s).
The Registrable Securities or other securities so excluded shall also be
withdrawn from such registration. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall also be withdrawn from
such
registration. If Shares are so withdrawn from the registration and if the
number
of Shares to be included in such registration was previously reduced as a
result
of marketing factors pursuant to this Section 2.2(d),
then
the Company shall then offer to all Holders who have retained rights to include
securities in the registration the right to include additional Registrable
Securities in the registration in an aggregate amount equal to the number
of
shares so withdrawn, with such shares to be allocated among such Holders
requesting additional inclusion, as set forth above.
5
2.3 Expenses
of Registration.
All
Registration Expenses incurred in connection with registrations pursuant
to
Sections 2.1
and 2.2 hereof
shall be borne by the Company; provided,
however,
that
the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section
2.2
if the
registration request is subsequently withdrawn at the request of the Holders
of
a majority of the Registrable Securities to be registered or because a
sufficient number of Holders shall have withdrawn so that the minimum offering
conditions set forth in Section
2.2
are no
longer satisfied (in which case all participating Holders shall bear such
expenses pro
rata
among
each other based on the number of Registrable Securities requested to be
so
registered). All Selling Expenses relating to securities registered on behalf
of
the Holders shall be borne by the holders of securities included in such
registration pro rata among each other on the basis of the number of Registrable
Securities so registered.
2.4 Registration
Procedures.
In the
case of each registration effected by the Company pursuant to Section 2,
the
Company will keep each Holder advised in writing as to the initiation of
each
registration and as to the completion thereof. At its expense, the Company
will
use its reasonable best efforts to and as expeditiously as
possible:
(a) Keep
such
registration effective for a period ending on the earlier of the date which
is
one hundred twenty (120) days from the effective date of the registration
statement or such time as the Holder or Holders have completed the distribution
described in the registration statement relating thereto; provided,
however,
that
(i) such 120-day period shall be extended for a period of time equal to the
period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, subject to compliance with applicable SEC rules,
such 120-day period shall be extended for up to 90 days, if necessary, to
keep
the registration statement effective until all such Registrable Securities
are
sold.
(b) Prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions
of the
Securities Act with respect to the disposition of all securities covered
by such
registration statement for the period set forth in subsection (a)
above;
(c) Furnish
such number of prospectuses, including any preliminary prospectuses, and
other
documents incident thereto, including any amendment of or supplement to the
prospectus, as a Holder from time to time may reasonably request;
(d) Register
and qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdiction as shall be reasonably
requested by the Holders; provided,
that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service
of
process in any such states or jurisdictions.
6
(e) Notify
each seller of Registrable Securities covered by such registration statement
at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not
misleading or incomplete in light of the circumstances then existing, and
following such notification promptly prepare and furnish to such seller a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or incomplete
in light of the circumstances then existing;
(f) Furnish,
on the date that such Registrable Securities are delivered to the underwriters
for sale, if such securities are being sold through underwriters, (i) an
opinion, dated as of such date, of the counsel representing the Company for
the
purposes of such registration, in form and substance as is customarily given
to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and reasonably satisfactory to a majority in interest of the Holders
requesting registration of Registrable Securities and (ii) a “comfort”
letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters.
(g) Provide
a
transfer agent and registrar for all Registrable Securities registered pursuant
to such registration statement and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration;
(h) Otherwise
comply with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not
more
than eighteen months, beginning with the first month after the effective
date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(i) Cause
all
such Registrable Securities registered pursuant hereunder to be listed on
each
securities exchange on which similar securities issued by the Company are
then
listed; and
(j) In
connection with any underwritten offering pursuant to a registration statement
filed pursuant to Section 2.2
hereof,
enter into an underwriting agreement in form reasonably necessary to effect
the
offer and sale of Common Stock, provided such underwriting agreement contains
reasonable and customary provisions.
7
2.5 Indemnification
(a) To
the
extent permitted by law, the Company will indemnify and hold harmless each
Holder, each of its officers, directors and partners, legal counsel, and
accountants and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification, or compliance has been effected pursuant to this Section 2,
and
each underwriter, if any, and each person who controls within the meaning
of
Section 15 of the Securities Act any underwriter, against all expenses,
claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on: (i) any
untrue
statement (or alleged untrue statement) of a material fact contained or
incorporated by reference in any prospectus, offering circular, or other
document (including any related registration statement, notification, or
the
like) incident to any such registration, qualification, or compliance,
(ii) any omission (or alleged omission) to state therein a material
fact
required to be stated therein or necessary to make the statements therein
not
misleading, or (iii) any violation (or alleged violation) by the Company
of
the Securities Act, any state securities laws or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any offering covered by such registration,
qualification, or compliance, and the Company will reimburse each such Holder,
each of its officers, directors, partners, legal counsel, and accountants
and
each person controlling such Holder, each such underwriter, and each person
who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending or settling any such
claim, loss, damage, liability, or action; provided
that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability, or action arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company
by
such Holder, any of such Holder’s officers, directors, partners, legal counsel
or accountants, any person controlling such Holder, such underwriter or any
person who controls any such underwriter and stated to be specifically for
use
therein; and provided,
further
that,
the indemnity agreement contained in this Section 2.5(a)
shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of
the
Company (which consent shall not be unreasonably withheld).
(b) To
the
extent permitted by law, each Holder will, if Registrable Securities held
by
such Holder are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify and hold harmless
the
Company, each of its directors, officers, partners, legal counsel, and
accountants and each underwriter, if any, of the Company’s securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act,
each
other such Holder, and each of their officers, directors, and partners, and
each
person controlling such Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on:
(i) any untrue statement (or alleged untrue statement) of a material
fact
contained or incorporated by reference in any such registration statement,
prospectus, offering circular, or other document, or (ii) any omission
(or
alleged omission) to state therein a material fact required to be stated
therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and such Holders, directors, officers, partners, legal counsel,
and
accountants, persons, underwriters, or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability, or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder
and
stated to be specifically for use therein; provided,
however,
that
the obligations of such Holder hereunder shall not apply to amounts paid
in
settlement of any such claims, losses, damages, or liabilities (or actions
in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld); and provided
that in
no event shall any indemnity under this Section 2.5
exceed
the net proceeds from the offering received by such Holder.
(c) Each
party entitled to indemnification under this Section 2.5
(the
“Indemnified Party”)
shall
give notice to the party required to provide indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as
to
which indemnity may be sought, and shall permit the Indemnifying Party to
assume
the defense of such claim or any litigation resulting therefrom; provided
that
counsel for the Indemnifying Party, who shall conduct the defense of such
claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at such party’s expense; and provided further
that the
failure of any Indemnified Party to give notice as provided herein shall
not
relieve the Indemnifying Party of its obligations under this Section 2.5,
to the
extent such failure is not prejudicial. No Indemnifying Party, in the defense
of
any such claim or litigation, shall, except with the consent of each 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
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying
Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting
therefrom.
8
(d) If
the
indemnification provided for in this Section 2.5
is held
by a court of competent jurisdiction to be unavailable to an Indemnified
Party
with respect to any loss, liability, claim, damage, or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or
expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other
in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
2.6 Information
by Holder.
Each
Holder of Registrable Securities shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be reasonably required
in
connection with any registration, qualification, or compliance referred to
in
this Section 2.
2.7 Restrictions
on Transfer
(a) The
holder of each certificate representing Registrable Securities by acceptance
thereof agrees to comply in all respects with the provisions of this
Section 2.7.
Each
Holder agrees not to make any sale, assignment, transfer, pledge or other
disposition of all or any portion of the Restricted Securities, or any
beneficial interest therein, unless and until the transferee thereof has
agreed
in writing for the benefit of the Company to take and hold such Restricted
Securities subject to, and to be bound by, the terms and conditions set forth
in
this Agreement, including, without limitation, this Section 2.7,
except
for transfers permitted under Section 2.8(b):
9
(i) There
is
then in effect a registration statement under the Securities Act covering
such
proposed disposition and such disposition is made in accordance with such
registration statement; or
(ii) Such
Holder shall have given prior written notice to the Company of such Holder’s
intention to make such disposition and shall have furnished the Company with
a
detailed description of the manner and circumstances of the proposed
disposition, and, if requested by the Company, such Holder shall have furnished
the Company, at its expense, with (i) an opinion of counsel, reasonably
satisfactory to the Company, to the effect that such disposition will not
require registration of such Restricted Securities under the Securities Act
or
(ii) a “no action” letter from the Commission to the effect that the
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the holder of such Restricted Securities shall be entitled
to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the Holder to the Company. It is agreed that the Company will
not
require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(b) Permitted
transfers include (i) a transfer not involving a change in beneficial
ownership, or (ii) in transactions involving the distribution without
consideration of Restricted Securities by any Holder to (x) a parent, subsidiary
or other affiliate of Holder, or (y) any of its partners, members or other
equity owners, or retired partners, retired members or other equity owners,
or
to the estate of any of its partners, members or other equity owners or retired
partners, retired members or other equity owners, or (iii) transfers
in
compliance with Rule 144(k), as long as the Company is furnished with
satisfactory evidence of compliance with such Rule; provided,
in each
case, that the Holder thereof shall give written notice to the Company of
such
Holder’s intention to effect such disposition and shall have furnished the
Company with a detailed description of the manner and circumstances of the
proposed disposition.
(c) Each
certificate representing Registrable Securities shall (unless otherwise
permitted by the provisions of this Agreement) be stamped or otherwise imprinted
with a legend substantially similar to the following (in addition to any
legend
required under applicable state securities laws):
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.
THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR
HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES
WITH
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS..
10
The
Holders consent to the Company making a notation on its records and giving
instructions to any transfer agent of the Restricted Securities in order
to
implement the restrictions on transfer established in this Section 2.7.
(d) The
legend referring to federal and state securities laws identified in Section 2.7(c)
hereof
stamped on a certificate evidencing the Restricted Securities and the stock
transfer instructions and record notations with respect to such Restricted
Securities shall be removed and the Company shall issue a certificate without
such legend to the holder of such Restricted Securities if (i) such
securities are registered under the Securities Act, or (ii) such holder
provides the Company with an opinion of counsel reasonably acceptable to
the
Company to the effect that a public sale or transfer of such securities may
be
made without registration under the Securities Act, or (iii) such
holder
provides the Company with reasonable assurances, that such securities can
be
sold pursuant to Section (k) of Rule 144 under the Securities
Act.
2.8 Rule 144
Reporting.
With a
view to making available the benefits of certain rules and regulations of
the
Commission that may permit the sale of the Restricted Securities to the public
without registration, the Company agrees to use its reasonable best efforts
to:
(a) Make
and
keep public information regarding the Company available as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) File
with
the Commission in a timely manner all reports and other documents required
of
the Company under the Securities Act and the Exchange Act at any time after
it
has become subject to such reporting requirements; and
(c) So
long
as a Holder owns any Restricted Securities, furnish to the Holder forthwith
upon
written request a written statement by the Company as to its compliance with
the
reporting requirements of Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without
registration.
2.9 Delay
of Registration.
No
Holder shall have any right to take any action to restrain, enjoin, or otherwise
delay any registration as the result of any controversy that might arise
with
respect to the interpretation or implementation of this Agreement.
2.10 Transfer
or Assignment of Registration Rights.
The
rights to cause the Company to register securities granted to a Holder by
the
Company under this Agreement may be transferred or assigned by a Holder only
to
a transferee, assignee or holder of not less than 40,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments
for
stock splits, stock dividends, reverse stock splits, and the like); provided
that
(i) such transfer or assignment of Registrable Securities is effected
in
accordance with the terms of Section 2.7
hereof
and applicable securities laws and (ii) the transferee or assignee
of such
rights assumes in writing the obligations of such Holder under this
Agreement.
2.11 Limitations
on Subsequent Registration Rights.
From and
after the date of this Agreement, the Company shall not, without the prior
written consent of a the holders holding at least a majority of the Registrable
Securities, enter into any agreement with any holder or prospective holder
of
any securities of the Company giving such holder or prospective holder any
registration rights the terms of which are pari
passu
with or
senior to the registration rights granted to the Holders
hereunder.
11
2.12 Termination
of Registration Rights. The
right
of any Holder to request registration or inclusion in any registration pursuant
to this Agreement shall terminate on the earlier of: (i) the date on which
all
shares of Registrable Securities held any Holder that holds less than 1%
of the
outstanding capital stock of the Company may immediately be sold under
Rule 144 during any ninety (90)-day period, or (ii) five (5)
years
after the date of this Agreement.
Section 3
Miscellaneous
3.1 Amendment.
Except
as expressly provided herein, neither this Agreement nor any term hereof
may be
amended, waived, discharged or terminated other than by a written instrument
referencing this Agreement and signed by (i) the Company and (ii) the Investors
holding at least a majority of the Registrable Securities then held by the
Investors. Any such amendment, waiver, discharge or termination effected
in
accordance with this paragraph shall be binding upon each Investor.
3.2 Notices.
All
notices and other communications required or permitted hereunder shall be
in
writing and shall be mailed by registered or certified mail, postage prepaid,
sent by facsimile or electronic mail or otherwise delivered by hand or by
messenger addressed:
(a) if
to an
Investor, at the Investor’s address, facsimile number or electronic mail address
as shown in the Company’s records, as may be updated in accordance with the
provisions hereof;
(b) if
to any
Holder, at such address, facsimile number or electronic mail address as shown
in
the Company’s records, or, until any such holder so furnishes an address,
facsimile number or electronic mail address to the Company, then to and at
the
address of the last holder of such shares for which the Company has contact
information in its records; or
(c) if
to the
Company, one copy should be sent to Q Comm International, Inc., 000 Xxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxxx, Xxxx 00000; Telephone: (000) 000-0000;
Facsimile: (000) 000-0000; Attn: Chief Executive Officer, or at such other
address as the Company shall have furnished to the Investors, with a copy
to
Xxxxx Xxxxx Xxxxxxxx XxXxxxxxx, PC, 000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxx
Xxxx
Xxxx Xxxx, 00000; Attn: Xxxxxx X. Xxxxxxx.
Each
such
notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given when delivered if delivered
personally, or, if sent by mail, at the earlier of its receipt or 48 hours
after
the same has been deposited in a regularly maintained receptacle for the
deposit
of the United States mail, addressed and mailed as aforesaid or, if sent
by
facsimile, upon confirmation of facsimile transfer or, if sent by electronic
mail, upon confirmation of delivery when directed to the electronic mail
address
set forth on the Schedule of Investors.
12
3.3 Governing
Law.
This
Agreement shall be governed in all respects by the internal laws of the State
of
Utah as applied to agreements entered into among Utah residents to be performed
entirely within Utah, without regard to principles of conflicts of
law.
3.4 Successors
and Assigns.
This
Agreement, and any and all rights, duties and obligations hereunder, shall
not
be assigned, transferred, delegated or sublicensed by any Investor without
the
prior written consent of the Company. Any attempt by an Investor without
such
permission to assign, transfer, delegate or sublicense any rights, duties
or
obligations that arise under this Agreement shall be void. Subject to the
foregoing and except as otherwise provided herein, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
3.5 Entire
Agreement.
This
Agreement and the exhibits hereto constitute the full and entire understanding
and agreement between the parties with regard to the subject hereof and
supercedes all prior understandings or agreements with regard to the subject
matter hereof.
3.6 Delays
or Omissions.
Except
as expressly provided herein, no delay or omission to exercise any right,
power
or remedy accruing to any party to this Agreement upon any breach or default
of
any other party under this Agreement shall impair any such right, power or
remedy of such non-defaulting party, nor shall it be construed to be a waiver
of
any such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring, nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind
or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party to this Agreement,
shall be cumulative and not alternative.
3.7 Severability.
If any
provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, portions of such provision,
or such provision in its entirety, to the extent necessary, shall be severed
from this Agreement, and such court will replace such illegal, void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the same economic, business and
other
purposes of the illegal, void or unenforceable provision. The balance of
this
Agreement shall be enforceable in accordance with its terms.
3.8 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only
and
are not to be considered in construing or interpreting this Agreement. All
references in this Agreement to sections, paragraphs and exhibits shall,
unless
otherwise provided, refer to sections and paragraphs hereof and exhibits
attached hereto.
3.9 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties that execute such counterparts, and all of
which
together shall constitute one instrument.
13
3.10 Telecopy
Execution and Delivery.
A
facsimile, telecopy or other reproduction of this Agreement may be executed
by
one or more parties hereto and delivered by such party by facsimile or any
similar electronic transmission device pursuant to which the signature of
or on
behalf of such party can be seen. Such execution and delivery shall be
considered valid, binding and effective for all purposes. At the request
of any
party hereto, all parties hereto agree to execute and deliver an original
of
this Agreement as well as any facsimile, telecopy or other reproduction
hereof.
3.11 Jurisdiction;
Venue.
With
respect to any disputes arising out of or related to this Agreement, the
parties
consent to the exclusive jurisdiction of, and venue in, the state courts
in Salt
Lake County in the State of Utah (or in the event of exclusive federal
jurisdiction, the courts of the Northern District of Utah).
3.12 Further
Assurances.
Each
party hereto agrees to execute and deliver, by the proper exercise of its
corporate, limited liability company, partnership or other powers, all such
other and additional instruments and documents and do all such other acts
and
things as may be necessary to more fully effectuate this Agreement.
3.13 Attorneys’
Fees.
In the
event that any suit or action is instituted to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right
of
such prevailing party under or with respect to this Agreement, including
without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
3.14 Aggregation.
All
shares of Common Stock held or acquired by affiliated entities or persons
of an
Investor (including but not limited to: (i) a constituent partner
or a
retired partner of an Investor that is a partnership; (ii) a parent,
subsidiary or other affiliate of an Investor that is a corporation;
(iii) an immediate family member living in the same household, a
descendant, or a trust therefore, in the case of an Investor who is an
individual; or (iv) a member of an Investor that is a limited liability
company) shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement which are triggered by the
beneficial ownership of a threshold number of shares of the Company’s capital
stock.
3.15 Obligation
of Company.
The
Company agrees to use its reasonable best efforts to enforce the terms of
this
Agreement, to inform the Investors of any breach hereof (to the extent the
Company has knowledge thereof) and to assist the Investors in the exercise
of
their rights and the performance of their obligations hereunder.
[Remainder
of page intentionally left blank.]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Registration
Rights Agreement effective as of the day and year first above
written.
|
Q
COMM INTERNATIONAL, INC.
|
||
|
By:
___________________________________________________
|
||
|
Name:
Xxxx Xxxxxxxx
|
||
|
Title:
Chief Financial Officer
|
||
|
If
Investor is an individual:
|
______________________________________________________
|
|
|
(Signature)
|
||
| ______________________________________________________ | ||
|
(Name
of Investor)
|
||
|
If
Investor is an entity:
|
______________________________________________________
|
|
|
(Name
of Investor)
|
||
|
By____________________________________________________
|
||
|
(Signature of Authorized Representative)
|
||
|
______________________________________________________
|
||
|
(Name
of Authorized Representative)
|
||
|
______________________________________________________
|
||
|
(Title
of Authorized Representative)
|
15
EXHIBIT A
INVESTORS
Pike
Capital Partners, L.P.
Odyssey
Value Partners, LP
Talkot
Crossover Fund, L.P.
