Exhibit 2
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (this "Agreement") is made and
entered into as of this __ day of August, 2004, by and between Crown Financial
Group, Inc., a New Jersey corporation (the "Company"), and Sky Capital Holdings
Ltd. and Sky Capital Enterprises Inc. (individually a "Purchaser" or "Holder"
and collectively, the "Purchasers" or the "Holders").
PREAMBLE
This Agreement is made pursuant to two identical Subscription and Stock
Sale Agreements of even date with this Agreement, by and between each Purchaser
and the Company (each a "Purchase Agreement")
The Company and the Purchasers hereby agree as follows:
1. Definitions. Pursuant to the Purchase Agreements, the Company and
Holders have entered into a Registration Rights Agreement of even date
("Registration Rights Agreement"). Capitalized terms used and not otherwise
defined herein that are defined in the Purchase Agreement or in the Registration
Rights Agreement shall have the meanings given such terms in the Purchase
Agreement or Registration Rights Agreement as the case may be.
2. Director or Advisor
(a) The Company and its Board of Directors shall engage a designee of
the Holders as a nonvoting advisor to the Company's Board of Directors (the
"Advisor") or in lieu thereof, at Holders' option, to nominate, and use its best
efforts to cause a designee of Holders to be elected to the Board of Directors
of the Company ("Director"). The Advisor or Director may be a director, officer,
partner, employee or affiliate of Holders and the Holders shall designate such
person in writing to the Board of Directors. The initial designee is Xxxxxxx X.
Xxxxx. In the event the Holders shall not have designated such individual at the
time of any meeting of the Board of Directors or Committee or such person is
unavailable to serve, the Company shall notify the Holders of each meeting of
the Board and any Committee; in such event, the Holders may designate an
substitute Advisor to attend such meeting in place of the Director or Advisor,
as the case may be. The Advisor shall be entitled to receive notice of and
attend all meetings of the Board of Directors and the Advisor or Director, as
the case may be, shall be entitled to receive notice of, and attend and speak
at, all meetings of committees of the Board of Directors ("Committees"). There
may be appropriate circumstances for Committees to have discussions and take
actions without the presence of the Advisor or Director; in such event, the
Advisor or Director shall excuse himself from the meeting for such portion as is
so appropriate. The Advisor, if any, designated by the Holders shall receive all
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notices and other correspondence and communications sent by the Company to
members of the Board and the Advisor and Director, as the case may be shall
receive all notices and other correspondence and communications sent by the
Company to, or between, the members of any Committee. Such Advisor shall be
entitled to receive reimbursement for all reasonable costs incurred in attending
such meetings including, but not limited to, food, lodging, and transportation.
In addition, such Advisor shall be entitled to the same compensation as the
Company pays to its Independent Directors for acting in such capacity. The
Company further agrees that it shall give the Advisor the same notice of any
meeting of the Company's Board of Directors as it affords its other directors
and the Director and Advisor, as the case may be, shall be given the same notice
of any meeting of Committees as the other Committee members are given. The
Director shall receive the same compensation and reimbursement of expenses as is
given by the Company to its Independent Directors.
(b) The Company agrees to indemnify and hold the Advisor or Director,
as the case may be, harmless against any and all claims, actions, damages, costs
and expenses, and judgments arising solely out of the attendance and
participation of the Advisor or Director at any such meetings described herein.
In the event the Company maintains a liability insurance policy affording
coverage for the acts of its officers and directors, the Director shall be an
insured under such policy and the Company agrees, if possible, to include the
Advisor as an insured under such policy. It is expressly understood that the
Advisor or Director may report to the executive officers and/or boards of
directors of the Holders, all matters discussed and all action taken at Board of
Directors' and Committee meetings attended by the Advisor or Director and may
provide them with copies of all information provided to the Advisor or Director
in connection therewith.
3. Securities Law Registration and Compliance
The Company shall maintain its registration under the Securities and
Exchange Act of 1934 and timely, and properly, file all reports required to be
filed by it thereunder. The Company shall use its best efforts to comply with
the requirements of Rule 144 promulgated under the Securities Act in order that
holders of its restricted Common Stock may be able to sell such shares pursuant
to such Rule. The Company, promptly after it meets the listing requirements for
its Common Stock to be listed or admitted for trading on the NASDAQ National
Market, shall apply for such listing and diligently prosecute such application
to completion. Once listed, the Company shall use its best efforts to maintain
such listing. In lieu of listing on the NASDAQ National Market either initially
or after listing, the Company may cause its Common Stock to be listed or
admitted for trading on the American Stock Exchange or New York Stock Exchange.
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4. Annual Meetings
The Company shall hold an annual meeting of stockholders for the
election of directors within 180 days after the end of each of the Company's
fiscal years commencing with the fiscal year ending January 21, 2005 and, within
150 days after the end of each of the Company's fiscal years, provide the
Company's stockholders with the audited financial statements of the Company as
of the end of the fiscal year just completed prior thereto. Such financial
statements shall be those required by Rule 14a-3 under the Exchange Act and
shall be included in an annual report pursuant to the requirements of such Rule.
5. Additional Undertakings
(a) As soon as possible after the date hereof, the Company shall take
all necessary and appropriate actions to be included in Standard and Poor's
Corporation Descriptions or other equivalent securities manual, if not so
included and to maintain its listing therein for a period of five (5) years from
the date hereof.
6. Benefits of Agreement.
The undertakings and agreements by the Company herein are for the benefit
of the Holders and may be enforced by the Holders by appropriate
proceeding.
7. Miscellaneous.
(a) In the event of a breach by the Company of any of its obligations
under this Agreement, each Holder in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
(b) The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the same shall
be in writing and signed by the Company and the Holders.
(c) Notices shall be given in the manner set forth in the Purchase
Agreement. The address for such notices and communications shall be as follows:
If to the Company: 000 Xxxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
ATTN: President
With a copy to:
Xxxxx X. XxXxxxxxx, Esq.
Xxxxxxxx Xxxxxx LLP
0000 X Xx., XX #000
Xxxxxxxxxx, XX 00000
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If to a Purchaser: The address of each set forth in the
Purchase Agreement
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
If to any other To the address of such Holder as it
Person who is then appears in the stock transfer books
the registered of the Company
Holder:
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(d) This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign its rights or obligations
hereunder without the prior written consent of each Holder. Each Holder may
assign their respective rights hereunder to a transferee of the any of the
Shares to the extent of such transfer.
(e) This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that
any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(f) All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement shall be commenced exclusively in
the state and federal courts sitting in the City of New York, Borough of
Manhattan and each party hereto hereby irrevocably submits to the exclusive
jurisdiction of such courts.
(g). The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
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(h) If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(i) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
SIGNATURES APPEAR ON NEXT PAGE
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IN WITNESS WHEREOF, the parties have executed this Investors' Rights
Agreement as of the date first written above
Crown Financial Group, Inc. Sky Capital Holdings Ltd.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxxx Xxxxx
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Sky Capital Enterprises Inc.
By: /s/ Xxxxxxx Xxxxx
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