Exhibit 1
REGISTRATION RIGHTS AGREEMENT
This Registration 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. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company.
"Shares" shall mean an aggregate of 4,545,455 shares of Common Stock
purchased by the Purchasers pursuant to the Purchase Agreements, appropriately
adjusted for stock splits, dividends, recapitalizations and similar
transactions.
"Demand Notice" shall mean a notice requiring registration of the
Shares, or a part thereof, given pursuant to the terms of this Agreement.
"Holder" or "Holders" means the Purchasers, either of them or any of
their respective affiliates or transferees to the extent any of them hold
Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means the Shares.
"Registration Statement" means each registration statement required to
be filed hereunder, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
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"Rule 144" means Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"Rule 415" means Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"Rule 424" means Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"S.E.C." means the United States Securities and Exchange SEC.
2. Registration. (a) On or before January 5, 2005, the Company shall
prepare and file with the SEC a Registration Statement covering the Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule 415
as promulgated under the Securities Act or any similar rule then in effect and
thereafter shall use its best efforts to cause such Registration Statement to be
declared effective. Said Registration Statement shall be treated as the first
Demand Registration Statement, filed pursuant to a Demand Notice, for purposes
of this Agreement. Thereafter, within thirty (30) days following the giving of a
Demand Notice, the Company shall prepare and file with the SEC a Registration
Statement covering the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415 as promulgated under the Securities Act or
any similar rule then in effect. Each Registration Statement shall be on Form
X-0, X-0 or such other appropriate form as is available for use by the Company.
The Company shall cause each Registration Statement to become effective and
remain effective as provided herein. The Company shall use its reasonable
commercial efforts to cause each Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof and
shall keep each Registration Statement continuously effective under the
Securities Act until the date on which the Purchaser has disposed of all of the
Registrable Securities covered by such registration statement in accordance with
the Purchaser's intended method of disposition set forth in such registration
statement for such period. A Demand Notice shall be in writing and given by a
Purchaser to the Company requiring the registration of the Shares or part
thereof as set forth in the Demand Notice provided that the number of Shares to
be included in such Registration Statement shall be not less than 50% of the
original number of Shares and further provided that the Purchasers in the
aggregate may give not more than two Demand Notices pursuant to the terms of
this subparagraph. A Demand Notice given by one Purchaser shall not be deemed to
be a proposal to register securities by the Company for purposes of subsection
(b) of this paragraph 2.
(b) If (but without any obligation to do so) at any time the Company
proposes to register (including for this purpose a registration effected by the
Company for shareholders other than the Holders) any of its stock or other
securities under the Securities Act in connection with the public offering
(whether for the account of the Company or for selling stockholders) of such
securities (other than a registration statement on Form S-8 relating solely to
the sale of securities to participants in a Company stock or stock option plan
or to other compensatory arrangements to the extent includible on Form S-8, or a
registration on Form S-4), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within ten (10) days after receipt by such Holder of such notice by
the Company, the Company shall, subject to Section 2(d), use its best efforts to
cause to be registered under the Securities Act all of the Registrable
Securities that are not, on the date of filing by the Company of such
Registration Statement that each such Holder has requested to be registered. The
Company shall have no obligation under this Section 2(b) to make any offering of
its securities, or to complete an offering of its securities that it proposes to
make, and shall incur no liability to any Holder for its failure to do so.
Notwithstanding the foregoing, the Company may, and without any liability, at
any time prior to the effective date of such registration, withdraw the
registration from consideration by the S.E.C. No registration affected under
this Section 2(b), however, shall relieve the Company of any of its obligations
to affect registration under Section 2(a). As a condition of the exercise of the
registration rights contained in this Section 2(b) in connection with an
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underwritten offering by the Company under the Securities Act, if so requested
by the managing underwriter (the "Managing Underwriter") of such offering, the
Holders shall agree not sell or otherwise transfer any Registrable Securities
during the 30-day period (the "Market Standoff Period") following the effective
date of such registration statement. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
(c) If all Registrable Securities may be sold immediately without
registration under the Securities Act and without volume restrictions pursuant
to Rule 144(k), as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Company's
transfer agent and the Holders, then the Company shall have no further
obligations under this Agreement. The Company expressly acknowledges that the
Purchasers may be deemed to be affiliates for purposed of Rule 144 and therefore
that their ownership, and sales, of Common Stock may be aggregated and as a
result, the provisions of Rule 144(k) may not be available as early as it might
be available if the Holders were not affiliates.
(d) The Holder shall execute such documents and agreements and provide
such additional information as may be required by the Company from time to time
in order for the Company to respond to inquiries from the S.E.C. or to otherwise
complete the registration process and achieve effectiveness of the registration
or is otherwise customary.
(e) The Holders shall be solely responsible for compliance with the
provisions of Rules 2710 and 2711 of the National Association of Securities
Dealers, Inc. The Company will cooperate in all reasonable respects in any
filings or submissions required to be made thereunder.
3. Other Registration Procedures. If and whenever the Company is
required by the provisions hereof to affect the registration of the Registrable
Securities under the Act, the Company will, as expeditiously as possible:
(a) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the registration
statement and to keep such registration statement effective until the date on
which the Purchaser has disposed of all of the Registrable Securities covered by
such registration statement in accordance with the Purchaser's intended method
of disposition set forth in such registration statement for such period;
(b) furnish to the Purchaser such number of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus) as the Purchaser reasonably may request to facilitate the public
sale or disposition of the securities covered by such registration statement;
(c) use its commercially reasonable efforts to register or qualify the
Purchaser's Registrable Securities covered by such registration statement under
the securities or "blue sky" laws of such jurisdictions as the Purchaser,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(d) list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;
(e) immediately notify the Purchaser at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained 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 light of the circumstances then existing; and
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(f) make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, all publicly available,
non-confidential financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all publicly available, non-confidential information
reasonably requested by the attorney, accountant or agent of the Purchaser.
4. Registration Expenses. All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of and disbursements incurred by counsel
for the Holders, not to exceed $15,000 in the aggregate, are called
"Registration Expenses." All selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any special
counsel to the Holders beyond those included in Registration Expenses, are
called "Selling Expenses." The Company shall be responsible for all Registration
Expenses.
5. Indemnification. (a) In the event of a registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless the Purchaser, and its officers,
directors and each other person, if any, who controls the Purchaser within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Purchaser, or such persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Registrable
Securities were registered under the Securities Act pursuant to this Agreement,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Purchaser, and each such person for any reasonable legal or other
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by the Purchaser or any such person in writing
specifically for use in any such document.
(b) In the event of a registration of the Registrable Securities under
the Securities Act pursuant to this Agreement, the Purchaser will indemnify and
hold harmless the Company, and its officers, directors and each other person, if
any, who controls the Company within the meaning of the Securities Act, against
all losses, claims, damages or liabilities, joint or several, to which the
Company or such persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact which was furnished in writing by the
Purchaser to the Company expressly for use in (and such information is contained
in) the registration statement under which such Registrable Securities were
registered under the Securities Act pursuant to this Agreement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Purchaser will be liable in any
such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished in writing to the Company by the Purchaser specifically for use in any
such document. Notwithstanding the provisions of this paragraph, the Purchaser
shall not be required to indemnify any person or entity in excess of the amount
of the aggregate net proceeds received by the Purchaser of Registrable
Securities in connection with any such registration under the Securities Act.
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(c) Promptly after receipt by an Indemnified Party hereunder of notice
of the commencement of any action, such Indemnified Party shall, if a claim in
respect thereof is to be made against the Indemnifying Party hereunder, notify
the Indemnifying Party in writing thereof, but the omission so to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
such Indemnified Party other than under this Section 5(c) and shall only relieve
it from any liability which it may have to such Indemnified Party under this
Section 5(c) if and to the extent the Indemnifying Party is prejudiced by such
omission. In case any such action shall be brought against any Indemnified Party
and it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such Indemnified Party, and, after notice from the Indemnifying
Party to such Indemnified Party of its election so to assume and undertake the
defense thereof, the Indemnifying Party shall not be liable to such Indemnified
Party under this Section 5(c) for any legal expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof; if the
Indemnified Party retains its own counsel, then the Indemnified Party shall pay
all fees, costs and expenses of such counsel, provided, however, that, if the
defendants in any such action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, the indemnified parties shall have the right to
select one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred.
(d) In order to provide for just and equitable contribution in the
event of joint liability under the Securities Act in any case in which either
(i) the Purchaser, or any controlling person of the Purchaser, makes a claim for
indemnification pursuant to this Section 5(c) but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 5(c) provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the
Purchaser or controlling person of the Purchaser in circumstances for which
indemnification is provided under this Section 5(c); then, and in each such
case, the Company and the Purchaser will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that the Purchaser is responsible only for
the portion represented by the percentage that the public offering price of its
securities offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, provided,
however, that, in any such case, (A) the Purchaser will not be required to
contribute any amount in excess of the public offering price of all such
securities offered by it pursuant to such registration statement; and (B) no
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 10(f) of the Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
6. Miscellaneous.
(a) In the event of a breach by the Company or by a Holder, of any of
their obligations under this Agreement, each Holder or the Company, as the case
may be, 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) Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement.
(c) Each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event as described in this paragraph, such Holder will
forthwith discontinue disposition of such Registrable Securities under the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement. The Company
may provide appropriate stop orders to enforce the provisions of this paragraph.
For purposes of this Section 6(c), any request by the SEC or any other Federal
or state governmental authority for amendments or supplements to such
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Registration Statement or Prospectus or for additional information or the
issuance by the SEC or any other governmental agency of any stop order
suspending the effectiveness of such Registration Statement or qualification or
exemption of the sale of registered securities in any jurisdiction in which the
Company is subject to such regulation; and the occurrence of any event or
passage of time that makes the financial statements included in such
Registration Statement ineligible for inclusion therein or any statement made in
such Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) 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 of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of certain Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(e) 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
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 Person To the address of such Holder
who is then the as it appears in the stock
registered Holder: transfer books of the Company
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(f) 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.
(g) 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.
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(h) 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.
(i). The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
(j) 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.
(k) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties have executed this Registration 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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