EXHIBIT 10.29
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
as of January 2, 2002, by and between Naturade, Inc., a Delaware corporation
(the "Company") and Westgate Equity Partners, L.P., a limited partnership
organized under the laws of Delaware (the "Holder").
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the Company and the Holder are entering into a securities
purchase agreement (the "Securities Purchase Agreement"), which provides that
the Company will issue and sell 13,540,723 shares of its Series B Preferred
Stock and a Warrant to Purchase 33,641,548 shares of Series B Preferred Stock
(the "Warrant") to the Holder in consideration of an aggregate purchase price of
$2,500,0000.
WHEREAS, in order to induce the Holder to enter into the
Securities Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement with respect to the Common Stock
to be issued on the exercise and/or conversion of such securities.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the parties hereto agree as follows:
1. Definitions. The following terms shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):
"Advice" shall have the meaning set forth in Section 3(s).
"Agreement" shall mean this Registration Rights Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Approved Transferee" shall mean any affiliate or associate
(as such terms are defined in Rule 405 promulgated under the Securities Act) of
Westgate Equity Partners, L.P., or a transferee of at least 25% of the
Registrable Securities.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of California.
"Closing" of the Securities Purchase Agreement means the time
at which the securities to be sold thereunder are delivered against payment
therefor.
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"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean the Company's common stock, par
value $0.0001 per share.
"Demand Registration Statement" shall have the meaning set
forth in Section 2(a).
"Demand Registration Filing Date " shall have the meaning set
forth in Section 2(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.
"Holder" shall mean the Holder and its subsidiaries that hold
securities issued in connection with the Securities Purchase Agreement or on
conversion or exercise therefor, and any Approved Transferee of the Holder to
which such securities have been assigned or transferred.
"HHB Holders" shall mean any holders of "Registrable
Securities" as defined in the Registration Rights Agreement between the Company
and Health Holdings and Botanicals, Inc., dated as of December 15, 1997, who
have registration rights under that agreement, and holders of "Registrable
Securities" as defined in that certain Finance Agreement between HHB and the
Company dated Xxxxx 00, 0000 (xx amended June 1, 1999 and on the date hereof),
who have registration rights under that agreement.
"Holder's Counsel" means Xxxxx, Xxxx & Xxxxxxxx, X.X., or any
successor counsel selected by the Holder.
"Majority Holders" shall mean the Holders holding more than
50% of the Registrable Securities outstanding at the time of determination.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"Objecting Party" shall have the meaning set forth in Section
3(a).
"Objection Notice" shall have the meaning set forth in Section
3(a).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
unincorporated organization or government or other agency or political
subdivision thereof.
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"Piggy-Back Registration" shall have the meaning set forth in
Section 2(d).
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
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 Shares
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" shall mean the shares of Common Stock
held by or issuable to the Holder or its subsidiaries upon conversion of the
Series B Preferred Stock or conversion of the Warrant Shares. As to any
particular Registrable Securities held by any Holder, such securities shall
cease to constitute Registrable Securities when (A) a registration statement
with respect to the sale of such securities shall have been declared effective
under the Securities Act and such securities shall have been disposed of in
accordance with the plan of distribution contemplated by the registration
statement, (B) such securities have been sold under Rule 144 under the
Securities Act or any successor rule thereto ("Rule 144"), (C) such securities
are held by a Holder who may dispose of all of the Holder's Registrable
Securities within a three-month period under Rule 144; or (D) such securities
shall have ceased to be issued and outstanding.
"Registration Statement" means any registration statement of
the Company under the Securities Act that covers any of the Registrable Shares
pursuant to the provisions of this Agreement (including any Shelf Registration
Statement), and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Series B Preferred Stock" means the Series B Preferred
Convertible Preferred Stock, par value $0.0001, of the Company issued pursuant
to the Securities Purchase Agreement.
"Suspension Notice" shall have the meaning set forth in
Section 3(s).
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"Suspension Period" shall have the meaning set forth in
Section 3(s).
"Warrant Shares" means the shares of Series B Preferred Stock
issuable on exercise of the Warrant.
2. Demand and Piggyback Registration.
(a) Request for Registration. If at any time after the first
anniversary of the Closing of the Securities Purchase Agreement, the
Holder makes a written request that the Company file a registration
statement under the Securities Act with the Commission to register such
number of shares of Registrable Shares as the Holder may request (which
request shall specify the number of Registrable Shares intended to be
disposed of by the Holder and the intended method of distribution
thereof) ( a "Demand Registration Statement"), then the Company shall
(subject to Section 2(f) below), within ten (10) days of the receipt
thereof, give written notice of such request to all Holders and shall
use all reasonable commercial efforts to effect as soon as practicable,
and in any event within 90 days of the receipt of such request (the
"Demand Registration Filing Date"), the registration under the
Securities Act for resale of all Registrable Securities that the
Holders request to be registered within twenty (20) days of the mailing
of such notice by the Company. The Company shall use its best efforts
to keep such Demand Registration Statement continuously effective for a
period of at least 60 days following the date 60 days after the Demand
Registration Filing Date or the date on which such Demand Registration
Statement is declared effective, if later.
(b) Effective Registration. The Holder shall have the right to
cause only one such Demand Registration; however, the Company's
obligations with respect to a Demand Registration Statement will not be
deemed to have been satisfied unless either: (i) the Holder shall have
sold at least 90% of the shares it proposed to sell pursuant to such
Demand Registration Statement; provided, however, the Holder shall be
deemed to have sold at least 90% of such shares, and a Demand
Registration Statement shall be deemed to have occurred, if the
managing underwriter for such offering advises the Company that such
shares could have been sold in such offering (including at the price
proposed by such offering) but were not sold at the direction of the
Holder, or (ii) the net proceeds received by the Holder from all sales
of shares held by the Holder and registered under the Securities Act
pursuant to the Holder's demand registration rights is at least
$2,500,000 in the aggregate.
The Company's obligation with respect to a Demand
Registration Statement will not be deemed to have been satisfied unless
the applicable Demand Registration Statement has been declared
effective by the Commission and the Company has complied in all
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material respects with its obligations under this Agreement with
respect thereto; provided, however, that if after it has been declared
effective, the offering of Registrable Shares pursuant to a Demand
Registration Statement is interfered with by any stop order, injunction
or other order or requirement of the Commission or any other
governmental agency or court, such Demand Registration Statement will
be deemed not to have become effective during the period of such
interference until the offering of Registrable Shares pursuant to such
Demand Registration Statement may legally resume. If a registration
requested pursuant to Section 2(a) is deemed not to have been effected,
then the Company shall continue to be obligated to effect a
registration pursuant to Section 2(a).
(c) Selection of Underwriter. If the Holder so elects, the offering
of Registrable Shares pursuant to a Demand Registration Statement shall
be in the form of an underwritten offering. If it so elects, the Holder
participating in such Demand Registration Statement shall select one or
more nationally recognized firms of investment bankers reasonably
acceptable to the Company to act as the book-running managing
underwriter or underwriters in connection with such offering and shall
select any additional investment bankers and managers reasonably
acceptable to the Company to be used in connection with the offering.
(d) Piggy-Back Registration. Each time the Company proposes to file
a registration statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any
of its security holders of any class of equity security (other than (i)
a registration statement on Form S-4 or S-8 (or any substitute form
that is adopted by the Commission) or (ii) a registration statement
filed in connection with an exchange offer or offering of securities
solely to the Company's existing security holders), then the Company
shall give written notice of such proposed filing to the Holder of
Registrable Shares as soon as practicable (but in no event less than 30
days before the anticipated filing date), and such notice shall offer
the Holder the opportunity to register such number of shares of
Registrable Shares as the Holder may request (which request shall
specify the Registrable Shares intended to be disposed of by the Holder
and the intended method of distribution thereof) (a "Piggy-Back
Registration"). The Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Shares requested to be included in a
Piggy-Back Registration to be included on the same terms and conditions
as any similar securities of the Company or any other security holder
included therein and to permit the sale or other disposition of such
Registrable Shares in accordance with the intended method of
distribution thereof, if such method is reasonably acceptable to the
Company. The Holder shall have the right to withdraw its request for
inclusion of its Registrable Shares in any registration statement
pursuant to this Section 2 by giving written notice to the Company of
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such withdrawal. The Company may withdraw a Piggy-Back Registration at
any time prior to the time it becomes effective, provided that the
Company shall give immediate notice of such withdrawal to the Holder of
Registrable Shares requested to be included in such Piggy-Back
Registration and shall reimburse the Holder for all reasonable
out-of-pocket expenses (including counsel fees and expenses) incurred
prior to such withdrawal.
(e) Reduction of Offering. In connection with an underwritten
offering where Piggy-Back Registration has been requested as provided
herein, the Company shall use its best efforts to cause all Registrable
Shares requested to be included in such Piggy-Back Registration
Statement to be included as provided herein. If the managing
underwriter or underwriters of any such underwritten offering have
informed, in writing, the Holder of the Registrable Shares requesting
inclusion in such offering that it is their opinion that the total
number of shares which the Company, Holder of Registrable Shares and
any other Persons participating in such registration intend to include
in such offering is such as to materially and adversely affect the
success of such offering, then (i) the number of shares to be offered
for the account of all Persons (other than the Company, the Holder and
any HHB Holders who have requested inclusion of their shares in the
registration) participating in such registration other than pursuant to
demand registration rights shall be reduced or limited (to zero if
necessary) pro rata in proportion to the respective number of shares
requested to be registered by such Persons to the extent necessary to
reduce the total number of shares requested to be included in such
offering to the number of shares, if any, recommended by such managing
underwriter or underwriters and (ii) if such managing underwriter or
underwriters recommend a further reduction in the number of shares in
the offering, then the number of shares to be offered for the account
of the Holders and the HHB Holders shall be reduced or limited (to zero
if necessary) pro rata in proportion to the respective number of shares
requested to be registered by the Holder and the HHB Holders to the
extent necessary to reduce the total number of shares requested to be
included in such offering to the number of shares, if any, recommended
by such managing underwriter or underwriters.
(f) Delay in Offering. If at the time of a request made under
Section 2(a) the Company has a registration statement under the
Securities Act (other than a registration statement on form S-8 or any
successor thereto, or a registration statement filed in connection with
a transaction of the type described in Rule 145 under the Securities
Act) either on file with the Commission or effective, the Company may
delay filing the Demand Registration Statement with the Commission
until 60 days after the date of effectiveness of such other
registration statement.
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3. Registration Procedures. In connection with the obligations of the
Company to effect or cause the registration of any Registrable Shares pursuant
to the terms and conditions of this Agreement, the Company shall use its best
efforts to effect the registration and sale of such Registrable Shares in
accordance with the intended method of distribution thereof as quickly as
practicable, and in connection therewith:
(a) The Company shall prepare and file with the Commission a
Registration Statement on the appropriate form under the Securities
Act, which form shall comply as to form in all material respects with
the requirements of the applicable form and include all financial
statements required by the Commission to be filed therewith, and use
its best efforts to cause such Registration Statement to become
effective and remain effective in accordance with the provisions of
this Agreement; provided that, at least ten Business Days prior to
filing a Registration Statement or Prospectus or any amendments or
supplements thereto, including documents incorporated by reference
after the initial filing of the Registration Statement, the Company
shall furnish to the Holder of the Registrable Shares covered by such
Registration Statement, Holder's Counsel and the underwriters, if any,
draft copies of all such documents proposed to be filed, which
documents will be subject to the review of Holder's Counsel and the
underwriters, if any, and the Company will not, unless required by law,
file any Registration Statement or amendment thereto or any Prospectus
or any supplement thereto to which the Holder holding a majority in
interest of the Registrable Shares covered by such Registration
Statement or the underwriters with respect to such Shares, if any,
shall object; provided, however, that any such objection to the filing
of any Registration Statement or amendment thereto or any Prospectus or
supplement thereto shall be made by written notice (the "Objection
Notice"), shall be made on the basis of an inaccurate statement in the
Registration Statement, and shall be delivered to the Company no later
than ten Business Days after the party or parties asserting such
objection (the "Objecting Party") receives draft copies of the
documents the Company proposes to file. The Objection Notice shall set
forth the objections and the specific areas in the draft documents
where such objections arise. The Company shall have five Business Days
after receipt of the Objection Notice to correct such deficiencies to
the satisfaction of the Objecting Party, and will notify the Holder of
any stop order issued or threatened by the Commission in connection
therewith and shall use its best efforts to prevent the entry of such
stop order or to remove it if entered at the earliest possible moment.
(b) The Company shall promptly prepare and file with the Commission
such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep such Registration Statement
effective for as long as such registration is required to remain
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effective pursuant to the terms of this Agreement; shall cause the
prospectus to be supplemented by any required prospectus supplement,
and, as so supplemented, to be filed pursuant to Rule 424 under the
Securities Act; and shall comply with the provisions of the Securities
Act applicable to it with respect to the disposition of all Registrable
Shares covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the
Holder set forth in such Registration Statement or supplement to the
Prospectus.
(c) The Company shall promptly furnish to the Holder and the
underwriters, if any, without charge, such number of conformed copies
of such Registration Statement and any post-effective amendment thereto
and such number of copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto, any documents
incorporated by reference therein and such other documents as the
Holder or underwriter may request in order to facilitate the public
sale or other disposition of the Registrable Shares being sold by the
Holder.
(d) The Company shall, on or prior to the date on which a
Registration Statement is declared effective, (i) use its best efforts
to register or qualify the Registrable Shares covered by such
Registration Statement under the securities or "blue sky" laws of each
of the fifty states of the United States or to establish the
availability of an exemption therefrom; (ii) do any and all other acts
and things which may be necessary or advisable to enable the Holder to
consummate the disposition of such Registrable Shares owned by the
Holder; (iii) use its best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the period in
which the Registration Statement is required to be kept effective; and
(iv) use its best efforts to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions
of such Registrable Shares; provided, however, that the Company shall
not be required (v) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this Section 3(d) or (vi) to file any general consent to service of
process.
(e) The Company shall use its best efforts to cause the Registrable
Shares covered by a Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to
enable the Holder to consummate the disposition of such Registrable
Shares.
(f) The Company shall promptly notify the Holder, Holder's Counsel
and any underwriter and (if requested by any such Person) confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement
or post-effective amendment has been filed and, with respect to a
Registration Statement or any post-effective amendment, when the same
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has become effective, (ii) of any request by the Commission or any
state securities authority for amendments and supplements to a
Registration Statement and Prospectus or for additional information
after the Registration Statement has become effective, (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of a Registration Statement or the initiation or
threatening of any proceedings for that purpose, (iv) of the issuance
by any state securities commission or other regulatory authority of any
order suspending the qualification or exemption from qualification of
any of the Registrable Shares under state securities for "blue sky"
laws or the initiation of any proceedings for that purpose, (v) if,
between the effective date of a Registration Statement and the closing
of any sale of Registrable Shares covered thereby, the representations
and warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating
to the offering cease to be true and correct in all material respects,
and (vi) of the happening of any event which makes any statement made
in a Registration Statement or related Prospectus untrue or which
requires the making of any changes in such Registration Statement or
Prospectus so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
herein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading; and, as
promptly as practicable thereafter, prepare and file with the
Commission and furnish a supplement or amendment to such Prospectus so
that, as thereafter deliverable to the purchasers of such Registrable
Shares, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(g) The Company shall make generally available to the Holder an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act as soon as practicable but in no event later than 90
days after the end of the 12-month period beginning with the first day
of the Company's first fiscal quarter commencing after the effective
date of a Registration Statement, which earnings statement shall cover
said 12-month period, and which requirement will be deemed to be
satisfied if the Company timely files complete and accurate information
on forms 10-Q, 10-K, and 8-K under the Exchange Act and otherwise
complies with Rule 158 under the Securities Act.
(h) The Company shall promptly use its best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration
Statement, and if one is issued use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of a Registration
Statement at the earliest possible moment.
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(i) The Company shall, if requested by the managing underwriter or
underwriters, if any, Holder's Counsel, or any Holder promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as such managing underwriter or underwriters requests, or
Holder's Counsel requests, to be included therein with respect to the
Registrable Shares being sold by the Holder to such underwriter or
underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any other terms of an
underwritten offering of the Registrable Shares to be sold in such
offering, and promptly make all required filings of such Prospectus
supplement or post-effective amendment, in each case subject to the
requirement that such information is accurate in all respects and the
Company's reasonable discretion, on advice of counsel, that such
information and filings are appropriate and legal.
(j) The Company shall cooperate with the Holder and the managing
underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (which shall not bear any
restrictive legends unless required under applicable law) representing
securities sold under a Registration Statement, and enable such
securities to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or the Holder may
request and keep available and make available to the Company's transfer
agent prior to the effectiveness of such Registration Statement a
supply of such certificates.
(k) The Company shall enter into such customary agreements
(including, if applicable, an underwriting agreement in customary form)
and take such other actions as the Holder or the underwriters retained
by the Holder participating in an underwritten public offering, if any,
may request in order to expedite or facilitate the disposition of
Registrable Shares (the Holder may, at its option, require that any or
all of the representations, warranties and covenants of the Company to
or for the benefit of any underwriters also be made to and for the
benefit of the Holder).
(l) The Company shall promptly make available to the Holder, any
underwriter participating in any disposition pursuant to a Registration
Statement, and any attorney, accountant or other agent or
representative retained by the Holder or underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information requested by any such
Inspector in connection with such Registration Statement.
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(m) The Company shall furnish to the Holder and to each
underwriter, if any, a signed counterpart, addressed to the Holder or
underwriter, of (i) an opinion or opinions of counsel to the Company
and (ii) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort
letters as the case may be, as the Holder of Registrable Shares
included in such offering or the managing underwriter therefor
reasonably requests.
(n) The Company shall use its best efforts to cause the Registrable
Shares included in a Registration Statement to be (i) listed on each
securities exchange, if any, on which similar securities issued by the
Company are then listed or (ii) authorized to be quoted and or listed
as applicable, on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") or the National Market System of NASDAQ
if the Registrable Shares so qualify.
(o) The Company shall provide a CUSIP number for all Registrable
Shares covered by a Registration Statement not later than the effective
date of such Registration Statement.
(p) The Company shall cooperate with the Holder and each
underwriter participating in the disposition of Registrable Shares and
their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc.
("NASD").
(q) The Company shall, during the period when the Prospectus is
required to be delivered under the Securities Act, promptly file all
documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act.
(r) The Company shall appoint a transfer agent and registrar for
all Registrable Shares covered by a Registration Statement not later
than the effective date of such Registration Statement.
(s) In connection with an underwritten offering, the Company will
participate, to the extent reasonably requested by the managing
underwriter for the offering or the Holder, in customary efforts to
sell the securities under the offering, including without limitation,
participating in "road shows."
In the case of any Registration Statement filed
hereunder, the Holder, upon receipt of any notice (a "Suspension
Notice") from the Company of the happening of any event of the kind
described in Section 3(f)(vi), shall forthwith discontinue disposition
of the Registrable Shares pursuant to such Registration Statement
covering such Registrable Shares until the Holder's receipt of the
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copies of the supplemented or amended Prospectus contemplated by
Section 3(f) or until it is advised in writing (the "Advice") by the
Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the Company, the
Holder will, or will request the managing underwriter or underwriters,
if any, to deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in the Holder's
possession, of the Prospectus covering such Registrable Shares current
at the time of receipt of such notice; provided, however, that the
Company shall not give a Suspension Notice until after the Registration
Statement has been declared effective. In the event that the Company
shall give any Suspension Notice, (i) the Company shall use its best
efforts and take such actions as are reasonably necessary to render the
Advice and end the period from the date on which the Holder receives a
Suspension Notice to the date on which any Holder receives either the
Advice or copies of the supplemented or amended Prospectus contemplated
by Section 3(f) (the "Suspension Period") as promptly as practicable
and if the time periods for which a Registration Statement is required
to be kept effective pursuant to Section 2 hereof shall be extended by
the number of days during the Suspension Period.
If any Registration Statement refers to the Holder by
name or otherwise as the holder of any securities of the Company, then
the Holder shall have the right to require (i) the insertion therein of
language, in form and substance reasonably satisfactory to the Holder,
to the effect that the holding by the Holder of such securities is not
to be construed as a recommendation by the Holder of the investment
quality of the Company's securities covered thereby and that such
holding does not imply that the Holder will assist in meeting any
future financial requirements of the Company or (ii) in the event that
such reference to the Holder by name or otherwise is not required by
the Securities Act or any similar Federal or state "blue sky" statute
and the rules and regulations thereunder then in force, the deletion of
the reference to the Holder.
4. Registration Expenses. Any and all expenses incident to the
Company's performance of or compliance with this Agreement (other than
underwriting discounts and commissions and stock transfer taxes incurred in
connection with the registration and sale of Registrable Securities hereunder),
including, without limitation, all Commission and securities exchange, NASDAQ or
NASD registration and filing fees, all fees and expenses incurred in connection
with compliance with state securities or "blue sky" laws (including reasonable
fees and disbursements of counsel for any underwriters or Holder in connection
with "blue sky" qualifications or the Registrable Shares), printing expenses,
messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), all expenses for word processing,
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printing and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, the fees and expenses incurred in connection with the
listing of the Registrable Shares, the fees and disbursements of counsel for the
Company and of the independent certified public accountants of the Company
(including the expenses of any comfort letters or costs associated with the
delivery by independent certified public accountants of a comfort letter
requested pursuant to Section 3(m), Securities Act liability insurance (if the
Company elects to obtain such insurance), the reasonable fees and expenses of
any special experts or other Persons retained by the Company in connection with
any registration, but not including fees and disbursements of counsel for the
Holder, underwriting discounts, selling commissions and stock transfer taxes
applicable to the sales of Registrable Securities, will be borne by the Company
whether or not the Demand Registration Statement or Piggy-Back Registration to
which such expenses relate becomes effective.
5. Indemnification and Contribution.
(a) In the event of any registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Company shall
indemnify and hold harmless the Holder of such Registrable Securities,
such Holder's directors and officers, and each other person (including
each underwriter) who participated in the offering of such Registrable
Securities and each other person, if any, who controls such Holder or
such participating person within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several,
(including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or claim asserted) to which such Holder or
any such director or officer or participating person or controlling
person may become subject under the Securities Act or any other statute
or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (i) any alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered
under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto,
or (ii) any alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse such Holder or such director, officer
or participating person or controlling person for any legal or any
other expenses reasonably incurred by such Holder or such director,
officer or participating person or controlling person in connection
with investigating or defending any such loss, claim, damage, liability
or action, provided that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any actual or alleged untrue statement
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or actual or alleged omission made in such registration statement,
preliminary prospectus, prospectus or amendment or supplement (X) in
reliance upon and in conformity with written information furnished to
the Company by such Holder specifically for use therein or (Y) if any
such untrue statement or omission is made in any such preliminary
prospectus and such Holder, being obligated to do so, failed to deliver
a copy of the final prospectus prior to or concurrently with the sale
of the Registrable Securities to the person asserting such loss, claim,
damage or liability after the Company had furnished such Holder with a
sufficient number of copies of the same within a reasonably sufficient
time period prior to such sale and the final prospectus corrected such
untrue statement or omission. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
Holder or such director, officer or participating person or controlling
person, and shall survive the transfer of such securities by such
Holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify and hold
harmless the Company, its directors and officers and each other person,
if any, who controls the Company within the meaning of the Securities
Act against any losses, claims, damages or liabilities, joint or
several, (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or claim asserted) to which the
Company or any such director or officer or any such person may become
subject under the Securities Act or any other statute or at common law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information provided in
writing to the Company by such Holder specifically for use in any
registration statement under which securities were registered under the
Securities Act at the request of such Holder, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, but in an amount not to exceed the net proceeds
received by such Holder in the offering.
(c) If the indemnification provided for in this Section 5 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of such
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indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation
or proceeding. The liability of any Holder of Registrable Securities
hereunder shall not exceed the net proceeds received by it in the
offering.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(c) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
6. Certain Limitations On Registration Rights. Notwithstanding the
other provisions of this Agreement, the Company shall not be obligated to
register the Registrable Securities of any Holder if, in the opinion of counsel
to the Company reasonably satisfactory to the Holder and its counsel, the sale
or other disposition of all of such Holder's Registrable Securities, in the
manner proposed by such Holder, may be effected without registering such
Registrable Securities under the Securities Act.
7. Holdback Agreements. Each Holder of Registrable Securities covered
by a registration statement pursuant to Section 2 agrees, if requested by the
Company or the managing underwriter of an underwritten offering, and if the HHB
Holders and the executive officers of the Company reporting directly to the
board of directors (including the Chief Executive Officer and Chief Financial
Officer) are similarly bound, not to effect any sale or other distribution of
equity securities of the Company during the seven-day period prior to, and
during the 180-day period beginning with, the effectiveness of such registration
statement.
8. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not heretofore and
will not hereafter enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Holders
in this Agreement.
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(b) Remedies. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Agreement.
The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be
adequate. In any action or proceeding brought to enforce any provision
of this Agreement or where any provision hereof is validly asserted as
a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
(c) Amendments. This Agreement and all other Agreements may be
amended or modified with the written consent of the Company and the
Majority Holders.
(d) Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Agreement shall be sufficiently
given or made if in writing and either delivered in person with receipt
acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
(i) If to any Holder, at
Westgate Equity Partners, L.P.
One Magna Place, Suite 650
0000 Xxxxx Xxxxxxxxx Xxxx.
Xx. Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy (which shall not constitute notice) to:
Xxxxx, Rice & Xxxxxxxx X.X.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxx, Esquire
(ii) If to the Company, at
Naturade, Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile:
Attention:
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with a copy (which shall not constitute notice) to:
Sheppard, Mullin, Xxxxxxx & Hampton LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxx, Esquire
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every
notice, demand, request, consent, approval, declaration, delivery or
other communication hereunder shall be deemed to have been duly given
or served on the date on which personally delivered, with receipt
acknowledged, telecopied and confirmed by telecopy answerback or three
Business Days after the same shall have been deposited in the United
States mail.
(e) Reports Under Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities
Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration generally or pursuant to a registration on Form S-3, the
Company agrees to use commercially reasonable efforts to:
(1) make and keep public information available, as those
terms are understood and defined in SEC Rule 144;
(2) qualify for registration on Form S-3 for the resale of
the Registrable Securities;
(3) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act
and the Exchange Act; and
(4) furnish to any Holder, so long as the Holder owns any
Registrable Securities, promptly upon request (i) a written
statement by the Company that it has complied with the reporting
requirements of SEC Rule 144, the Securities Act and the Exchange
Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual
and/or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder
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of any rule or regulation of the SEC which permits the selling of
any such securities without registration or pursuant to such form.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties hereto, including any Approved Transferee.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
(h) Governing Law; Jurisdiction. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of
California without giving effect to the conflict of laws principles
thereof.
(i) Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(j) Entire Agreement. This Agreement, together with the Securities
Purchase Agreement, represents the complete agreement and understanding
of the parties hereto in respect of the subject matter contained herein
and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject matter
hereof.
The next page is the signature page.
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IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
NATURADE, INC.,
a Delaware corporation
-------------------------------
Xxxxx X. Xxxxxx
Secretary and Chief Financial Officer
WESTGATE EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By:__________________________________
Name: _______________________________
Title _______________________________
CONSENT
Health Holdings & Botanicals, LLC, a limited liability company formed
under the laws of California ("HHB"), hereby consents to the rights provided to
the Holder under this Agreement and agrees that the Registration Rights
Agreement between the Company and HHB dated December 15, 1997 (the "HHB
Agreement") shall be deemed amended to provide for the respective rights of the
Holder and HHB as provided herein.
HHB further agrees that the HHB Agreement shall be amended to add the
delaying provision of Section 2(f) hereto Section 2 of the HHB Agreement.
HEALTH HOLDINGS & BOTANICALS, LLC
a California limited liability company
By:__________________________________
Name: _______________________________
Title _______________________________
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