EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January 31, 2003, is
made by and among Tangible Asset Galleries, Inc., a Nevada corporation (the
"COMPANY"), and holders of the Company's Series B $1.00 Convertible Preferred
Stock (the "SERIES B PREFERRED STOCK"), Series C $100 Redeemable 9% Convertible
Preferred Stock (the "SERIES C PREFERRED STOCK") and Warrants (the "WARRANTS")
issued pursuant to that certain Securities Purchase Agreement by and between the
Company and such holders dated as of April 3, 2002 (the "FIRST PURCHASE
AGREEMENT") and the Company's Series D $1.00 Convertible Preferred Stock (the
"SERIES D PREFERRED STOCK") issued pursuant to that certain Series D Preferred
Stock and Warrant Exercise Agreement by and between the Company and such holders
dated as of even date herewith (the "SECOND PURCHASE AGREEMENT"; the First
Purchase Agreement and the Second Purchase Agreement collectively, the "PURCHASE
AGREEMENTS") whose names appear on the signature page hereto below that of the
Company (collectively, the "INVESTORS"). For purposes of clarification, the
Warrants include the warrants to purchase 4,000,000 shares of the Company's
Common Stock issued to Xxxxxxx XxXxxxxx pursuant to Section 4(g) of the First
Purchase Agreement. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Second Purchase Agreement.
RECITALS:
WHEREAS, the Company desires to grant to the Investors the registration
rights set forth herein with respect to the shares (the "CONVERSION SHARES") of
Common Stock issuable upon conversion or exchange of the Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, shares (the
"WARRANT SHARES") of Common Stock issuable upon exercise of the Warrants and
shares (the "DEFAULT WARRANT SHARES") of Common Stock issuable upon the exercise
of the warrants issuable in the event of a registration default pursuant to
Section 3(e) (all the shares of the Series B Preferred Stock, the Series C
Preferred Stock and Series D Preferred Stock, the Conversion Shares, the Warrant
Shares and the Default Warrant Shares, collectively and interchangeably to be
referred to as the "SECURITIES").
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. CERTAIN DEFINITIONS. As used herein the term "REGISTRABLE
SECURITY" means the Conversion Shares, Warrant Shares, and Default Warrant
Shares, until (i) all Securities have been disposed of pursuant to the
Registration Statement (as defined below), (ii) all Securities have been sold
under circumstances under which all of the applicable conditions of Rule 144
("RULE 144") (or any similar provision then in force) under the Securities Act
of 1933, as amended (the "SECURITIES ACT") are met, or (iii) such time as, in
the opinion of counsel to the Company reasonably satisfactory to the Investors
and upon delivery to the Investors of such executed opinion, all Securities may
be sold without any time, volume or manner limitations pursuant to Rule 144 (or
any similar provision then in effect). In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be deemed to be made
in the definition of "Registrable Security" as is appropriate in order to
prevent any dilution or enlargement of the rights granted pursuant to this
Agreement. As used herein the term "HOLDER" means any Person owning or having
the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 9 hereof.
Section 2. RESTRICTIONS ON TRANSFER. Each of the Investors acknowledges
and understands that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144. Each
of the Investors understands that no disposition or transfer of the Securities
may be made by any of the Investors in the absence of (i) an opinion of counsel
to such Investor, in form and substance reasonably satisfactory to the Company,
that such transfer may be made without registration under the Securities Act or
(ii) such registration.
With a view to making available to the Investors the benefits of Rule
144 or any other similar rule or regulation of the Securities and Exchange
Commission (the "COMMISSION") that may at any time permit the holders of the
Securities to sell securities of the Company to the public pursuant to Rule 144,
the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule
144;
(b) file with the Commission in a timely manner all reports
and other documents required to be filed with the Commission pursuant
to Section 13 or 15(d) under the Exchange Act by companies subject to
either of such sections, irrespective of whether the Company is then
subject to such reporting requirements; and
(c) Upon request by any Holder or the Company's transfer
agent, provide an opinion of counsel, which opinion shall be reasonably
acceptable to the Holder and/or the Company's transfer agent, that the
such Holder has complied with the applicable conditions of Rule 144 (or
any similar provision then in force).
Section 3. REGISTRATION RIGHTS WITH RESPECT TO THE REGISTRABLE
SECURITIES.
(a) The Company agrees that it will prepare and file with the
Commission, no later than June 30, 2003, a registration statement (on
Form S-1 or SB-2, or other appropriate registration statement form)
under the Securities Act (such registration statement, including (a)
all amendments and supplements thereto, (b) each prospectus contained
therein, and (c) all exhibits thereto or incorporated by reference
therein, the "REGISTRATION STATEMENT"), in respect of the Holders, so
as to permit a resale of the Securities under the Act by the Holders as
selling stockholders and not as underwriters.
The Company shall use diligent best efforts to cause the
Registration Statement to become effective as soon as practical
following the filing of the Registration Statement. The number of
shares designated in the Registration Statement to be registered shall
include 150% of the Warrant Shares, 150% of the Default Warrant Shares,
if any, and 150% of the Conversion Shares. The Registration Statement
shall include appropriate language regarding reliance upon Rule 416 to
the extent permitted by the Commission. The Company will notify the
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Holders and its transfer agent of the effectiveness of the Registration
Statement within one (1) Trading Day (as defined below) of such event.
As used herein "TRADING DAY" shall mean any business day on which the
market on which the Common Stock trades is open for business.
(b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 effective under the
Securities Act until the earlier of (i) the date that none of the
Registrable Securities covered by such Registration Statement are or
may become issued and outstanding, (ii) the date that all of the
Registrable Securities have been sold pursuant to such Registration
Statement, (iii) the date all the Holders receive an opinion of counsel
to the Company, which counsel shall be reasonably acceptable to the
Holders, that the Registrable Securities may be sold under the
provisions of Rule 144 without limitation as to volume, (iv) all
Registrable Securities have been otherwise transferred to persons who
may trade such shares without restriction under the Securities Act, and
the Company has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend, or (v)
3 years from the date on which the Registration Statement first became
effective (the "EFFECTIVE DATE").
(c) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and
filing of the Registration Statement under subparagraph 3(a) and in
complying with applicable securities and Blue Sky laws (including,
without limitation, all attorneys' fees of the Company and all other
fees and disbursements of the Company's accountants, auditors and other
independent professional service providers) shall be borne by the
Company. The Company shall also reimburse the fees and expenses of
counsel to the Holders incurred in connection with such counsel's
review of the Registration Statement and advice concerning the
Registration Statement and its filing subject to a cap of $10,000. The
Holders shall bear the cost of underwriting and/or brokerage discounts,
fees and commissions, if any, applicable to the Registrable Securities
being registered . The Holders and their counsel shall have a
reasonable period, not to exceed ten (10) Trading Days, to review the
proposed Registration Statement or any amendment thereto, prior to
filing with the Commission, and the Company shall provide the Holders
with copies of any comment letters received from the Commission with
respect thereto within two (2) Trading Days of receipt thereof. The
Company shall qualify any of the securities for sale in such states as
the Holders reasonably designate and shall furnish indemnification in
the manner provided in Section 6 hereof. However, the Company shall not
be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the Holders, or which
will require the Company to qualify to do business in such state or
require the Company to file therein any general consent to service of
process. The Company at its expense will supply each of the Investors
with copies of the applicable Registration Statement and the prospectus
included therein and other related documents in such quantities as may
be reasonably requested by any of the Investors.
(d) The Company shall not be required by this Section 3 to
include the Registrable Securities in any Registration Statement which
is to be filed if, in the opinion of counsel for both the Holders and
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the Company (or, should they not agree, in the opinion of another
counsel experienced in securities law matters acceptable to counsel for
the Holders and the Company) the proposed offering or other transfer as
to which such registration is requested is exempt from applicable
federal and state securities laws and would result in all purchasers or
transferees obtaining securities which are not "restricted securities"
as such term is defined in Rule 144.
(e) In the event that (i) the Registration Statement is not
filed by the Company in a timely manner as set forth in Section 3(a);
(ii) the Registration Statement is not declared effective by the
Commission within 180 days after the initial filing thereof; or (iii)
such Registration Statement is not maintained as effective by the
Company for the period set forth in Section 3(b) above (each a
"REGISTRATION DEFAULT"), then the Company will issue to each of the
Holders, for each Registration Default then in effect, as liquidated
damages and not as a penalty, for every three-month period in which
each Registration Default is occurring, warrants to purchase one (1)
share of the Common Stock ("DEFAULT WARRANTS") for each share of Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock issued to the Holders pursuant to the Purchase Agreements until
such corresponding Registration Default no longer exists ("LIQUIDATED
DAMAGES"); PROVIDED, HOWEVER, that the issuance of such Default
Warrants shall not relieve the Company from its obligations to register
the Registrable Securities pursuant to this Section.
If the Company does not issue the Default Warrants to the
Holders as set forth above, the Company will pay any Holder's
reasonable costs of any action in a court of law to cause compliance
with this Section 3(e), including reasonable attorneys' fees, in
addition to the Default Warrants. The registration of the Registrable
Securities pursuant to this Section shall not affect or limit a
Holder's other rights or remedies as set forth in this Agreement.
(f) The Company shall be precluded from including in any
registration statement which it is required to file pursuant to this
Section 3 any other securities apart from the Registrable Securities,
except for the securities listed on EXHIBIT B hereto and those
securities related to any qualified stock option plan approved by the
Board of Directors of the Company, without the prior written consent of
the Holders.
(g) If, at any time any Registrable Securities are not at the
time covered by any effective Registration Statement, the Company shall
determine to register under the Securities Act (including pursuant to a
demand of any stockholder of the Company exercising registration
rights) any of its shares of the Common Stock (other than in connection
with a merger or other business combination transaction that has been
consented to in writing by holders of the Series B Preferred Stock and
Series D Preferred Stock, or pursuant to Form S-8 when such filing has
been consented to in writing by holders of the Series B Preferred Stock
and the Series D Preferred Stock), it shall send to each Holder written
notice of such determination and, if within twenty (20) days after
receipt of such notice, such Holder shall so request in writing, the
Company shall use its best efforts to include in such registration
statement all or any part of the Registrable Securities that such
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Holder requests to be registered. Notwithstanding the foregoing, if, in
connection with any offering involving an underwriting of the Common
Stock to by issued by the Company, the managing underwriter shall
impose a limitation on the number of shares of the Common Stock
included in any such registration statement because, in such
underwriter's judgment, such limitation is necessary based on market
conditions: (a) if the registration statement is for a public offering
of common stock on a "firm commitment" basis with gross proceeds to the
Company of at least $15,000,000 (a "QUALIFIED PUBLIC OFFERING"), the
Company may exclude, to the extent so advised by the underwriters, the
Registrable Securities from the underwriting; PROVIDED, HOWEVER, that
if the underwriters do not entirely exclude the Registrable Securities
from such Qualified Public Offering, the Company shall be obligated to
include in such registration statement, with respect to the requesting
Holder, only an amount of Registrable Securities equal to the product
of (i) the number of Registrable Securities that remain available for
registration after the underwriter's cutback and (ii) such Holder's
percentage of ownership of all the Registrable Securities then
outstanding (on an as-converted basis) (the "REGISTRABLE PERCENTAGE");
and (b) if the registration statement is not for a Qualified Public
Offering, the Company shall be obligated to include in such
registration statement, with respect to the requesting Holder, only an
amount of Registrable Securities equal to the product of (i) the number
of Registrable Securities that remain available for registration after
the underwriter's cutback and (ii) such Holder's Registrable
Percentage; provided, however, that the aggregate value of the
Registrable Securities to be included in such registration may not be
so reduced to less than 20% of the total value of all securities
included in such registration. If any Holder disapproves of the terms
of any underwriting referred to in this paragraph, it may elect to
withdraw therefrom by written notice to the Company and the
underwriter. No incidental right under this paragraph shall be
construed to limit any registration required under the other provisions
of this Agreement.
Section 4. COOPERATION WITH COMPANY. Each Holder will cooperate with
the Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company (which shall
include all information regarding such Holder and proposed manner of sale of the
Registrable Securities required to be disclosed in any Registration Statement)
and executing and returning all documents reasonably requested in connection
with the registration and sale of the Registrable Securities and entering into
and performing its obligations under any underwriting agreement, if the offering
is an underwritten offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering. Nothing in this
Agreement shall obligate any Holder to consent to be named as an underwriter in
any Registration Statement. The obligation of the Company to register the
Registrable Securities shall be absolute and unconditional as to those
Registrable Securities which the Commission will permit to be registered without
naming any Holder as underwriters. Any delay or delays caused by a Holder by
failure to cooperate as required hereunder shall not constitute a Registration
Default as to such Holder.
Section 5. REGISTRATION PROCEDURES. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Securities Act, the Company shall
(except as otherwise provided in this Agreement), as expeditiously as possible,
subject to the Holders' assistance and cooperation as reasonably required with
respect to each Registration Statement:
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(a) (i) prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus used
in connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all Registrable
Securities covered by such Registration Statement whenever any of the
Holder shall desire to sell or otherwise dispose of the same (including
prospectus supplements with respect to the sales of Registrable
Securities from time to time in connection with a registration
statement pursuant to Rule 415 promulgated under the Securities Act)
and (ii) take all lawful action such that each of (A) the Registration
Statement and any amendment thereto does not, when it becomes
effective, contain 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, in light of the circumstances under which
they were made, not misleading and (B) the prospectus forming part of
the Registration Statement, and any amendment or supplement thereto,
does not at any time during the Registration Period 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, in
light of the circumstances under which they were made, not misleading;
(b) (i) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the
distribution or delivery of any prospectus (including any supplements
thereto), provide draft copies thereof to the Holders as required by
Section 3(c) and reflect in such documents all such comments as the
Holders (and their counsel) reasonably may propose; (ii) furnish to
each of the Holders such numbers of copies of a prospectus including a
preliminary prospectus or any amendment or supplement to any
prospectus, as applicable, in conformity with the requirements of the
Act, and such other documents, as any of the Holders may reasonably
request in order to facilitate the public sale or other disposition of
the Registrable Securities owned by such Holder; and (iii) provide to
the Holders copies of any comments and communications from the
Commission relating to the Registration Statement, if lawful to do so;
(c) register and qualify the Registrable Securities covered by
the Registration Statement under such other securities or blue sky laws
of such jurisdictions as any of the Holders shall reasonably request
(subject to the limitations set forth in Section 3(c) above), and do
any and all other acts and things which may be necessary or advisable
to enable such Holder to consummate the public sale or other
disposition in such jurisdiction of the Registrable Securities owned by
such Holder;
(d) list such Registrable Securities on the markets where the
Common Stock of the Company is listed as of the Effective Date, if the
listing of such Registrable Securities is then permitted under the
rules of such markets;
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(e) notify the Holders at any time when a prospectus relating
thereto covered by the Registration Statement is required to be
delivered under the Securities Act, of the happening of any event of
which it has knowledge as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and the
Company shall prepare and file a curative amendment under Section 5(a)
as quickly as reasonably possible and during such period, the Holders
shall not make any sales of Registrable Securities pursuant to the
Registration Statement;
(f) after becoming aware of such event, notify each of the
Holders who holds Registrable Securities being sold (or, in the event
of an underwritten offering, the managing underwriters) of the issuance
by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible
time and take all lawful action to effect the withdrawal, rescission or
removal of such stop order or other suspension;
(g) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates for the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates for the Registrable Securities to be in such denominations
or amounts, as the case may be, as any of the Holders reasonably may
request and registered in such names as any of the Holders may request;
and, within three (3) Trading Days after a Registration Statement which
includes Registrable Securities is declared effective by the
Commission, deliver and cause legal counsel selected by the Company to
deliver to the transfer agent for the Registrable Securities (with
copies to the Holders) an appropriate instruction and, to the extent
necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Holders of their
Registrable Securities in accordance with the intended methods therefor
provided in the prospectus which are customary for issuers to perform
under the circumstances;
(i) in the event of an underwritten offering, promptly include
or incorporate in a prospectus supplement or post-effective amendment
to the Registration Statement such information as the managers
reasonably agree should be included therein and to which the Company
does not reasonably object and make all required filings of such
prospectus supplement or post-effective amendment as soon as
practicable after it is notified of the matters to be included or
incorporated in such prospectus supplement or post-effective amendment;
and
(j) maintain a transfer agent and registrar for the Common
Stock.
Section 6. INDEMNIFICATION.
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(a) To the maximum extent permitted by law, the Company agrees
to indemnify and hold harmless each of the Holders, each person, if
any, who controls any of the Holders within the meaning of the
Securities Act, and each director, officer, shareholder, employee,
agent, representative, accountant or attorney of the foregoing (each of
such indemnified parties, a "DISTRIBUTING INVESTOR") against any
losses, claims, damages or liabilities, joint or several (which shall,
for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses), to which the Distributing Investor 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,
or any related final prospectus or amendment or supplement thereto, 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; provided,
however, that the Company will not be liable in any such case to the
extent, and only to the extent, that any such loss, claim, damage or
liability arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by the Distributing
Investor, its counsel, or affiliates, specifically for use in the
preparation thereof or (ii) such Distributing Investor's failure to
deliver to the purchaser a copy of the most recent prospectus
(including any amendments or supplements thereto). This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) To the maximum extent permitted by law, each Distributing
Investor agrees that it will indemnify and hold harmless the Company,
and each officer and director of the Company or person, if any, who
controls the Company within the meaning of the Securities Act, against
any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses) to which the Company or any such officer,
director or controlling person 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, or any related final
prospectus or amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Distributing Investor, its counsel or affiliates, specifically for use
in the preparation thereof. This indemnity agreement will be in
addition to any liability which the Distributing Investor may otherwise
have under this Agreement. Notwithstanding anything to the contrary
herein, the Distributing Investor shall be liable under this Section
6(b) for only that amount as does not exceed the net proceeds to such
Distributing Investor as a result of the sale of Registrable Securities
pursuant to the Registration Statement.
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(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action against such
indemnified party, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section
6, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve the indemnifying party from any liability which it may have to
any indemnified party except to the extent the failure of the
indemnified party to provide such written notification actually
prejudices the ability of the indemnifying party to defend such action.
In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, assume the defense thereof, subject to the
provisions herein stated and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion.
The indemnified parties shall have the right to employ one or more
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed
the defense of the action with counsel reasonably satisfactory to the
indemnified party unless (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii)
the named parties to any such action (including any interpleaded
parties) include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by its counsel that
there may be one or more legal defenses available to the indemnifying
party different from or in conflict with any legal defenses which may
be available to the indemnified party or any other indemnified party
(in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable only for the
reasonable fees and expenses of one separate firm of attorneys for the
indemnified party, which firm shall be designated in writing by the
indemnified party). No settlement of any action against an indemnified
party shall be made without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld so
long as such settlement includes a full release of claims against the
indemnified party.
All fees and expenses of the indemnified party (including
reasonable costs of defense and investigation in a manner not
inconsistent with this Section and all reasonable attorneys' fees and
expenses) shall be paid to the indemnified party, as incurred, within
ten (10) Trading Days of written notice thereof to the indemnifying
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party; provided, that the indemnifying party may require such
indemnified party to undertake to reimburse all such fees and expenses
to the extent it is finally judicially determined that such indemnified
party is not entitled to indemnification hereunder.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 6 hereof but 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 the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
applicable Distributing Investor shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees and
expenses), in either such case (after contribution from others) on the basis of
relative fault as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the applicable Distributing Investor on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Distributing Investor agree that it would not be just and equitable if
contribution pursuant to this Section 7 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 this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. 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.
Notwithstanding any other provision of this Section 7, in no event
shall (i) any of the Distributing Investors be required to undertake liability
to any person under this Section 7 for any amounts in excess of the dollar
amount of the proceeds received by such Distributing Investor from the sale of
such Distributing Investor's Registrable Securities (after deducting any fees,
discounts and commissions applicable thereto) pursuant to any Registration
Statement under which such Registrable Securities are registered under the
Securities Act and (ii) any underwriter be required to undertake liability to
any person hereunder for any amounts in excess of the aggregate discount,
commission or other compensation payable to such underwriter with respect to the
Registrable Securities underwritten by it and distributed pursuant to such
Registration Statement.
Section 8. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) hand delivered,
(ii) deposited in the mail, registered or certified, return receipt requested,
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postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by facsimile, addressed as set forth on EXHIBIT A
hereto or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the first business day following the date of sending by reputable
courier service, fully prepaid, addressed to such address, or (c) upon actual
receipt of such mailing, if mailed. Any party hereto may from time to time
change its address or facsimile number for notices under this Section 8 by
giving at least ten (10) days' prior written notice of such changed address or
facsimile number to the other party hereto.
Section 9. ASSIGNMENT. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The registration rights granted to any Holder under this
Agreement may be transferred as set forth below (provided (1) the transferee is
bound by the terms of this Agreement and (2) the Company is given written notice
prior to such transfer) to: (i) any partner or affiliate of such Holder; (ii) in
the case of an individual, any member of the immediate family of such individual
or any trust for the benefit of the individual or any such family member or
members; or (iii) any other transferee which receives substantially all of the
Registrable Securities (or the rights thereto) held by such Holder.
Section 10. ADDITIONAL COVENANTS OF THE COMPANY. For so long as it
shall be required to maintain the effectiveness of the Registration Statement,
it shall file all reports and information required to be filed by it with the
Commission in a timely manner and take all such other action so as to maintain
such eligibility for the use of the applicable form.
Section 11. COUNTERPARTS/FACSIMILE. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when together shall constitute but one and the same instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties. In lieu of the original, a facsimile
transmission or copy of the original shall be as effective and enforceable as
the original.
Section 12. REMEDIES. The remedies provided in this Agreement are
cumulative and not exclusive of any other remedies provided by law. 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 best 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.
Section 13. CONFLICTING AGREEMENTS. The Company shall not enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise prevents the
Company from complying with all of its obligations hereunder.
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Section 14. HEADINGS. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
contracts made in Florida by persons domiciled in Miami and without regard to
its principles of conflicts of laws. The Company and the Holders agree to submit
themselves to the IN PERSONAM jurisdiction of the state and federal courts
situated within the Southern District of the State of Florida with regard to any
controversy arising out of or relating to this Agreement. The non-prevailing
party to any dispute hereunder shall pay the expenses of the prevailing party,
including reasonable attorneys' fees, in connection with any such dispute.
Section 16. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in this
Agreement to the contrary notwithstanding, (A) changes in or additions to this
Agreement may be made, (B) compliance with any covenant or provision herein set
forth may be omitted or waived, or (C) approval or consent by the Holders may be
obtained, only if the Company receives consent thereto in writing from persons
holding or having the right to acquire a majority of the Registrable Shares at
the time such consent is given (on an as-converted, as exchanged basis). All
Holders shall be bound by any amendment to this Agreement that is approved by or
consented to by such persons holding or having the right to acquire a majority
of the Registrable Shares.
Section 17. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or unenforceability of this
Agreement in any other jurisdiction.
Section 18. INTEGRATION. This Agreement supersedes all prior agreements
and understandings among the parties hereto with respect to the subject matter
hereof (including that certain Registration Rights Agreement dated as of April
3, 2002 among the parties hereto).
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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[SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, as of the date and year first above
written.
TANGIBLE ASSET GALLERIES, INC.
By: /S/ XXXXXXX XXXXXXXX
--------------------------------------
Xxxxxxx XxXxxxxx, Chairman & CEO
INVESTORS:
STANFORD VENTURE CAPITAL HOLDINGS, INC.
By: /S/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
/S/ XXXXXXX XXXXXXXX
------------------------------------------
Xxxxxxx XxXxxxxx, an individual
/S/ XXXXXX X. XXXXX
------------------------------------------
Xxxxxx X. Xxxxx, an individual
/S/ XXXXXXX X. XXXXXXXXXX
------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, an individual
/S/ XXXXXXX PI
------------------------------------------
Xxxxxxx Pi, an individual
/S/ XXXXXX X. XXXXX
------------------------------------------
Xxxxxx X. Xxxxx, an individual
13
