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EXHIBIT 20.10
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered into
as of this 17th day of October, 2000, by and among EZConnect, Inc., a Nevada
corporation (the "Company"), Kevin S. Hamilton and Claudia K. Hamilton, as
Trustees of the Hamilton Family 1998 Trust dated July 10, 1998, SSMB Holdings,
LLC, a Nevada limited liability company, Norman R. and Kay G. Hamilton, Kelly
D. and Gay Lynn K. Johnson, Michael R. Lewellen, M.G. Meador, Jr., Mark E.
Olsen, Lyle M. Schoenborn, and Robert S. Turley, Jr. (collectively, the
"Shareholders").
RECITALS
A. Pursuant to the Agreement and Plan of Merger (the "Merger Agreement"),
dated as of July 8, 2000, as amended, among the Company, EZConnect Merger Co.,
and Encore Wireless, Inc., the Company will acquire Encore Wireless, Inc. by
merger with EZConnect Merger Co. in exchange for cash and 2,500,000 shares of
the Company's Series A preferred stock (the "Preferred Stock"). The Company
will also repay certain notes issued by Encore Wireless, Inc.'s wholly-owned
subsidiary in exchange for cash and 80,042 shares of the Company's common
stock (the "Common Stock").
B. As a part of the transactions contemplated by the Merger Agreement, the
Company desires to grant certain registration rights to the holders of (i) the
shares of Common Stock issued on conversion of the shares of Preferred Stock
issued in connection with the Merger Agreement, and (ii) the shares of Common
Stock issued in connection with the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
AGREEMENT
1. DEFINITIONS. Unless the context requires otherwise, the following
underlined terms shall have the following respective meanings:
1.1 Agreement. This Registration Rights Agreement.
1.2 Common Stock. The Company's common stock, par value $.001 per share.
1.3 Company. EZConnect, Inc., a Nevada corporation.
1.4 Exchange Act. The Securities Exchange Act of 1934, as amended.
1.5 Merger Agreement. That certain Agreement and Plan of Merger, dated as
of July 8, 2000, as amended, among the Company, EZConnect Merger Co., and
Encore Wireless, Inc.
1.6 Preferred Stock. The Company's Series A preferred stock, par value
$.001 per share.
1.7 Registration Expenses. All expenses of registration, including but not
limited to registration and filing fees, including filing fees for NASDAQ and
all stock exchanges on which the Common Stock is traded, fees and expenses of
complying with the Securities Laws, printing expenses, transfer agent fees,
and the fees and expenses of the Company's independent certified public
accountants, the Company's investment banker and underwriter, and the
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Company's legal counsel, but excluding the Selling Shareholders' brokerage
fees, underwriting fees and discounts, transfer taxes, if any, and the fees
and expenses of the Selling Shareholders' legal counsel.
1.8 SEC. The United States Securities and Exchange Commission.
1.9 Securities Act. The Securities Act of 1933, as amended.
1.10 Securities Laws. The Securities Act, the Exchange Act, and all
applicable state securities laws, and all rules and regulations promulgated
thereunder.
1.11 Selling Shareholder. With respect to any registration statement, any
Shareholder whose Shares are included therein.
1.12 Shareholders. Kevin S. Hamilton and Claudia K. Hamilton, as Trustees of
the Hamilton Family 1998 Trust dated July 10, 1998, SSMB Holdings, LLC, a
Nevada limited liability company, Norman R. and Kay G. Hamilton, Kelly D. and
Gay Lynn K. Johnson, Michael R. Lewellen, M.G. Meador, Jr., Mark E. Olsen,
Lyle M. Schoenborn, and Robert S. Turley, Jr.
1.13 Shares. The shares of Common Stock issued on conversion of the shares
of Preferred Stock issued in connection with the Merger Agreement, and the
shares of Common Stock issued in connection with the Merger Agreement
2. GRANT OF REGISTRATION RIGHTS.
2.1 Registration Rights. The Company hereby grants the Shareholders
unlimited incidental registration rights with respect to the Shares on the
terms and conditions set forth in Section 3 of this Agreement. The Company
hereby grants the Shareholders one (1) demand registration right with respect
to the Shares on the terms and conditions set forth in Section 4 of this
Agreement.
2.2 Expenses. The Company shall pay all Registration Expenses. The Selling
Shareholders shall pay all brokerage fees, underwriting fees and discounts,
transfer taxes, if any, and the fees and expenses of the Selling Shareholders'
legal counsel in connection with the registration and sale of the Shares.
2.3 Term. The incidental registration rights shall become effective on July
17, 2001, and shall continue through July 17, 2004. The demand registration
right shall become effective on July 17, 2002, and shall continue through July
17, 2004.
3. INCIDENTAL REGISTRATION RIGHTS.
3.1 Notice of Registration; Registration. Whenever during the effective
period of the incidental registration rights as set forth in Section 2.3 of
this Agreement the Company proposes to file a registration statement under the
Securities Act in connection with a public offering of shares of Common Stock
(other than in connection with any merger, acquisition, exchange offer,
dividend reinvestment plan, employee benefit plan, or stock option plan), the
Company shall give the Shareholders written notice of such intention at least
forty-five (45) days prior to the anticipated filing date. The Company shall
include in such registration statement all Shares requested to be so included
by the Shareholders upon written notice to the Company within thirty (30) days
of the Company's notice. The Selling Shareholders shall be required to sell
their Shares on the same terms and conditions as all other shares of Common
Stock being offered in such registration statement.
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3.2 Holdback. If the Company is advised in writing by the lead underwriter
in an underwritten offering that in the reasonable judgment of such
underwriter the number of shares of Common Stock for which incidental
registration is requested pursuant to this Agreement or any other grant of
incidental registration rights by the Company cannot be sold without impairing
the ability to complete the pre-established plan for distribution of the
Common Stock whose registration gave rise to the registration statement (the
grounds for which shall be confidentially disclosed to the Selling
Shareholders), then the number of Shares to be sold by each Selling
Shareholder shall be reduced. The number of Shares to be sold by each Selling
Shareholder shall be reduced by a number that is the product of the number of
Shares requested to be sold by such Selling Shareholder multiplied by a
fraction, the numerator of which is the total number of shares by which the
registration statement is to be reduced, and the denominator of which is the
total number of shares requested to be sold by such Selling Shareholder and
all other shareholders exercising incidental registration rights pursuant to
any grant of incidental registration rights by the Company; provided that a
Selling Shareholder shall not be required to reduce the number of Shares being
sold by a greater percentage than any other person exercising incidental
registration rights. If the number of Shares of a Selling Shareholder is
reduced, the Selling Shareholder may withdraw all Shares from registration,
and shall retain incidental registration rights for all Shares so withdrawn or
reduced. If the number of Shares of a Selling Shareholder is reduced, then
the effective period of the incidental registration rights as set forth in
Section 2.3 of this Agreement for all Shares held by such Selling Shareholder
shall be extended six (6) months.
3.3 Withdrawal by the Company. The Company shall retain the absolute right
to withdraw any registration statement prior to the effective date thereof,
even if the Company shall have given notice to the Selling Shareholders
pursuant to Section 3.1 of this Agreement and the Selling Shareholders have
requested inclusion of their Shares therein. In the event the Company
withdraws a registration statement prior to its effective date, then the
effective period of the incidental registration rights as set forth in Section
2.3 of this Agreement for all Shares held by Selling Shareholders in such
registration statement shall be extended six (6) months.
4. DEMAND REGISTRATION RIGHTS.
4.1 Notice of Demand. At any time during the effective period of the demand
registration right as set forth in Section 2.3 of this Agreement, if the
Company receives written notice from Shareholders holding a majority of the
outstanding Shares, including the Preferred Stock on an "as converted" basis,
demanding that the Company register such Shareholders' Shares, then the
Company shall give written notice of such demand to all other Shareholders and
will include in a registration statement all Shares requested to be so
included by all Shareholders upon written notice to the Company within twenty
(20) days after the date of the notice by the Company to the Shareholders.
4.2 Registration. Promptly after receipt of a demand for registration as
set forth in Section 4.1 of this Agreement, the Company shall use its best
efforts to prepare and file with the SEC a registration statement, on the
applicable form deemed most appropriate by the Company, for all Shares for
which registration is demanded, and the Company shall use its best efforts to
cause such registration statement to become effective as soon as practicable.
4.3 Deferral of Registration. If the Shareholders demand a registration
hereunder, the Company may defer filing a registration statement with the SEC
(i) for up to six (6) months after the effective date of a registration
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statement by the Company that has been filed with the SEC or been declared
effective prior to the demand by the Shareholders, (ii) for up to six (6)
months if the Company is advised in writing by the lead underwriter in an
underwritten offering for the issuance and sale of Common Stock by the Company
that in the reasonable judgment of such underwriter the registration demanded
hereunder will impair the ability to complete the underwritten offering (the
grounds for which shall be confidentially disclosed to the Shareholders), or
(iii) for up to ninety (90) days if the Company reasonably determines that a
registered offering would be detrimental to the Company (the grounds for which
shall be confidentially disclosed to the Shareholders), provided that the
Company may not file a registration statement with the SEC during such
deferral periods. In the event of any such deferral, then the effective
period of the demand registration right as set forth in Section 2.3 of this
Agreement shall be extended for the period of the deferral plus six (6)
months.
5. REGISTRATION PROCEDURES.
5.1 Selling Shareholder Agreements and Information. In connection with any
registration of the Shares, each Selling Shareholder participating in such
registration shall (i) cooperate with the Company, the underwriters, if any,
and their respective counsel in connection with the preparation of the
registration statement, (ii) in an underwritten offering, enter into an
underwriting agreement containing customary terms, conditions, and
indemnifications, and (iii) complete, execute, and deliver all customary
questionnaires, powers of attorney, certificates, and other documents required
by the terms of the underwriting agreement. If a Selling Shareholder fails to
comply with this requirement for more than ten (10) business days after the
Company gives written notice of such failure to comply to such Selling
Shareholder, then the Company shall have no further obligation to such Selling
Shareholder to include such Selling Shareholder's Shares in the registration
statement.
5.2 Consultation. The Company shall supply copies of any registration
statement and any amendment thereto to the Selling Shareholders prior to
filing the registration statement with the SEC, and shall reasonably consult
with the Selling Shareholders and their legal counsel with respect to the form
and content of such filing. The Company will promptly amend such registration
statement to include such reasonable changes as the Selling Shareholders and
their legal counsel agree should be included therein. A Selling Shareholder
may withdraw the Selling Shareholder's Shares from the registration statement
and retain all registration rights under this Agreement in the event a
requested change is refused by the Company.
5.3 Provision for Prospectuses. The Company shall furnish the Selling
Shareholders with the number of copies of a summary prospectus or other
prospectus, including a preliminary prospectus in conformity with the
requirements of the Securities Act, and such other documents as the Selling
Shareholders may reasonably request in order to facilitate the public sale or
other disposition of the Shares.
5.4 State Securities Laws Compliance. The Company shall use all reasonable
efforts to register or qualify the Shares covered by the registration
statement under the Securities Laws of such states as the Selling Shareholders
may reasonably request in light of the costs of such registration or
qualification for the Company, and shall perform all other acts that may be
reasonably necessary or advisable to enable the Selling Shareholders to
consummate the public sale or other disposition of the Shares in such states;
provided, however, that the Company shall not be required to qualify generally
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to do business in any jurisdiction where it is not then so qualified or to
take any action that would subject it to general service of process in any
jurisdiction where it is not then so subject.
5.5 Amendments. The Company shall prepare and file promptly with the SEC
such amendments and supplements to the registration statement filed with the
SEC in connection with such registration and the prospectus used in connection
therewith, as may be necessary to keep such registration statement
continuously effective and in compliance with the Securities Act for up to six
(6) months, or until all Shares registered in such registration statement have
been sold, whichever is earlier.
5.6 Prospectus Delivery. At any time when a sale or other public
disposition of Common Stock pursuant to a registration statement is subject to
a prospectus delivery requirement, the Company shall immediately notify the
Selling Shareholders of the occurrence of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing. Upon receipt of
such a notice, the Selling Shareholders shall immediately discontinue sales or
other dispositions of Shares pursuant to such registration statement. The
Selling Shareholders may resume sales only upon receipt of an amended
prospectus or after the Selling Shareholders have been advised by the Company
that use of the previous prospectus may be legally resumed.
5.7 Opinions. At the request of the Selling Shareholders, the Company shall
furnish on the date that the Shares are delivered to the underwriter for sale
in connection with an underwritten offering registration pursuant to this
Agreement (i) a letter from the legal counsel representing the Company for the
purposes of such registration giving the Selling Shareholders the right to
rely upon the opinion of such legal counsel delivered to the underwriters
acting on behalf of the Company in connection with such registration insofar
as such opinion relates to the Selling Shareholders, and (ii) a letter from
the independent certified public accountants of the Company giving the Selling
Shareholders the right to rely on the letter of such accountants delivered to
the underwriters acting on behalf of the Company in connection with such
registration.
5.8 Stop Orders. The Company shall immediately notify the Selling
Shareholders of the issuance by the SEC of any stop order or order suspending
the effectiveness of any registration statement, the issuance by any state
regulatory authority of any order suspending the registration or qualification
of the Shares for sale in such jurisdiction, or the initiation of any
proceeding for such purposes. The Company, with the reasonable cooperation of
the Selling Shareholders, shall use its best efforts to contest any such
proceeding or to obtain the withdrawal of any such order at the earliest
possible date.
5.9 Review of Records. The Company shall supply, and shall cause its
officers, directors, and employees to supply, all information reasonably
requested by the Selling Shareholders and/or their legal counsel or
accountants in connection with any registration statement filed or to be filed
hereunder, so long as such person agrees to keep confidential all records,
information, or documents designated by the Company in writing as
confidential.
5.10 Compliance with Securities Laws. In all actions taken under this
Agreement, the Company and the Selling Shareholders shall comply with all
provisions of the Securities Laws.
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6. REPORTS UNDER THE EXCHANGE ACT. With the view to making the benefits of
Rule 144 under the Securities Act available to the Selling Shareholders, the
Company shall use reasonable efforts to:
6.1 Public Information. Ensure that there is adequate current public
information (as set forth in Rule 144(c)) available with respect to the
Company;
6.2 Timely Filing. Timely file with the SEC all reports and other documents
required to be filed by the Company under the Securities Act, the Exchange
Act, and the rules and regulations promulgated thereunder; and
6.3 Deliveries Upon Request. Promptly furnish to a Selling Shareholder upon
request (i) a written statement by the Company that it has complied with these
covenants, (ii) a copy of the most recent annual or quarterly report of the
Company, and (iii) such other reports and documents filed by the Company as
may be reasonably requested by a Selling Shareholder.
7. INDEMNIFICATION.
7.1 The Company's Indemnification. The Company shall indemnify, defend,
save, and hold the Selling Shareholders harmless from and against any and all
liabilities, claims, damages, demands, expenses, and losses, including but not
limited to interest, penalties, court costs, attorneys' fees, and settlements
approved by the Company, which approval shall not be unreasonably withheld,
conditioned, or delayed, resulting from any untrue statement of a material
fact contained in any registration statement or in any other document filed
with the SEC pursuant to this Agreement, or any omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except as to each Selling Shareholder
insofar as the same may have been based upon (i) information furnished in
writing to the Company by such Selling Shareholder for inclusion in such
registration statement or other document, or (ii) the circumstances set forth
in Section 7.2(b) of this Agreement.
7.2 The Selling Shareholder's Indemnification. Each Selling Shareholder
shall indemnify, defend, save, and hold the Company harmless from and against
any and all liabilities, claims, damages, demands, expenses, and losses,
including but not limited to interest, penalties, court costs, attorneys'
fees, and settlements approved by such Selling Shareholder, which approval
shall not be unreasonably withheld, conditioned, or delayed, resulting from
(a) any untrue statement of a material fact contained in any registration
statement or in any other document filed with the SEC pursuant to this
Agreement, or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
based upon any information furnished in writing to the Company by such Selling
Shareholder for inclusion in the registration statement or other document
filed with the SEC, or (b) any untrue statement of a material fact contained
in any prospectus, or any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, if (i) a later prospectus shall correct the untrue statement or
omission that is the basis of the liability, claim, damage, demand, expense,
or loss for which indemnification is sought, (ii) a copy of the later
prospectus had not been sent or given to the purchaser at or prior to
confirmation of sale to such purchaser and the Selling Shareholder or the
underwriter shall have been under an obligation to deliver such later
prospectus, (iii) there would have been no liability but for such failure to
deliver such later prospectus by the Selling Shareholder, and (iv) the Company
had notified the Selling Shareholder prior to the confirmation of sale that
the earlier prospectus had been or would be replaced by the later prospectus.
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7.3 Contribution. If the indemnification provided for in this Section 7
from an indemnifying party is unavailable to an indemnified party hereunder in
respect to any liability, claim, damage, demand, expense, or loss referred to
herein, 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 liability, claim, damage, demand, expense, or loss
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the statements
or omissions that resulted in such liability, claim, damage, demand, expense,
or loss, as well as any other relevant equitable consideration. The relative
fault of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by such indemnifying party or indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by a
party as a result of the liabilities, claims, damages, demands, expenses, and
losses referred to above shall be deemed to include any court costs, attor-
neys' fees, and other expenses reasonably incurred by such party in connection
with investigating or defending any action, suit, or proceeding. The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 7.3 were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in this Section 7.3. 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 is not
also guilty of such fraudulent misrepresentation.
8. GENERAL PROVISIONS.
8.1 Amendment. All amendments or modifications of this Agreement shall be
in writing and shall be signed by each of the parties hereto.
8.2 Waiver. Any waiver of any right, power, or privilege hereunder must be
in writing and signed by the party being charged with the waiver. No delay on
the part of any party hereto in exercising any right, power, or privilege
hereunder shall operate as a waiver of any other right, power, or privilege
hereunder, nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege.
8.3 Notices. All notices or other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be delivered
personally or sent by overnight courier or by certified mail, return receipt
requested. Notices delivered personally or sent by overnight courier shall be
effective on the date received, while notices sent by certified mail, return
receipt requested, shall be deemed to have been received and to be effective
four (4) business days after deposit into the mails. Notices shall be given
to the parties at the following respective addresses, or to such other
addresses as any party shall designate in writing:
If to the Company: EZConnect, Inc.
Attn: President
c/o Taylor & Associates, Inc.
2681 Parleys Way
Suite 203
Salt Lake City, Utah 84109
If to the Selling Shareholders:
at the addresses set forth in the books and records of the Company
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8.4 Successors and Assigns. This Agreement and each of its provisions shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors, and assigns.
8.5 Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, without regard
for its conflict of laws rules.
8.6 Attorneys' Fees. In any suit to interpret or enforce the terms and
provisions of this Agreement, the prevailing party shall be entitled to
recover court costs and attorneys' fees, in addition to any other remedy or
recovery to which such party may be entitled.
8.7 Counterparts. This Agreement may be executed in two or more
counterparts, including by facsimile transmission, all of which together shall
constitute a single instrument.
8.8 Severability of Provisions. In the event any one or more of the
provisions of this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
8.9 Construction. The headings in the sections and paragraphs of this
Agreement are for convenience only and shall not constitute a part hereof.
Whenever the context so requires, the masculine shall include the feminine and
the neuter, the singular shall include the plural, and conversely. The terms
and all parts of this Agreement shall in all cases be interpreted simply and
according to their plain meaning and neither for nor against any party hereto.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first written above.
EZ Connect, Inc.
/S/
The Hamilton Family 1998 Trust dated July 10, 1998
/S/ Kevin S. Hamilton
/S/ Claudia K. Hamilton
SSMB Holdings, LLC
/S/ Tod M. Turley, Manager
/S/ Michael R. Lewellen
/S/ Norman R. Hamilton
/S/ Kay G. Hamilton
/S/ Kelly D. Johnson
/S/ Gay Lynn K. Johnson
/S/ M.G. Meador, Jr
/S/ Mark E. Olsen
/S/ Lyle M. Schoenborn
/S/Robert S. Turley, Jr.