EXHIBIT 10.17
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of August , 2000, by and between Power Kiosks, Inc., a Delaware
corporation (the "Company"), and EIG Capital Investments Ltd. (the "Purchaser").
Preliminary Statements
In connection with the consummation of the transactions contemplated
by that certain Common Stock Purchase Agreement (the "Purchase Agreement") of
even date herewith by and between the Company and the Purchaser, the Company has
agreed, upon the terms and subject to the conditions of the Common Stock
Purchase Agreement, to issue and sell to the Purchaser 100,000 shares ( the
"Shares") of the Company's Common Stock (the "Common Stock").
The Company has also agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue to the Purchaser a Warrant to
purchase 100,000 shares of Common Stock (the "Purchaser's Warrant") and to issue
to the Agent a Warrant to purchase 25,000 shares of the Common Stock (the
"Agent's Warrant").
The Shares, the Purchaser's Warrant and the Agent's Warrant are
collectively referred to as the "Securities." The Common Stock issuable upon
exercise of the Purchaser's Warrant is called the "Purchaser's Warrant Shares"
and the Common Stock issuable upon exercise of the Agent's Warrant is called the
"Agent's Warrant Shares" (the Purchaser's Warrant Shares and the Agent's Warrant
Shares are sometimes collectively referred to as the "Warrant Shares").
To induce the Purchaser to execute and deliver the Purchase
Agreement, the Company has agreed, pursuant to the terms and conditions of this
Agreement, to provide certain registration rights with respect to the Common
Shares, and the Warrant Shares.
Agreement
In consideration of the foregoing, the mutual covenants and
conditions set forth in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to become legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following respective meanings: "Agent" shall mean Equity Investors Group.
"Agent's Warrant" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Agent's Warrant Shares" shall have the meaning ascribed to such term
in the Preliminary Statements to this Agreement.
"Agreement" shall mean this Registration Rights Agreement, made and
entered into as of November ___, 2000, by and between the Company and the
Purchaser.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Purchase Agreement" shall have the meaning ascribed to such term in
the Preliminary Statements to this Agreement.
"Company" shall mean Power Kiosks, Inc., a Florida corporation.
"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 in effect from time to time.
"Filing Deadline" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Holder" or "Holders" shall mean (a) the Purchaser, to the extent
that the Purchaser holds Registrable Securities, and (b) any Person holding
Registrable Securities as a transferee of the Purchaser (directly or indirectly,
including subsequent transfers).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Purchase Agreement" shall mean, that certain Common Stock Purchase
Agreement, dated as of November , 2000, by and between the Company and the
Purchaser.
"Purchaser" shall mean Equity Investors Group, as Agent.
"Purchaser's Warrant" shall have the meaning ascribed to such term in
the Preliminary Statements to this Agreement.
"Purchaser's Warrant Shares" shall have the meaning ascribed to such
term in the Preliminary Statements to this Agreement.
The terms "register," "registered" and "registration" shall refer to
a registration effected by preparing and filing with the Commission one or more
registration statements covering Registrable Securities in compliance with the
Securities Act that is declared or ordered effective by the Commission.
"Registrable Securities" shall mean the Common Shares, the Converted
Common Shares, the Purchaser's Warrant Shares and the Agent's Warrant Shares,
and any shares of capital stock issued or issuable with respect to the
Securities, the Purchaser's Warrant Shares or the Agent's Warrant Shares as a
result of any stock split, stock dividend, recapitalization, exchange or similar
event; provided, however, that such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to such securities
shall have been declared effective under the Securities Act and such securities
shall have been disposed of pursuant to the registration statement, (b) such
securities are distributed to the public pursuant to Rule 144(k) (or any
successor provisions) promulgated under the Securities Act or (c) such
securities shall have ceased to be outstanding.
"Registration Deadline" shall have the meaning ascribed to such term
in Section 2.1 of this Agreement.
"Registration Expenses" shall mean all expenses incurred in order to
comply with Article II hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of one (1) counsel for the Holders,
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, but excluding the compensation of regular
employees of the Company (which shall be paid in any event by the Company) and
excluding Selling Expenses.
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"Restricted Securities" shall mean Registrable Securities that are
"restricted securities" as defined in Rule 144 under the Securities Act.
"Securities" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"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 in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions incurred in connection with the sale of securities pursuant to a
registration effected hereunder.
"Warrant Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Purchase
Agreements.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Mandatory Registration.
(a) The Company shall prepare and file with the Commission
within ninety (90) days from the date of this Agreement (the "Filing
Deadline") a registration statement or registration statements (as is
necessary) on Form SB-2 or Form S-1 covering (i) the issuance of the
Warrant Shares, and (ii) the resale of all of the Registrable
Securities. Such registration statement shall initially register for
resale at least 100% of the Common Shares, and the Warrant Shares.
The Company shall use its best efforts to have the registration
statement declared effective by the Commission within one hundred and
twenty (120) days after the Filing Deadline (the "Registration
Deadline"). The Company shall permit the registration statement to
become effective within five (5) business days after receipt of a "no
review" notice from the Commission. Such registration statement shall
be kept current and effective for the greater of (i) a period of at
least twelve (12) months from the Closing Date and (ii) a period of
at least ninety (90) days after the Purchaser's Warrant and the
Agent's Warrant shall have been fully exercised or expired. If a
registration statement with respect to the Registrable Securities is
not effective on the Registration Deadline date, the Company agrees
to and shall pay a cash penalty equal to two percent (2%) per month
of the aggregate purchase price of the Registrable Securities,
payable monthly and pro-rated for partial months until the
registration statement is effective.
Section 2.2 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 2.1 shall be borne by the Company; and all Selling Expenses
in connection with such registration, qualification or compliance shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of shares so registered.
Section 2.3 Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company pursuant to
this Article II, the Company will keep each Holder advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense, the Company will:
(a) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement;
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(b) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with
the requirement of the Securities Act, and such other documents as
they may reasonably request (including a conformed copy of the
registration statement filed with the Commission and any amendments
thereto and an original executed underwriting agreement entered into
in connection with such registration) in order to facilitate the
disposition of Registrable Securities owned by them;
(c) use reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of one (1) jurisdiction (in addition to
those jurisdictions in which the Company has otherwise agreed to so
register and qualify such securities) as shall be reasonably
requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in
any such states or jurisdictions;
(d) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement with
the managing underwriter(s) of such offering; each Holder
participating in such underwriting shall also enter into and perform
its obligations under such underwriting agreement;
(e) notify each Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening 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 the light of the circumstances then
existing; and
(f) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Article II,
on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with registration pursuant to
this Article II, if such securities are being sold through
underwriters, or on the date that the registration statement with
respect to such securities becomes effective, if such securities are
not being sold through underwriters, (i) a copy of any opinion, dated
such date, of the counsel representing the Company for the purposes
of such registration, addressed to the underwriters of the Company,
and (ii) a copy of any letter, dated such date, from the independent
accountants of the Company, addressed to the underwriters of the
Company.
Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (f) of this Section 2.3, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of a supplemented or amended prospectus and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense), all copies, other
than permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities that was in effect prior to such amendment
or supplement. In the event the Company shall give any such notice, the period
set forth in clause (a) of this Section 2.3 shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to clause (e) of this Section 2.3 to and including the date when each
seller of Registrable Securities covered by such registration statement shall
have received the copies of a supplemented or amended prospectus.
Section 2.4 Indemnification.
(a) The Company will indemnify each Holder, each Holder's
officers, directors and partners, and each Person controlling such
Holder (collectively, "Holder's Parties"), participating in any
registration, qualification, or compliance effected pursuant to this
Article II with respect to Registrable Securities held by such Holder
and each underwriter, if any, and each Person who controls any
underwriter, against all claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred
in
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settlement of any litigation, commenced or threatened, to which they
may become subject under the Securities Act, the Exchange Act or
other federal or state law, arising out of or based on (i) any untrue
statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other similar document
(including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance,
or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any violation by the
Company of any federal, state or common law rule or regulation
applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder's
Parties each such underwriter, and each Person who controls any such
underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss,
damage, liability or action, as incurred, provided that the Company
will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based
on any untrue statement or omission, made in reliance on and in
conformity with written information furnished to the Company by such
Holder's Parties or underwriter or Person controlling such
underwriter specifically for use in the preparation thereof.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such
registration, qualification or compliance is being effected,
severally and not jointly, indemnify the Company, each of its
directors and officers, each underwriter, if any, of the Company
securities covered by such a registration statement, and each Person
who controls the Company or such underwriter within the meaning of
the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based
on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement,
prospectus, offering circular or other similar document, or any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such
directors, officers, Persons, underwriters or control Persons for any
legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, as incurred, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with the written information
furnished to the Company by such Holder specifically for use in the
preparation thereof, or (ii) any violation by any such Holder of any
federal, state or common law rule or regulation applicable to such
Holder in connection with the distribution of securities pursuant to
a registration statement, and will reimburse the Company, such
Holders, such directors, officers, Persons, underwriters or control
Persons for any legal any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, liability, or action, as incurred; provided, however, that
the obligations of each such Holder hereunder shall be limited to an
amount equal to the aggregate proceeds received by such Holder in
such offering.
(c) Each party entitled to indemnification under this
Section 2.4 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has received written notice of
any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld). The Indemnified Party
may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall bear the expense of such
defense of one counsel representing the Indemnified Party if
representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest. The
failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under
this Section 2.4, except to the extent such failure to give notice
shall materially and adversely prejudice the Indemnifying Party in
the defense of any such claim or any such litigation. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that
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does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(d) (i) If the indemnification provided for in this Section
2.4 is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any
loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party hereunder shall
contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability,
claim, damage or expense, in such proportion as is
appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified
Party on the other hand in connection with the statements
or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying
Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission
to state a material fact relates to information supplied by
the Indemnifying Party or by the Indemnified Party and the
parties' relevant intent, knowledge, access to information
and opportunities to correct or prevent such statement or
omission.
(ii) The parties agree that it would not be just
and equitable if contribution pursuant to this Section 2.4
were determined by pro rata allocation or by any other
method of allocation that does not take account of the
equitable considerations referred to above. The amount paid
or payable by an Indemnified Party as a result of the
claims, losses, damages and liabilities referred to above
shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with
investigating or defending any such action or claim.
(iii) No Holder that is a seller of Registrable
Stock covered by such registration statement or Person
controlling such seller other than the Company shall be
obligated to make contribution hereunder that in the
aggregate exceeds the total public offering price of the
Registrable Stock sold by such Holder, less the aggregate
amount of any damages that such Holder and its controlling
Persons have otherwise been required to pay pursuant to
this Section 2.4. The obligations of such Holders to
contribute are several in proportion to their respective
ownership of the securities covered by such registration
statement and not joint.
(iv) The indemnity and contribution provided
herein shall be in addition to, and not in lieu of, any
other liability that one party may have to another.
Section 2.5 Information by Holder. Each Holder of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Article
II.
Section 2.6 Rule 144 Reporting With a view to making available the
benefits of certain rules and regulations of the Commission that may at any time
permit the sale of the Restricted Securities to the public without registration,
the Company agrees to:
(a) use its best efforts to facilitate the sale of the
Restricted Securities to the public without registration under the
Securities Act, pursuant to Rule 144 under the Securities Act;
(b) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities
Act, at all times after the effective date of the first registration
statement filed by the Company for an offering of its securities to
the general public;
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(c) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such
reporting requirements); and
(d) so long as a Holder owns any Restricted Securities to
furnish to the Holder forthwith upon request a written statement by
the Company as to its compliance with the public information
requirements of said Rule 144, and the reporting requirements of the
Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports and
documents so filed by the Company as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission
allowing a Holder to sell any such securities without registration.
Section 2.7 Transfer of Registration Rights The rights granted under
this Article II may be assigned or otherwise conveyed by any Holder of
Registrable Securities to any transferee, subject to compliance with all
applicable securities laws and regulations.
Section 2.8 Certain Limitations in Connection with Future Grants of
Registration Rights.
From and after the date of this Agreement, without the prior written
consent of the Holders of a majority of the Registrable Securities, the Company
shall not enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the granting to such holder of
registration rights that would be superior to those granted to Holders pursuant
to Section 2.1.
Section 2.9 Restrictions on Market Manipulation. In the event any
shares of Common Stock are offered or sold by any Holder in a registration, each
such Holder will:
(a) advise the Company in writing of any offer, sale or
other disposition by it of any Common Stock in any manner other than
as set forth in the registration statement or any prospectus included
therein on or for the 30-day period prior to the filing of such
registration statement until the distribution under the registration
statement has been completed;
(b) not effect any stabilization activity in connection
with the Company's Common Stock;
(c) not bid or purchase, for any account in which it has a
beneficial interest, any Common Stock except as may be permitted
pursuant to Rule 10b-6 under the Exchange Act (if applicable);
(d) not until it has sold all of such shares of Common
Stock, attempt to induce any Person to purchase any Common Stock
except as may be permitted pursuant to Rule 10b-6; and
(e) not until it has sold all such shares of Common Stock,
pay any compensation for soliciting another to purchase any
securities of the Company, except as may be permitted pursuant to
Rule 10b-6.
ARTICLE III
MISCELLANEOUS
Section 3.1 Governing Law; Jurisdiction and Venue. This Agreement
shall be governed by and interpreted in accordance with the laws of the State of
Florida; provided, however, that if any provision of this Agreement is
unenforceable under the laws of the State of Florida, but is enforceable under
the laws of the Province of Ontario, Canada, then such provision shall be
governed by and interpreted in accordance with the laws of the Province of
Ontario. The parties agree that the courts of the Province of Ontario, Canada,
shall have exclusive jurisdiction and venue for the adjudication of any civil
action between them arising out of relating to this Agreement, and hereby
irrevocably consent to such jurisdiction and venue.
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Section 3.2 Successors and Assignees. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assignees, heirs, executors and administrators (as the
case may be) of the parties hereto.
Section 3.3 Entire Agreement. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject matter hereof.
Section 3.4 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be effective four
days after mailed by first-class mail, postage prepaid, or otherwise delivered
by hand or by messenger, addressed (a) if to the Purchaser, at Edificio Marina
Marbella, 6 B, Avenida Severo Ochoa 28, 29600 Marbella, Malaga, Spain,
Attention: Jan Telander, Director; (b) if to any other Holder of Registrable
Securities, at such address as such Holder shall have furnished the Company in
writing, or, until any such Holder so furnishes an address to the Company, then
to and at the address of the last Holder of such Registrable Securities who has
so furnished an address to the Company; or (c) if to the Company, at 181
Whitehall Drive, Markham, ON, Canada L3R 9T1, Attention: Terry Cooke, President.
Section 3.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Holder of any Registrable Securities,
upon any breach or default of the Company under this Agreement, shall impair any
such right, power or remedy of such Holder nor shall it be construed to be a
waiver of any such breach or default or an acquiescence therein or of or in any
similar breach or default thereunder occurring nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any Holder shall be cumulative
and not alternative.
Section 3.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all of the
parties hereto, each of which shall be enforceable against the parties actually
executing such counterparts and all of which together shall constitute one
instrument.
Section 3.7 Severability. In the event any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 3.8 Amendments. The provisions of this Agreement may be
amended at any time and from time to time, and particular provisions of this
Agreement may be waived, with and only with, an agreement or consent in writing
signed by the Company and by the Holders of a majority of the Registrable
Securities voting as a single class.
The parties have executed this Registration Rights Agreement as of
the date first written above.
Power Kiosks, Inc
By: /s/ Terry Cooke
Name: Terry Cooke
Title: President
EIG Capital Investments Ltd., ((as agent))
By: /s/ Jan Telander
Name: Jan Telander
Title: Director
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