SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is entered into as of September 27, 2001, by and among E-Rex, Inc.,
a corporation duly incorporated and existing under the laws of the State of
Nevada (the "Company"), and Swartz Private Equity, LLC (hereinafter referred to
as "Investor"), and amends and restates the Amended and Restated Registration
Rights Agreement between the parties dated on or about March 8, 2001, which was
originally dated on or about December 22, 2000.
RECITALS:
WHEREAS, pursuant to the Company's offering ("Offering") of up to Fifteen
Million Dollars ($15,000,000) of Common Stock of the Company, pursuant to that
certain Second Amended and Restated Investment Agreement of even date herewith
(the "Investment Agreement") between the Company and the Investor, the Company
has agreed to sell and the Investor has agreed to purchase, from time to time as
provided in the Investment Agreement, shares of the Company's Common Stock for a
maximum aggregate offering amount as described above;
WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed to issue and has issued to the Investor the Commitment Warrants to
purchase a number of shares of Common Stock, exercisable for seven (7) years
from their respective dates of issuance (the "Commitment Warrants" or the
"Warrants"); and
WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the Common Stock to be issued in the Offering and the Common Stock issuable upon
exercise of the Warrants as set forth in this Agreement.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement (including the
Recitals above), the following terms shall have the following meanings (such
meanings to be equally applicable to both singular and plural forms of the terms
defined):
"Additional Registration Statement" shall have the meaning set forth
in Section 3(b).
"Amended Registration Statement" shall have the meaning set forth in
Section 3(b).
"Business Day" shall have the meaning set forth in the Investment
Agreement.
"Closing Bid Price" shall have the meaning set forth in the Investment
Agreement.
"Commitment Warrant" shall have the meaning as set forth in the
Investment Agreement.
"Common Stock" shall mean the common stock, par value $0.01, of the
Company.
"Due Date" shall mean the date that is one hundred twenty (120) days
after the date of this Agreement.
"Effective Date" shall have the meaning set forth in Section 2.3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Filing Deadline" shall mean October 31, 2001.
"Ineffective Period" shall mean any period of time after the Effective
Date during the term hereof that the Registration Statement or any Supplemental
Registration Statement (each as defined herein) becomes ineffective or
unavailable for use for the sale or resale, as applicable, of any or all of the
Registrable Securities (as defined herein) for any reason (or in the event the
prospectus under either of the above is not current and deliverable).
"Investment Agreement" shall have the meaning set forth in the
Recitals hereto.
"Investor" shall have the meaning set forth in the preamble to this
Agreement.
"Holder" shall mean Investor, and any other person or entity owning or
having the right to acquire Registrable Securities or any permitted assignee.
"Piggyback Registration" and "Piggyback Registration Statement" shall
have the meaning set forth in Section 4.
"Put" shall have the meaning as set forth in the Investment Agreement.
"Register," "Registered," and "Registration" shall mean and refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule, and the declaration or ordering
of effectiveness of such registration statement or document.
"Registrable Securities" shall have the meaning set forth in Section
2.1.
"Registration Statement" shall have the meaning set forth in Section
2.2.
"Rule 144" shall mean Rule 144, as amended, promulgated under the
Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Supplemental Registration Statement" shall have the meaning set forth
in Section 3(b).
"Warrants" shall have the meaning set forth in the above Recitals.
"Warrant Shares" shall mean shares of Common Stock issuable upon
exercise of any Warrant.
2. Required Registration.
2.1 Registrable Securities. "Registrable Securities" shall mean
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those shares of the Common Stock of the Company together with any capital stock
issued in replacement of, in exchange for or otherwise in respect of such Common
Stock, that are: (i) issuable or issued to the Investor pursuant to the
Investment Agreement, or (ii) issuable or issued upon exercise of the Commitment
Warrants; provided, however, that notwithstanding the above, the following shall
not be considered Registrable Securities:
(a) any Common Stock which would otherwise be deemed to be
Registrable Securities, if and to the extent that those shares of Common Stock
may be resold in a public transaction without volume limitations or other
material restrictions without registration under the Securities Act, including
without limitation, pursuant to Rule 144 under the Securities Act; and
(b) any shares of Common Stock which have been sold in a
private transaction in which the transferor's rights under this Agreement are
not assigned.
2.2 Filing of Initial Registration Statement. The Company shall,
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by the Filing Deadline, file a registration statement ("Registration Statement")
on Form SB-2 (or other suitable form, at the Company's discretion, but subject
to the reasonable approval of Investor), covering the resale of a number of
shares of Common Stock as Registrable Securities equal to at least Thirty
Million (30,000,000) shares of Common Stock and shall cover, to the extent
allowed by applicable law, such indeterminate number of additional shares of
Common Stock that may be issued or become issuable as Registrable Securities by
the Company pursuant to Rule 416 of the Securities Act. In the event that the
Company has not filed the Registration Statement by the Filing Deadline, then
the Company shall pay to Investor an amount equal to $500, in cash, for each
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Business Day after the Filing Deadline until such Registration Statement is
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filed, payable within ten (10) Business Days following the end of each calendar
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month in which such payments accrue.
2.3 Registration Effective Date. The Company shall use its
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reasonable best efforts to have the Registration Statement declared effective by
the SEC (the date of such effectiveness is referred to herein as the "Effective
Date") by the Due Date.
2.4 Shelf Registration. The Registration Statement shall be
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prepared as a "shelf" registration statement under Rule 415, and shall be
maintained effective until all Registrable Securities are resold pursuant to the
Registration Statement.
2.5 Supplemental Registration Statement. Anytime the Registration
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Statement does not cover a sufficient number of shares of Common Stock to cover
all outstanding Registrable Securities, the Company shall promptly prepare and
file with the SEC such Supplemental 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 such Registrable Securities and shall use its reasonable best efforts to
cause such Supplemental Registration Statement to be declared effective as soon
as possible.
3. Obligations of the Company. Whenever required under this Agreement
to effect the registration of any Registrable Securities, the Company shall,
with reasonable haste:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a Registration Statement with respect to such Registrable Securities and
use its reasonable best efforts to cause such Registration Statement to become
effective and to remain effective until the earlier of (i) the date that all
Registrable Securities are resold pursuant to such Registration Statement, or
(ii) the date that is one (1) year after the Termination Date (as defined in the
Investment Agreement).
(b) Prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection with such
Registration Statement ("Amended Registration Statement") or prepare and file
any additional registration statement ("Additional Registration Statement,"
together with the Amended Registration Statement, "Supplemental Registration
Statements") as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Supplemental Registration Statements or such prior registration statement and to
cover the resale of all Registrable Securities.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus (if applicable), in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such Registration Statement under such other securities or
Blue Sky laws of Georgia, Florida and of all other jurisdictions where the
Company is legally required, 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.
(e) [Intentionally Left Blank].
(f) As promptly as practicable after becoming aware of such event,
notify Swartz Private Equity, LLC of the happening of any event of which the
Company 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, in light of the circumstances under
which they were made, not misleading, use its reasonable best efforts to prepare
a supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Holder as such Holder may reasonably request.
(g) Provide Swartz Private Equity, LLC with notice of the date that a
Registration Statement or any Supplemental Registration Statement registering
the resale of the Registrable Securities is declared effective by the SEC, and
the date or dates when the Registration Statement is no longer effective.
(h) Provide Swartz Private Equity, LLC and their representatives the
opportunity and a reasonable amount of time, based upon reasonable notice
delivered by the Company, to conduct a reasonable due diligence inquiry of
Company's pertinent financial and other records and make available its officers
and directors for questions regarding such information as it relates to
information contained in the Registration Statement.
(i) Provide Swartz Private Equity, LLC and its representatives the
opportunity to review the Registration Statement and all amendments or
supplements thereto prior to their filing with the SEC by giving the Holder at
least five (5) business days advance written notice prior to such filing.
(j) Provide each Holder with prompt notice of the issuance by the SEC
or any state securities commission or agency of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceeding
for such purpose. The Company shall use its reasonable best efforts to prevent
the issuance of any stop order and, if any is issued, to obtain the removal
thereof at the earliest possible date.
(k) Use its reasonable best efforts to list the Registrable Securities
covered by the Registration Statement with all securities exchanges or markets
on which the Common Stock is then listed and prepare and file any required
filing with the NASD, American Stock Exchange, NYSE and any other exchange or
market on which the Common Stock is listed.
4. Ineffective Period.
(a) Ineffective Period Payment. Within five (5) Business Days after
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the last day of any Ineffective Period, the Company will pay to the
Investor in cash ("Ineffective Period Payments"), an amount equal to the
number of shares of Common Stock issued to the Investor in any Put with
a Pricing Period End Date (as defined in the Investment Agreement) that is
thirty (30) business days or less prior to the date that the Ineffective
Period commences, multiplied by the difference of
(i) the highest closing price of the Company's Common Stock
for any trading day during the Ineffective Period,
minus
(ii) the lowest closing price of the Company's Common Stock
for the five (5) trading days including and immediately following the
last trading day of such Ineffective Period.
(b) Liquidated Damages. The parties hereto acknowledge and agree
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that, with respect to the sums payable as Ineffective Period Payments, (i) the
amount of loss or damages likely to be incurred by the Holder is incapable or is
difficult to precisely estimate, (ii) the amounts specified bear a reasonable
proportion and are not plainly or grossly disproportionate to the probable loss
likely to be incurred by the Investor, and (iii) the parties are sophisticated
business parties and have been represented by sophisticated and able legal and
financial counsel and negotiated this Agreement at arm's length.
5. Piggyback Registration. If anytime prior to the date that the
Registration Statement is declared effective or during any Ineffective Period
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
Common Stock under the Securities Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely for
the sale of securities to participants in a Company stock plan or a registration
on Form S-4 promulgated under the Securities Act or any successor or similar
form registering stock issuable upon a reclassification, upon a business
combination involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall, at such time,
promptly give each Holder written notice of such registration (a "Piggyback
Registration Statement"). Upon the written request of each Holder given by fax
within ten (10) days after mailing of such notice by the Company, the Company
shall cause to be included in such registration statement under the Securities
Act all of the Registrable Securities that each such Holder has requested to be
registered ("Piggyback Registration") to the extent such inclusion does not
violate the registration rights of any other security holder of the company
granted prior to the date hereof; provided, however, that nothing herein shall
prevent the Company from withdrawing or abandoning such registration statement
prior to its effectiveness.
6. Limitation on Obligations to Register under a Piggyback
Registration. In the case of a Piggyback Registration pursuant to an
underwritten public offering by the Company, if the managing underwriter
determines and advises in writing that the inclusion in the related Piggyback
Registration Statement of all Registrable Securities proposed to be included
would interfere with the successful marketing of the securities proposed to be
registered by the Company, then the Company shall not be required to register
all of the Registrable Securities in such underwritten public offering and the
number of such Registrable Securities to be included in such Piggyback
Registration Statement, to the extent any such Registrable Securities may be
included in such Piggyback Registration Statement, shall be allocated among all
Holders who had requested Piggyback Registration pursuant to the terms hereof,
in the proportion that the number of Registrable Securities which each such
Holder seeks to register bears to the total number of Registrable Securities
sought to be included by all Holders. If required by the managing underwriter of
such an underwritten public offering, the Holders shall enter into an agreement
limiting the number of Registrable Securities to be included in such Piggyback
Registration Statement and the terms, if any, regarding the future sale of such
Registrable Securities.
7. Dispute as to Registrable Securities. In the event the Company
believes that shares sought to be registered under Section 2 or Section 5 by
Holders do not constitute "Registrable Securities" by virtue of Section 2.1 of
this Agreement on the grounds that such shares are resalable, without volume
limitations, pursuant to exemption from registration under Rule 144(k) of the
Act, and the status of those shares as Registrable Securities is disputed, the
Company shall provide, at its expense, an Opinion of Counsel, reasonably
acceptable to the Holders of the Securities at issue (and satisfactory to the
Company's transfer agent to permit the sale and transfer), that those securities
may be sold immediately, without volume limitation or other material
restrictions, without registration under the Securities Act, by virtue of Rule
144(k) or similar provisions.
8. Furnish Information. At the Company's request, each Holder shall
furnish to the Company such information regarding Holder, the Registrable
Securities held by it, and the intended method of disposition of such securities
to the extent required to effect the registration of its Registrable Securities
or to determine that registration is not required pursuant to Rule 144 or other
applicable provision of the Securities Act. The Company shall include all
information provided by such Holder pursuant hereto in the Registration
Statement, substantially in the form supplied, except to the extent such
information is not permitted by law.
9. Expenses. All expenses, other than commissions and fees and
expenses of counsel to the selling Holders, incurred in connection with
registrations, filings or qualifications pursuant hereto, including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company, shall be
borne by the Company.
10. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the officers, directors, partners, legal counsel, and
accountants of each Holder, any underwriter (as defined in the Securities Act,
or as deemed by the Securities Exchange Commission, or as indicated in a
registration statement) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of Section 15 of the Securities
Act or the Exchange Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements or omissions: (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or (ii) the omission
or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, and the
Company will reimburse each such Holder, officer or director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, officer, director, underwriter or controlling
person; provided however, that the above shall not relieve the Company from any
other liabilities which it might otherwise have.
(b) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume, the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses of one such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 10.
(c) To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which it would be required to make if such foregoing undertaking was
enforceable which is permissible under applicable law.
(d) The obligations of the Company and Holders under this Section
10 shall survive the resale, if any, of the Common Stock, and the completion of
any offering of Registrable Securities in a Registration Statement under this
Agreement.
11. Reports Under Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company agrees
to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144; and
(b) use its reasonable best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
12. Amendments to Registration Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the written consent of each Holder affected
thereby. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder, each future Holder, and the Company. The
Company will provide the Investor at least three (3) business days notice prior
to filing any amendment to the Registration Statement or any amendment or
supplement to the
Prospectus and shall give the Investor the opportunity to review and comment on
any such amendment or supplement, unless such information amounts to "Insider
Information," as defined in the Act.
13. Notices. All notices required or permitted under this Agreement
shall be made in writing signed by the party making the same, shall specify the
section under this Agreement pursuant to which it is given, and shall be
addressed if to (i) the Company at: E-Rex, Inc., Attention: Carl E. Dilley,
President & CEO, 11645 Biscayne Boulevard, Suite 210, Miami, FL 33160;
Telephone: (305) 895-3350, Facsimile: (305) 895-1400, (or at such other location
as directed by the Company in writing), to the Investor at 300 Colonial Center
Parkway, Suite 300, Roswell, GA 30076, Telephone: (770) 640-8130, Facsimile:
(770) 640-7150; and (iii) any subsequent Holders at their respective last
address as the party as shown on the records of the Company. Any notice, except
as otherwise provided in this Agreement, shall be made by fax (with the original
sent by overnight courier) and shall be deemed given at the time of transmission
of the fax.
14. Termination. This Agreement shall automatically terminate on the
date all Registrable Securities cease to exist (as that term is defined in
Section 2.1 hereof); but without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination (ii) other indemnification obligations under this Agreement.
15. Assignment. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this Agreement
by the Company or any Holder, respectively, shall be made without the prior
written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a
Registration, a writing executed by such transferee agreeing to be bound as a
Holder by the terms of this Agreement), and the Company hereby agrees to file an
amended registration statement including such transferee as a selling security
holder thereunder; and provided further that the Company may transfer its rights
and obligations under this Agreement to a purchaser of all or a substantial
portion of its business if the obligations of the Company under this Agreement
are assumed in connection with such transfer, either by merger or other
operation of law (which may include without limitation a transaction whereby the
Registrable Securities are converted into securities of the successor in
interest) or by specific assumption executed by the transferee.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia applicable to agreements
made in and wholly to be performed in that jurisdiction, except for matters
arising under the Securities Act or the Exchange Act, which matters shall be
construed and interpreted in accordance with such laws. Any dispute arising out
of or relating to this Agreement or the breach, termination or validity hereof
shall be finally settled by the federal or state courts located in Fulton
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County, Georgia.
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17. Execution in Counterparts Permitted. This Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one (1) instrument.
18. Specific Performance. The Holder shall be entitled to the remedy
of specific performance in the event of the Company's breach of this Agreement,
the parties agreeing that a remedy at law would be inadequate.
19. Legal Fees. In the event that it becomes necessary to litigate a
dispute hereunder, the prevailing party shall be entitled to reimbursement of
its reasonable legal fees.
20. Entire Agreement; Written Amendments Required. This Agreement,
including the Exhibits attached hereto, the Investment Agreement, the Common
Stock certificates, and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this
27th day of September, 2001.
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E-REX, INC.
/s/ Carl E. Dilley
By: ____________________________________
Carl E. Dilley, President & CEO
Address: 11645 Biscayne Boulevard, Suite 210
Miami, FL 33160
Telephone: (305) 895-3350
Facsimile: (305) 895-1400
INVESTOR:
SWARTZ PRIVATE EQUITY, LLC.
/s/ Eric S. Swartz
By: ________________________________
Eric S. Swartz, Manager
Address: 300 Colonial Center Parkway
Suite 300
Roswell, GA 30076
Telephone: (770) 640-8130
Facsimile: (770) 640-7150