Exhibit 10.5
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REGISTRATION RIGHTS AGREEMENT
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Registration Rights Agreement (the "Agreement"), dated as of February 20,
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2005, by and between Walker Financial Corporation, a corporation organized under
the laws of State of Delaware, with its principal executive office at 990
Stewart Avenue, Suite. 650, Garden City, NY 11530,(the "Company"), and Dutchess
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Private Equities Fund, L.P., a Delaware limited partnership with its principal
office at 50 Commonwealth Avenue, Suite 2, Boston, MA 02116 (the "Holder").
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Whereas, in connection with the Investment Agreement by and between the
Company and the Investor of even date herewith (the "Investment Agreement"), the
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Company has agreed to issue and sell to the Investor an indeterminate number of
shares of the Company's Common Stock, $.10 par value per share (the "Common
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Stock"), to be purchased pursuant to the terms and subject to the conditions set
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forth in the Investment Agreement; and
Whereas, to induce the Investor to execute and deliver the Investment
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
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applicable state securities laws, with respect to the shares of Common Stock
issuable pursuant to the Investment Agreement.
Now therefore, in consideration of the foregoing premises and the mutual
covenants contained hereinafter and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investor hereby agree as follows:
SECTION 1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the following
meanings:
"Execution Date" means the date first written above.
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"Investor" means Dutchess Private Equities Fund, L.P., a Delaware limited
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partnership.
"Person" means a corporation, a limited liability company, an association,
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a partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
"Potential Material Event" means any of the following: (I) the possession by the
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Company of material information not ripe for disclosure in the Registration
Statement, which shall be evidenced by determinations in good faith by the Board
of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of the
Company, or (II) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in the Registration Statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information.
"Principal Market" shall mean The American Stock Exchange, National
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Association of Securities Dealer's, Inc. Over-the-Counter electronic bulletin
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board, the Nasdaq National Market or The Nasdaq SmallCap Market whichever is the
principal market on which the Common Stock is listed.
"Register," "Registered," and "Registration" refer to the Registration
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effected by preparing and filing one (1) or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
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415"), and the declaration or ordering of effectiveness of such Registration
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Statement(s) by the United States Securities and Exchange Commission (the
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"SEC").
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"Registrable Securities" means (I) the shares of Common Stock issued or
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issuable pursuant to the Investment Agreement, and (II) any shares of capital
stock issued or issuable with respect to such shares of Common Stock, if any, as
a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, which have not been (X) included in the Registration
Statement that has been declared effective by the SEC or (Y) sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the 1933 Act.
"Registration Statement" means the registration statement of the Company
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filed under the 1933 Act covering the Registrable Securities.
All capitalized terms used in this Agreement and not otherwise defined
herein shall have the same meaning ascribed to them as in the Investment
Agreement.
SECTION 2. REGISTRATION.
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(A) The Company shall, within thirty (30) days of the date in the preamble
of this Agreement, file with the SEC the Registration Statement or Registration
Statements (as is necessary) on Form SB-2 (or, if such form is unavailable for
such a registration, on such other form as is available for such a
registration), covering the resale of all of the Registrable Securities, which
Registration Statement(s) shall state that, in accordance with Rule 416
promulgated under the 1933 Act, such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon stock splits, stock dividends or similar transactions. The Company shall
initially register for resale 50,000,000 shares of Common Stock which would be
issuable on the date preceding the filing of the Registration Statement based on
the closing bid price of the Company's Common Stock on such date and the amount
reasonably calculated that represents Common Stock issuable to other parties as
set forth in the Investment Agreement except to the extent that the SEC requires
the share amount to be reduced as a condition of effectiveness
(B) The Company shall use commercially reasonable efforts to have the
Registration Statement(s) declared effective by the SEC within ninety (90)
calendar days after the Execution Date.
(C) Except as enumerated on Schedule 2( c ) attached hereto, The Company
agrees not to include any other securities in the Registration Statement
covering the Registrable Securities without Investor's prior written consent
which Investor may withhold in its sole discretion. Furthermore, the Company
agrees that it will not file any other Registration Statement for other
securities, until thirty calendar days after the Registration Statement for the
Registrable Securities is declared effective by the SEC.
SECTION 3. RELATED OBLIGATIONS.
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At such time as the Company is obligated to prepare and file the
Registration Statement with the SEC pursuant to Section 2(a), the Company will
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, with respect thereto, the Company
shall have the following obligations:
(A) The Company shall use commercially reasonable efforts to cause such
Registration Statement relating to the Registrable Securities to become
effective within ninety (90) days after the Execution Date and shall keep such
Registration Statement effective until the earlier to occur of (I) the date on
which (A) the Investor shall have sold all the Registrable Securities; and (B)
the Investor has no right to acquire any additional shares of Common Stock under
the Investment Agreement (the "Registration Period"). The Registration
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Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any 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 in which they were
made, not misleading. The Company shall use its commercially reasonable efforts
to respond to all SEC comments within ten (10) business days from receipt of
such comments by the Company. The Company shall use its commercially reasonable
efforts to cause the Registration Statement relating to the Registrable
Securities to become effective no later than five (5) business days after
notice from the SEC that the Registration Statement may be declared effective.
The Investor agrees to provide all information which it is required by law to
provide to the Company, including the intended method of disposition of the
Registrable Securities, and the Company's obligations set forth above shall be
conditioned on the receipt of such information.
(B) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the Investor
thereof as set forth in such Registration Statement. In the event the number of
shares of Common Stock covered by the Registration Statement filed pursuant to
this Agreement is at any time insufficient to cover all of the Registrable
Securities, the Company shall amend such Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case, as soon as
practicable, but in any event within thirty (30) calendar days after the
necessity therefor arises (based on the then Purchase Price of the Common Stock
and other relevant factors on which the Company reasonably elects to rely),
assuming the Company has sufficient authorized shares at that time, and if it
does not, within thirty (30) calendar days after such shares are authorized.
The Company shall use commercially reasonable efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof.
(C) The Company shall make available to the Investor whose Registrable
Securities are included in any Registration Statement and its legal counsel
without charge (I) promptly after the same is prepared and filed with the SEC at
least one (1) copy of such Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, the prospectus included in such Registration
Statement (including each preliminary prospectus) and, with regards to such
Registration Statement(s), any correspondence by or on behalf of the Company to
the SEC or the staff of the SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives; (II) upon the effectiveness of
any Registration Statement, the Company shall make available copies of the
prospectus, via EDGAR, included in such Registration Statement and all
amendments and supplements thereto; and (III) such other documents, including
copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities.
(D) The Company shall use commercially reasonable efforts to (I) register
and qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such states in the United
States as any Investor reasonably requests; (II) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period; (III) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (IV)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (X) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), or (Y) subject
itself to general taxation in any such jurisdiction. The Company shall promptly
notify each Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the
securities or "blue sky" laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threatening of any proceeding for
such purpose.
(E) As promptly as practicable after becoming aware of such event, the
Company shall notify Investor in writing of the happening of any event 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 omission 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 ("Registration Default") and use all diligent efforts to promptly
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prepare a supplement or amendment to such Registration Statement and take any
other necessary steps to cure the Registration Default, (which, if such
Registration Statement is on Form S-3, may consist of a document to be filed by
the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934 Act (as defined below) and to be incorporated by reference in the
prospectus) to correct such untrue statement or omission, and make available
copies of such supplement or amendment to each Investor. The Company shall also
promptly notify Investor (I) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when the Registration Statement or
any post-effective amendment has become effective (the Company will prepare
notification of such effectiveness which shall be delivered to the Investor on
the same day of such effectiveness and by overnight mail), additionally, the
Company will promptly provide to the Investor, a copy of the effectiveness order
prepared by the SEC once it is received by the Company; (II) of any request by
the SEC for amendments or supplements to the Registration Statement or related
prospectus or related information, (III) of the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate, (IV) in the event the Registration Statement is no longer
effective, or (V) if Registration Statement is stale as a result of the
Company's failure to timely file its financials or otherwise. The Company
acknowledges that its failure to cure the Registration Default within ten (10)
business days will cause the Investor to suffer damages in an amount that will
be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. It is the intention of the
parties that interest payable under any of the terms of this Agreement shall not
exceed the maximum amount permitted under any applicable law. If a law, which
applies to this Agreement which sets the maximum interest amount, is finally
interpreted so that the interest in connection with this Agreement exceeds the
permitted limits, then: (1) any such interest shall be reduced by the amount
necessary to reduce the interest to the permitted limit; and (2) any sums
already collected (if any) from the Company which exceed the permitted limits
will be refunded to the Company. The Investor may choose to make this refund by
reducing the amount that the Company owes under this Agreement or by making a
direct payment to the Company. If a refund reduces the amount that the Company
owes the Investor, the reduction will be treated as a partial payment. In case
any provision of this Agreement is held by a court of competent jurisdiction to
be excessive in scope or otherwise invalid or unenforceable, such provision
shall be adjusted rather than voided, if possible, so that it is enforceable to
the maximum extent possible, and the validity and enforceability of the
remaining provisions of this Agreement will not in any way be affected or
impaired thereby.
(F) The Company shall use commercially reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of the
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(G) The Company shall permit the Investor and one (1) legal counsel, designated
by the Investor, to review and comment upon the Registration Statement and all
amendments and supplements thereto at least one (1) calendar day prior to their
filing with the SEC. However, any postponement of a filing of a Registration
Statement or any postponement of a request for acceleration or any postponement
of the effective date or effectiveness of a Registration Statement by written
request of the Investor (collectively, the "Investor's Delay") shall not act to
trigger any penalty of any kind, or any cash amount due or any in-kind amount
due the Investor from the Company under any and all agreements of any nature or
kind between the Company and the Investor. The event(s) of an Investor's Delay
shall act to suspend all obligations of any kind or nature of the Company under
any and all agreements of any nature or kind between the Company and the
Investor
(H) At the request of the Investor, the Company shall cause to be
furnished to Investor, on the date of the effectiveness of the Registration
Statement, a legal opinion, in form and substance reasonably acceptable to
Investor's counsel, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement.
(I) The Company shall hold in confidence and not make any disclosure of
information concerning a Investor provided to the Company unless (I) disclosure
of such information is necessary to comply with federal or state securities
laws, (II) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (III) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (IV) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(J) The Company shall use commercially reasonable efforts to maintain
designation and quotation of all the Registrable Securities covered by any
Registration Statement on the Principal Market. If, despite the Company's
commercially reasonable efforts, the Company is unsuccessful in satisfying the
preceding sentence, it shall use commercially reasonable efforts to cause all
the Registrable Securities covered by any Registration Statement to be listed on
each other national securities exchange and automated quotation system, if any,
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or system. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(j).
(K) The Company shall cooperate with the Investor to facilitate the prompt
preparation and delivery of certificates representing the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investor may reasonably request (and after any sales of such Registrable
Securities by the Investor, such certificates not bearing any restrictive
legend).
(L) The Company shall provide a transfer agent for all the Registrable
Securities not later than the effective date of the first Registration Statement
filed pursuant hereto.
(M) If requested by the Investor, the Company shall (I) as soon as
reasonably practical incorporate in a prospectus supplement or post-effective
amendment such information as such Investor reasonably determines should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
offering of the Registrable Securities to be sold in such offering; (II) make
all required filings of such prospectus supplement or post-effective amendment
as soon as reasonably possible after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(III) supplement or make amendments to any Registration Statement if reasonably
requested by such Investor.
(N) The Company shall use commercially reasonable efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.
(O) The Company shall otherwise use commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
(P) Within one (1) business day after the Registration Statement which
includes Registrable Securities is declared effective by the SEC, the Company
shall deliver to the transfer agent for such Registrable Securities, with copies
to the Investor, confirmation that such Registration Statement has been declared
effective by the SEC.
(Q) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to the Registration Statement.
SECTION 4. OBLIGATIONS OF THE INVESTOR.
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(A) At least five (5) calendar days prior to the first anticipated filing
date of the Registration Statement the Company shall notify the Investor in
writing of the information the Company requires from Investor if Investor elects
to have any of the Registrable Securities included in such Registration
Statement. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of the Investor and Investor shall furnish in writing to
the Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities held
by it as shall reasonably be required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. Investor covenants and
agrees that, in connection with any sale of Registrable Securities by it
pursuant to the Registration Statement, it shall comply with the "Plan of
Distribution" section of the current prospectus relating to such Registration
Statement.
(B) The Investor, by Investor's acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any Registration Statement
hereunder, unless Investor has notified the Company in writing of an election to
exclude all Investor's Registrable Securities from such Registration Statement.
(C) The Investor agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of 3(e), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until Investor's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e)
SECTION 5. EXPENSES OF REGISTRATION.
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All expenses, other than underwriting discounts and commissions and other
than as set forth in the Investment Agreement, incurred in connection with
registrations including comments, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printing and accounting fees, and fees and disbursements of
counsel for the Company or for the Investor shall be paid by the Company.
SECTION 6. INDEMNIFICATION.
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In the event any Registrable Securities are included in the Registration
Statement under this Agreement:
(A) To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend Investor who holds Registrable
Securities, the directors, officers, partners, employees, counsel, agents,
representatives of, and each Person, if any, who controls, any Investor within
the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act") (each, an "Indemnified Person"), against any losses, claims,
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damages, liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims"), incurred in investigating, preparing or defending any action, claim,
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suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
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may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (I)
any untrue statement or alleged untrue statement of a material fact in the
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which the Investor has requested
in writing that the Company register or qualify the Shares ("Blue Sky Filing"),
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or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which the statements therein were made, not misleading, (II)
any untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading, or (III) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to the restrictions set forth in
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Section 6(c) the Company shall reimburse the Investor and each such controlling
person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (I) shall not apply to a Claim arising out of or
based upon a Violation which is due to the inclusion in the Registration
Statement of the information furnished to the Company by any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (II) shall not be
available to the extent such Claim is based on (A) a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the Company
or (B) the Indemnified Person's use of an incorrect prospectus despite being
promptly advised in advance by the Company in writing not to use such incorrect
prospectus; (III) any claims based on the manner of sale of the Registrable
Securities by the Investor or of the Investor's failure to register as a dealer
under applicable securities laws; (IV) any omission of the Investor to notify
the Company of any material fact that should be stated in the Registration
Statement or prospectus relating to the Investor or the manner of sale; and (V)
any amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the resale of the Registrable Securities by the Investor
pursuant to the Registration Statement.
(B) In connection with any Registration Statement in which Investor
is participating, Investor agrees to severally and jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act and the Company's agents
(collectively and together with an Indemnified Person, an "Indemnified Party"),
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against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation is due to the
inclusion in the Registration Statement of the written information furnished to
the Company by such Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the resale of the
Registrable Securities by the Investor pursuant to the Registration Statement.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
were corrected on a timely basis in the prospectus, as then amended or
supplemented. This indemnification provision shall apply separately to each
Investor and liability hereunder shall not be joint and several.
(C) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, 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 control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, the representation by counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one (1) separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as applicable,
and such counsel shall be selected by the Investor, if the Investor are entitled
to indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully appraised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim. Following indemnification
as provided for hereunder, the indemnifying party shall be surrogated to all
rights of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
(D) The indemnity agreements contained herein shall be in addition to (I)
any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (II) any liabilities the
indemnifying party may be subject to pursuant to the law.
SECTION 7. CONTRIBUTION.
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To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (I) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6; (II) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (III) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
SECTION 8. REPORTS UNDER THE 1934 ACT.
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With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration ("Rule 144"), provided that the Investor
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holds any Registrable Securities are eligible for resale under Rule 144 (k), the
Company agrees to:
(A) make and keep public information available, as those terms are
understood and defined in Rule 144;
(B) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 5(c) of the
Investment Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and
(C) furnish to the Investor, promptly upon request, (I) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (II) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (III) such other information as may be reasonably requested
to permit the Investor to sell such securities pursuant to Rule 144 without
registration.
SECTION 9. NO ASSIGNMENT OF REGISTRATION RIGHTS.
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The rights under this Agreement shall not be assignable.
SECTION 10. AMENDMENT OF REGISTRATION RIGHTS.
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Provisions of this Agreement may be amended only with the written consent
of the Company and Investor.
SECTION 11. MISCELLANEOUS.
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(A) Any notices or other communications required or permitted to be given
under the terms of this Agreement that must be in writing will be deemed to have
been delivered (I) upon receipt, when delivered personally; (II) upon receipt,
when sent by facsimile (provided a confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party); or (III) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
If to the Company:
Walker Financial Corp.
990 Stewart Avenue, Suite 650
Garden City, NY 11530
Telephone: 516-832-7000
Facsimile: 516-832-7979
If to the Investor:
Dutchess Private Equities Fund, LP
50 Commonwealth Ave, Suite 2
Boston, MA 02116
Telephone: 617-301-4700
Facsimile: 617-249-0947
Each party shall provide five (5) business days prior notice to the other
party of any change in address, phone number or facsimile number.
(B) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(C) The laws of the Commonwealth of Massachusetts shall govern all
issues arising from or related to this Agreement without regard to the
principles of conflict of laws. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
Boston, County of Suffolk, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
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 in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(D) This Agreement and the Transaction Documents constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein.
(E) This Agreement and the Transaction Documents supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(F) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof. Whenever required
by the context of this Agreement, the singular shall include the plural and
masculine shall include the feminine. This Agreement shall not be construed as
if it had been prepared by one of the parties, but rather as if all the parties
had prepared the same.
(G) This Agreement may be executed in two or more identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
(H) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
SECTION 12. DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW
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All disputes arising under this agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflict of laws. The parties to this agreement
will submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("AAA"). The arbitrator shall be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an attorney admitted to practice law in the Commonwealth of Massachusetts. No
party to this agreement will challenge the jurisdiction or venue provisions as
provided in this section.
SECTION 13. WAIVER OF JURY TRIAL.
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AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.
Section 14. PRIOR REGISTRATION RIGHTS AGREEMENT
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The execution and delivery of this Agreement shall void the Registration Rights
Agreement for the Equity Line of Credit signed on December 23, 2005 between the
Company and the Investor.
* * *
SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT
Your signature on this Signature Page evidences your agreement to be bound by
the terms and conditions of the Investment Agreement and the Registration Rights
Agreement as of the date first written above.
The undersigned signatory hereby certifies that he has read and understands the
Registration Rights Agreement, and the representations made by the undersigned
in this Registration Rights Agreement are true and accurate, and agrees to be
bound by its terms.
DUTCHESS PRIVATE EQUITIES FUND, L.P.,
BY ITS GENERAL PARTNER,
DUTCHESS CAPITAL MANAGEMENT, LLC
By: /s/Douglas H. Leighton
------------------------
Douglas H. Leighton, Managing Member
WALKER FINANCIAL CORP.
By: /s/Mitchell S. Segal
----------------------
Mitchell S. Segal, Chief Executive Officer