REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of April 27, 2004 (this "AGREEMENT")
by and between Invicta Group Inc., a Nevada corporation, with principal
executive offices located at 9553 Harding Avenue, Suite 301, Miami Beach,
Florida 33154 (the "COMPANY"), and Golden Gate Investors, Inc. (the "INITIAL
INVESTOR").
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement dated as of even date herewith, by and between the Initial
Investor and the Company (the "SECURITIES PURCHASE AGREEMENT"), the Company has
agreed to issue and sell to the Initial Investor a Convertible Debenture (the
"DEBENTURE") of the Company in the aggregate principal amount of $300,000 which,
upon the terms of and subject to the conditions contained therein, is
convertible into shares of the Company's Common Stock (the "COMMON STOCK") ; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide with respect to
the Common Stock issued upon conversion of the Debenture and the Warrant Shares
certain registration rights under the Securities Act;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions
(A) As used in this Agreement, the following terms shall have the meanings:
(1) "AFFILIATE" of any specified Person means any other Person who directly, or
indirectly through one or more intermediaries, is in control of, is
controlled by, or is under common control with, such specified Person. For
purposes of this definition, control of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract, securities ownership or
otherwise; and the terms "CONTROLLING" and "CONTROLLED" have the respective
meanings correlative to the foregoing.
(2) "CLOSING DATE" means the date of this Agreement.
(3) "COMMISSION" means the Securities and Exchange Commission.
(4) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder, or any similar
successor statute.
(5) "INVESTOR" means each of the Initial Investor and any transferee or
assignee of Registrable Securities which agrees to become bound by all of
the terms and provisions of this Agreement in accordance with Section 8
hereof.
(6) "PERSON" means any individual, partnership, corporation, limited liability
company, joint stock company, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
(7) "PROSPECTUS" means the prospectus (including, without limitation, any
preliminary prospectus and any final prospectus filed pursuant to Rule
424(b) under the Securities Act, including any prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance on Rule 430A under the
Securities Act) included in the Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such
prospectus and all documents filed after the date of such prospectus by the
Company under the Exchange Act and incorporated by reference therein.
(8) "PUBLIC OFFERING" means an offer registered with the Commission and the
appropriate state securities commissions by the Company of its Common Stock
and made pursuant to the Securities Act.
(9) "REGISTRABLE SECURITIES" means the Common Stock issued or issuable (i) upon
conversion or redemption of the Debenture, (ii) exercise of the Conversion
Warrants (iii) pursuant to the terms and provisions of the Debenture or the
Securities Purchase Agreement, (iv) in connection with any distribution,
recapitalization, stock-split, stock adjustment or reorganization of the
Company; provided, however, a share of Common Stock shall cease to be a
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Registrable Security for purposes of this Agreement when it no longer is a
Restricted Security.
(10) "REGISTRATION STATEMENT" means a registration statement of the Company
filed on an appropriate form under the Securities Act providing for the
registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Registrable Securities pursuant to Rule 415 under
the Securities Act, including the Prospectus contained therein and forming
a part thereof, any amendments to such registration statement and
supplements to such Prospectus, and all exhibits to and other material
incorporated by reference in such registration statement and Prospectus.
(11) "RESTRICTED SECURITY" means any share of Common Stock issued upon
conversion or redemption of the Debenture or Warrant except any such share
that (i) has been registered pursuant to an effective registration
statement under the Securities Act and sold in a manner contemplated by the
prospectus included in such registration statement, (ii) has been
transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable
pursuant to paragraph (k) of Rule 144 under the Securities Act (or any
successor provision thereto) or (iii) otherwise has been transferred and a
new share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company.
(12) "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, or any similar
successor statute.
(B) All capitalized terms used and not defined herein have the respective
meaning assigned to them in the Securities Purchase Agreement or the
Debenture.
2. Registration
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(A) FILING AND EFFECTIVENESS OF REGISTRATION STATEMENT. The Company shall
prepare and file with the Commission as soon as practicable a Registration
Statement relating to the offer and sale of the Registrable Securities and
shall use its best efforts to cause the Commission to declare such
Registration Statement effective under the Securities Act as promptly as
practicable but in no event later than the Deadline (as defined in the
Debenture). The Company shall promptly (and, in any event, no more than 24
hours after it receives comments from the Commission), notify the Buyer
when and if it receives any comments from the Commission on the
Registration Statement and promptly forward a copy of such comments, if
they are in writing, to the Buyer. At such time after the filing of the
Registration Statement pursuant to this Section 2(A) as the Commission
indicates, either orally or in writing, that it has no further comments
with respect to such Registration Statement or that it is willing to
entertain appropriate requests for acceleration of effectiveness of such
Registration Statement, the Company shall promptly, and in no event later
than two (2) business days after receipt of such indication from the
Commission, request that the effectiveness of such Registration Statement
be accelerated within forty-eight (48) hours of the Commission's receipt of
such request. The Company shall notify the Initial Investor by written
notice that such Registration Statement has been declared effective by the
Commission within 24 hours of such declaration by the Commission.
(B) ELIGIBILITY FOR USE OF FORM S-3 OR AN SB-2. The Company agrees that at such
time as it meets all the requirements for the use of Securities Act
Registration Statement on Form S-3 or SB-2 and it shall file all reports
and information required to be filed by it with the Commission in a timely
manner and take all such other action so as to maintain such eligibility
for the use of such form.
(C) ADDITIONAL REGISTRATION STATEMENT. In the event the Current Market Price
declines to a price per share the result of which is that the Company
cannot satisfy its conversion obligations to Initial Investor hereunder,
the Company shall, to the extent required by the Securities Act (because
the additional shares were not covered by the Registration Statement filed
pursuant to Section 2(a)), as reasonably determined by the Initial
Investor, file an additional Registration Statement with the Commission for
such additional number of Registrable Securities as would be issuable upon
conversion of the Debenture (the "ADDITIONAL REGISTRABLE SECURITIES") in
addition to those previously registered. The Company shall, to the extent
required by the Securities Act, as reasonably determined by the Initial
Investor, prepare and file with the Commission not later than the 30th day
thereafter, a Registration Statement relating to the offer and sale of such
Additional Registrable Securities and shall use its best efforts to cause
the Commission to declare such Registration Statement effective under the
Securities Act as promptly as practicable but not later than the Deadline.
The Company shall not include any other securities in the Registration
Statement relating to the offer and sale of such Additional Registrable
Securities.
(D) (i) If the Company proposes to register any of its warrants, Common Stock
or any other shares of common stock of the Company under the Securities Act
(other than a registration (A) on Form S-8 or S-4 or any successor or
similar forms, (B) relating to Common Stock or any other shares of common
stock of the Company issuable upon exercise of employee share options or in
connection with any employee benefit or similar plan of the Company or (C)
in connection with a direct or indirect acquisition by the Company of
another Person or any transaction with respect to which Rule 145 (or any
successor provision) under the Securities Act applies), whether or not for
sale for its own account, it will each such time, give prompt written
notice at least 20 days prior to the anticipated filing date of the
registration statement relating to such registration to each Investor,
which notice shall set forth such Investor's rights under this Section 2(D)
and shall offer such Investor the opportunity to include in such
registration statement such number of Registrable Securities as such
Investor may request. Upon the written request of any Investor made within
10 days after the receipt of notice from the Company (which request shall
specify the number of Registrable Securities intended to be disposed of by
such Investor), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities that
the Company has been so requested to register by each Investor, to the
extent requisite to permit the disposition of the Registrable Securities so
to be registered; provided, however, that (A) if such registration involves
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a Public Offering, each Investor must sell its Registrable Securities to
any underwriters selected by the Company with the consent of such Investor
on the same terms and conditions as apply to the Company and (B) if, at any
time after giving written notice of its intention to register any
Registrable Securities pursuant to this Section 2 and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register
such Registrable Securities, the Company shall give written notice to each
Investor and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration. The
Company's obligations under this Section 2(D) shall terminate on the date
that the registration statement to be filed in accordance with Section 2(A)
is declared effective by the Commission. (ii) If a registration pursuant to
this Section 2(D) involves a Public Offering and the managing underwriter
thereof advises the Company that, in its view, the number of shares of
Common Stock that the Company and the Investors intend to include in such
registration exceeds the largest number of shares of Common Stock that can
be sold without having an adverse effect on such Public Offering (the
"MAXIMUM OFFERING SIZE"), the Company will include in such registration
only such number of shares of Common Stock as does not exceed the Maximum
Offering Size, and the number of shares in the Maximum Offering Size shall
be allocated among the Company, the Investors and any other sellers of
Common Stock in such Public Offering ("THIRD-PARTY SELLERS"), first, pro
rata among the Investors until all the shares of Common Stock originally
proposed to be offered for sale by the Investors have been allocated, and
second, pro rata among the Company and any Third-Party Sellers, in each
case on the basis of the relative number of shares of Common Stock
originally proposed to be offered for sale under such registration by each
of the Investors, the Company and the Third-Party Sellers, as the case may
be. If as a result of the proration provisions of this Section 2(D)(ii),
any Investor is not entitled to include all such Registrable Securities in
such registration, such Investor may elect to withdraw its request to
include any Registrable Securities in such registration. With respect to
registrations pursuant to this Section 2(D), the number of securities
required to satisfy any underwriters' over-allotment option shall be
allocated among the Company, the Investors and any Third Party Seller pro
rata on the basis of the relative number of securities offered for sale
under such registration by each of the Investors, the Company and any such
Third Party Sellers before the exercise of such over-allotment option.
3. Obligations of the Company
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In connection with the registration of the Registrable Securities, the
Company shall:
(A) Promptly (i) prepare and file with the Commission such amendments
(including post-effective amendments) to the Registration Statement and
supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of
the Securities Act applicable thereto so as to permit the Prospectus
forming part thereof to be current and useable by Investors for resales of
the Registrable Securities for a period of five (5) years from the date on
which the Registration Statement is first declared effective by the
Commission (the "EFFECTIVE TIME") or such shorter period that will
terminate when all the Registrable Securities covered by the Registration
Statement have been sold pursuant thereto in accordance with the plan of
distribution provided in the Prospectus, transferred pursuant to Rule 144
under the Securities Act or otherwise transferred in a manner that results
in the delivery of new securities not subject to transfer restrictions
under the Securities Act (the "REGISTRATION PERIOD") and (ii) take all
lawful action such that each of (A) the Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, not
misleading and (B) the Prospectus forming part of the Registration
Statement, and any amendment or supplement thereto, does not at any time
during the Registration Period include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(B) During the Registration Period, comply with the provisions of the
Securities Act with respect to the Registrable Securities of the Company
covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the Investors as set forth in the
Prospectus forming part of the Registration Statement;
(C) (i) Prior to the filing with the Commission of any Registration Statement
(including any amendments thereto) and the distribution or delivery of any
Prospectus (including any supplements thereto), provide (A) draft copies
thereof to the Investors and reflect in such documents all such comments as
the Investors (and their counsel) reasonably may propose and (B) to the
Investors a copy of the accountant's consent letter to be included in the
filing and (ii) furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel identified to
the Company, (A) promptly after the same is prepared and publicly
distributed, filed with the Commission, or received by the Company, one
copy of the Registration Statement, each Prospectus, and each amendment or
supplement thereto and (B) such number of copies of the Prospectus and all
amendments and supplements thereto and such other documents, as such
Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Investor;
(D) (i) Register or qualify the Registrable Securities covered by the
Registration Statement under such securities or "blue sky" laws of such
jurisdictions as the Investors who hold a majority-in-interest of the
Registrable Securities being offered reasonably request, (ii) prepare and
file in such jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may
be necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take all such other lawful actions as may be
necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period and (iv) take all such other
lawful actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the
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Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(D), (B) subject
itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;
(E) As promptly as practicable after becoming aware of such event, notify each
Investor of the occurrence 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 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, and promptly prepare an amendment to the Registration
Statement and supplement to the Prospectus to correct such untrue statement
or omission, and deliver a number of copies of such supplement and
amendment to each Investor as such Investor may reasonably request;
(F) As promptly as practicable after becoming aware of such event, notify each
Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance by the
Commission of any stop order or other suspension of the effectiveness of
the Registration Statement at the earliest possible time and take all
lawful action to effect the withdrawal, rescission or removal of such stop
order or other suspension;
(G) Cause all the Registrable Securities covered by the Registration Statement
to be listed on the principal national securities exchange, and included in
an inter-dealer quotation system of a registered national securities
association, on or in which securities of the same class or series issued
by the Company are then listed or included;
(H) Maintain a transfer agent and registrar, which may be a single entity, for
the Registrable Securities not later than the effective date of the
Registration Statement;
(I) Cooperate with the Investors who hold Registrable Securities being offered
to facilitate the timely preparation and delivery of certificates for the
Registrable Securities to be offered pursuant to the registration statement
and enable such certificates for the Registrable Securities to be in such
denominations or amounts, as the case may be, as the Investors reasonably
may request and registered in such names as the Investor may request; and,
within three (3) business days after a registration statement which
includes Registrable Securities is declared effective by the Commission,
deliver and cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such registration statement)
an appropriate instruction and, to the extent necessary, an opinion of such
counsel;
(J) Take all such other lawful actions reasonably necessary to expedite and
facilitate the disposition by the Investors of their Registrable Securities
in accordance with the intended methods therefor provided in the Prospectus
which are customary under the circumstances;
(K) Make generally available to its security holders as soon as practicable,
but in any event not later than three (3) months after (i) the effective
date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11 (a)
of the Securities Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158);
(L) In the event of an underwritten offering, promptly include or incorporate
in a Prospectus supplement or post-effective amendment to the Registration
Statement such information as the managers reasonably agree should be
included therein and to which the Company does not reasonably object and
make all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after it is notified of the matters to be
included or incorporated in such Prospectus supplement or post-effective
amendment;
(M) (i) Make reasonably available for inspection by Investors, any underwriter
participating in any disposition pursuant to the Registration Statement,
and any attorney, accountant or other agent retained by such Investors or
any such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and
(ii) cause the Company's officers, directors and employees to supply all
information reasonably requested by such Investors or any such underwriter,
attorney, accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence
examinations; provided, however, that all records, information and
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documents that are designated in writing by the Company, in good faith, as
confidential, proprietary or containing any material nonpublic information
shall be kept confidential by such Investors and any such underwriter,
attorney, accountant or agent (pursuant to an appropriate confidentiality
agreement in the case of any such holder or agent), unless such disclosure
is made pursuant to judicial process in a court proceeding (after first
giving the Company an opportunity promptly to seek a protective order or
otherwise limit the scope of the information sought to be disclosed) or is
required by law, or such records, information or documents become available
to the public generally or through a third party not in violation of an
accompanying obligation of confidentiality; and provided, further, that, if
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the foregoing inspection and information gathering would otherwise disrupt
the Company's conduct of its business, such inspection and information
gathering shall, to the maximum extent possible, be coordinated on behalf
of the Investors and the other parties entitled thereto by one firm of
counsel designated by and on behalf of the majority in interest of
Investors and other parties;
(N) In connection with any underwritten offering, make such representations and
warranties to the Investors participating in such underwritten offering and
to the managers, in form, substance and scope as are customarily made by
the Company to underwriters in secondary underwritten offerings;
(O) In connection with any underwritten offering, obtain opinions of counsel to
the Company (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managers) addressed to the
underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the
matters to be covered by such opinions shall include, without limitation,
as of the date of the opinion and as of the Effective Time of the
Registration Statement or most recent post-effective amendment thereto, as
the case may be, the absence from the Registration Statement and the
Prospectus, including any documents incorporated by reference therein, of
an untrue statement of a material fact or the omission of a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in light of the circumstances under which
they were made) not misleading, subject to customary limitations);
(P) In connection with any underwritten offering, obtain "cold comfort" letters
and updates thereof from the independent public accountants of the Company
(and, if necessary, from the independent public accountants of any
subsidiary of the Company or of any business acquired by the Company, in
each case for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
underwriter participating in such underwritten offering (if such
underwriter has provided such letter, representations or documentation, if
any, required for such cold comfort letter to be so addressed), in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with secondary underwritten offerings;
(Q) In connection with any underwritten offering, deliver such documents and
certificates as may be reasonably required by the managers, if any, and
(R) In the event that any broker-dealer registered under the Exchange Act shall
be an "AFFILIATE" (as defined in Rule 2729(b)(1) of the rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD RULES") (or any successor provision thereto)) of the Company or has a
"CONFLICT OF INTEREST" (as defined in Rule 2720(b)(7) of the NASD Rules (or
any successor provision thereto)) and such broker-dealer shall underwrite,
participate as a member of an underwriting syndicate or selling group or
assist in the distribution of any Registrable Securities covered by the
Registration Statement, whether as a holder of such Registrable Securities
or as an underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, the Company shall assist such broker-dealer
in complying with the requirements of the NASD Rules, including, without
limitation, by (A) engaging a "QUALIFIED INDEPENDENT UNDERWRITER" (as
defined in Rule 2720(b)(15) of the NASD Rules (or any successor provision
thereto)) to participate in the preparation of the Registration Statement
relating to such Registrable Securities, to exercise usual standards of due
diligence in respect thereof and to recommend the public offering price of
such Registrable Securities, (B) indemnifying such qualified independent
underwriter to the extent of the indemnification of underwriters provided
in Section 6 hereof and (C) providing such information to such
broker-dealer as may be required in order for such broker-dealer to comply
with the requirements of the NASD Rules.
4. Obligations of the Investors
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In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
(A) 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 a particular Investor that such Investor shall
furnish 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 be reasonably 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;
(B) Each Investor by its acceptance of the Registrable Securities agrees to
cooperate with the Company in connection with the preparation and filing of
the Registration Statement hereunder, unless such Investor has notified the
Company in writing of its election to exclude all of its Registrable
Securities from the Registration Statement; and
(C) Each Investor agrees that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in Section 3(E) or 3(F),
it shall immediately discontinue its disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(E) and, if so directed by the Company,
such Investor shall deliver to the Company (at the expense of the Company)
or destroy (and deliver to the Company a certificate of destruction) all
copies in such Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
5. Expenses of Registration
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All expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Section
3, but including, without limitation, all registration, listing, and
qualifications fees, printing and engraving fees, accounting fees, and the fees
and disbursements of counsel for the Company, and the reasonable fees of one
firm of counsel to the holders of a majority in interest of the Registrable
Securities shall be borne by the Company.
6. Indemnification and Contribution
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(A) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and hold
harmless each Investor and each underwriter, if any, which facilitates the
disposition of Registrable Securities, and each of their respective
officers and directors and each person who controls such Investor or
underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each such person being sometimes
hereinafter referred to as an "INDEMNIFIED PERSON") from and against any
losses, claims, damages or liabilities, joint or several, to which such
Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement of a material fact contained in any Registration Statement or an
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 arise out of or are based upon an untrue statement of a
material fact contained in any Prospectus or an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company hereby agrees
to reimburse such Indemnified Person for all reasonable legal and other
expenses incurred by them in connection with investigating or defending any
such action or claim as and when such expenses are incurred; provided,
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however, that the Company shall not be liable to any such Indemnified
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Person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (i) an untrue statement or alleged
untrue statement made in, or an omission or alleged omission from, such
Registration Statement or Prospectus in reliance upon and in conformity
with written information furnished to the Company by such Indemnified
Person expressly for use therein or (ii) in the case of the occurrence of
an event of the type specified in Section 3(E), the use by the Indemnified
Person of an outdated or defective Prospectus after the Company has
provided to such Indemnified Person an updated Prospectus correcting the
untrue statement or alleged untrue statement or omission or alleged
omission giving rise to such loss, claim, damage or liability.
(B) NOTICE OF CLAIMS, ETC. Promptly after receipt by a party seeking
indemnification pursuant to this Section 6 (an "INDEMNIFIED PARTY") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "CLAIM"), the
Indemnified Party promptly shall notify the party against whom
indemnification pursuant to this Section 6 is being sought (the
"INDEMNIFYING PARTY") of the commencement thereof; but the omission to so
notify the Indemnifying Party shall not relieve it from any liability that
it otherwise may have to the Indemnified Party, except to the extent that
the Indemnifying Party is materially prejudiced and forfeits substantive
rights and defenses by reason of such failure. In connection with any Claim
as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense
thereof. Notwithstanding the assumption of the defense of any Claim by the
Indemnifying Party, the Indemnified Party shall have the right to employ
separate legal counsel and to participate in the defense of such Claim, and
the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if
(and only if): (x) the Indemnifying Party shall have agreed to pay such
fees, costs and expenses, (y) the Indemnified Party and the Indemnifying
Party shall reasonably have concluded that representation of the
Indemnified Party by the Indemnifying Party by the same legal counsel would
not be appropriate due to actual or, as reasonably determined by legal
counsel to the Indemnified Party, potentially differing interests between
such parties in the conduct of the defense of such Claim, or if there may
be legal defenses available to the Indemnified Party that are in addition
to or disparate from those available to the Indemnifying Party or (z) the
Indemnifying Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified Party within a reasonable period of time
after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in connection with any
Claim in the same jurisdiction, be liable for the fees and expenses of more
than one firm of counsel for the Indemnified Party (together with
appropriate local counsel). The Indemnified Party shall not, without the
prior written consent of the Indemnifying Party (which consent shall not
unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnifying Party from all liabilities with respect to such Claim or
judgment.
(C) CONTRIBUTION. If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an Indemnified Person under
subsection (A) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by such
Indemnifying Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 6(D)
were determined by pro rata allocation (even if the Investors or any
underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in this Section 6(D). The amount paid or payable
by an Indemnified Party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Investors and any
underwriters in this Section 6(D) to contribute shall be several in
proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(D) Notwithstanding any other provision of this Section 6, in no event shall
any (i) Investor be required to undertake liability to any person under
this Section 6 for any amounts in excess of the dollar amount of the
proceeds to be received by such Investor from the sale of such Investor's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act and
(ii) underwriter be required to undertake liability to any Person hereunder
for any amounts in excess of the aggregate discount, commission or other
compensation payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to the Registration
Statement.
(E) The obligations of the Company under this Section 6 shall be in addition to
any liability which the Company may otherwise have to any Indemnified
Person and the obligations of any Indemnified Person under this Section 6
shall be in addition to any liability which such Indemnified Person may
otherwise have to the Company. The remedies provided in this Section 6 are
not exclusive and shall not limit any rights or remedies which may
otherwise be available to an indemnified party at law or in equity.
7. Rule 144
--------
With a view to making available to the Investors the benefits of Rule 144
under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to
use its best efforts to:
(1) comply with the provisions of paragraph (c) (1) of Rule 144 and
(2) file with the Commission in a timely manner all reports and other documents
required to be filed by the Company pursuant to Section 13 or 15(d) under
the Exchange Act; and, if at any time it is not required to file such
reports but in the past had been required to or did file such reports, it
will, upon the request of any Investor, make available other information as
required by, and so long as necessary to permit sales of, its Registrable
Securities pursuant to Rule 144.
8. Assignment
----------
The rights to have the Company register Registrable Securities pursuant to
this Agreement shall be automatically assigned by the Investors to any permitted
transferee of all or any portion of such Registrable Securities (or all or any
portion of the Debenture or Warrant of the Company which is convertible into
such securities) only if (a) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) immediately following such transfer or assignment,
the securities so transferred or assigned to the transferee or assignee
constitute Restricted Securities and (d) at or before the time the Company
received the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein.
9. Amendment and Waiver
--------------------
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 Investors who hold a majority-in-interest of the Registrable Securities.
Any amendment or waiver effected in accordance with this Section 9 shall be
binding upon each Investor and the Company.
10. Changes in Common Stock
-----------------------
If, and as often as, there are any changes in the Common Stock by way of
stock split, stock dividend, reverse split, combination or reclassification, or
through merger, consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall continue
with respect to the Common Stock as so changed.
11. Miscellaneous
-------------
(A) A person or entity shall be deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from
two or more persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
(B) If, after the date hereof and prior to the Commission declaring the
Registration Statement to be filed pursuant to Section 2(a) effective under
the Securities Act, the Company grants to any Person any registration
rights with respect to any Company securities which are more favorable to
such other Person than those provided in this Agreement, then the Company
forthwith shall grant (by means of an amendment to this Agreement or
otherwise) identical registration rights to all Investors hereunder.
(C) Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally, or sent by telecopier machine or
by a nationally recognized overnight courier service, and shall be deemed
given when so delivered personally, or by telecopier machine or overnight
courier service as follows:
(1) if to the Company, to:
Invicta Group Inc.
9553 Harding Avenue, Suite 301
Miami Beach, FL 33154
Telephone: 305-866-6525
Facsimile:
(2) if to the Investor, to:
Golden Gate Investors, Inc.
7817 Herschel Avenue, Suite 200
La Jolla, California 92037
Telephone: 858-551-8789
Facsimile: 858-551-8779
(3) if to any other Investor, at such address as such Investor shall have
provided in writing to the Company. The Company, the Initial Investor or
any Investor may change the foregoing address by notice given pursuant to
this Section 11(C).
(D) 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.
(E) This Agreement shall be governed by and interpreted in accordance with the
laws of the State of California. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of
the City of San Diego or the state courts of the State of California
sitting in the City of San Diego in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by
law, any objection including any objection based on forum non conveniens,
to the bringing of any such proceeding in such jurisdictions.
(F) Should any party hereto employ an attorney for the purpose of enforcing or
construing this Agreement, or any judgment based on this Agreement, in any
legal proceeding whatsoever, including insolvency, bankruptcy, arbitration,
declaratory relief or other litigation, the prevailing party shall be
entitled to receive from the other party or parties thereto reimbursement
for all reasonable attorneys' fees and all reasonable costs, including but
not limited to service of process, filing fees, court and court reporter
costs, investigative costs, expert witness fees, and the cost of any bonds,
whether taxable or not, and that such reimbursement shall be included in
any judgment or final order issued in that proceeding. The "prevailing
party" means the party determined by the court to most nearly prevail and
not necessarily the one in whose favor a judgment is rendered.
(G) The remedies provided in this Agreement are cumulative and not exclusive of
any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(H) The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to
any person which conflicts with the Company's obligations hereunder or
gives any other party the right to include any securities in any
Registration Statement filed pursuant hereto, except for such rights and
conflicts as have been irrevocably waived. Without limiting the generality
of the foregoing, without the written consent of the holders of a majority
in interest of the Registrable Securities, the Company shall not grant to
any person the right to request it to register any of its securities under
the Securities Act unless the rights so granted are subject in all respect
to the prior rights of the holders of Registrable Securities set forth
herein, and are not otherwise in conflict or inconsistent with the
provisions of this Agreement. The restrictions on the Company's rights to
grant registration rights under this paragraph shall terminate on the date
the Registration Statement to be filed pursuant to Section 2(A) is declared
effective by the Commission.
(I) This Agreement, the Securities Purchase Agreement, the Debenture and the
Conversion Warrants Agreement, of even date herewith among the Company and
the Initial Investor constitute the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein. These Agreements supersede all prior
agreements and undertakings among the parties hereto with respect to the
subject matter hereof.
(J) Subject to the requirements of Section 8 hereof, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of
the parties hereto.
(K) All pronouns and any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
(L) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning thereof.
(M) The Company acknowledges that any failure by the Company to perform its
obligations under Section 3, or any delay in such performance, could result
in direct damages to the Investors and the Company agrees that, in addition
to any other liability the Company may have by reason of any such failure
or delay, the Company shall be liable for all direct damages caused by such
failure or delay.
(N) This Agreement may be executed in counterparts, each of which shall be
deemed an original but both of which shall constitute one and the same
agreement. A facsimile transmission of this signed Agreement shall be legal
and binding on the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed and delivered on the date first above written.
Invicta Group Inc.
By:
Name:
Title:
Golden Gate Investors, Inc.
By:
Name:
Title: