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REGISTRATION RIGHTS AGREEMENT dated as of June 23, 2000, (this
"Agreement") between Capita Research Group, Inc., a Nevada corporation (the
"Corporation"), and Jim Salim (the "Stockholder").
WITNESSETH:
WHEREAS, the Corporation desires to provide the Stockholder
with certain registration rights and the parties wish to make the
representations and enter into the covenants set forth herein.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the conditions and promises herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Registration of Common Stock. (a) In the event that, at any
time, the Corporation proposes to register the sale of any shares of its common
stock, $.001 par value, ("Common Stock") to be issued by the Corporation or sold
by any holder of shares of Common Stock (the "Registration Shares") under the
Securities Act of 1933, as amended (the "Securities Act"), other than pursuant
to a registration statement on Forms S-4 or S-8, or any successor to such Forms,
for the purpose of the issuance, sale or other transfer of the Registration
Shares by the Corporation or such holder, the Corporation shall mail or deliver
to the Stockholder at least 25 days prior to the filing of the registration
statement covering such Registration Shares, a written notice (a "Registration
Notice") of its intention so to register the Registration Shares, and specifying
the date by which the Supplemental Notice referred to in Section 1(b) below must
be returned to the Corporation.
(b) In the event that a Registration Notice shall have been so
mailed or delivered, the Stockholder, at such person's election, may mail or
deliver to the Corporation a written notice (a "Supplemental Notice") (i)
specifying the number of shares of Common Stock ("Supplemental Registration
Shares") issued or issuable upon the exercise of Warrants and/or the conversion
of, or as interest upon, that certain Convertible Promissory Note, in each case
acquired by the Stockholder pursuant to the Loan Agreement dated as of the date
hereof between the Corporation and the Stockholder, proposed to be sold or
otherwise transferred by the Stockholder, (ii) describing the proposed manner of
sale or other transfer thereof and (iii) requesting the registration thereof
under the Securities Act; provided, however, that such Supplemental Notice shall
be so mailed or delivered by the Stockholder not more than 15 days after the
date of the Registration Notice.
(c) From and after receipt of a Supplemental Notice, the
Corporation shall, subject to the prior sale or other transfer of some or all of
such Registration Shares, use its reasonable best efforts to cause the
Supplemental Registration Shares specified in such Supplemental Notice to be
registered under the Securities Act and to effect and to comply with all such
regulatory qualifications and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares in the manner
described in such Supplemental Notice, including, without limitation,
qualifications under applicable blue sky or other state securities laws
(provided that the Corporation shall not be required in connection therewith to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction); provided, however, that (i) if in the case of an
underwritten public offering of the Registration Shares the managing underwriter
shall advise the Corporation that the inclusion of some or all of such
Supplemental Registration Shares would, in such managing underwriter's judgment,
materially interfere with the proposed distribution of the Registration Shares,
then the
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Corporation may, upon written notice to the Stockholder, reduce or eliminate the
Supplemental Registration Shares otherwise to be included in the registration
statement (if and to the extent such reduction or elimination is indicated by
such managing underwriter as necessary to eliminate such interference), (ii) if
any firm of counsel representing the Corporation in connection with such
registration or representing the Stockholder that is reasonably satisfactory to
the Corporation shall advise the Corporation and the Stockholder in writing that
in its opinion the registration under the Securities Act contemplated hereby is
not necessary to permit the sale of the Supplemental Registration Shares in the
intended method of disposition by the Stockholder, then the Corporation shall
not be required to take any action with respect to such registration or other
steps contemplated hereby and (iii) the Corporation shall have the right to
delay or abandon such registration at any time in the event that the Board of
Directors of the Corporation determines in good faith that such delay or
abandonment is in the best interest of the Corporation.
(d) If and whenever the Corporation is required by the
provisions of this Section 1 to use its reasonable best efforts to effect the
registration under the Securities Act of any securities requested to be so
registered by the Stockholder, the Corporation will, as promptly as practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with
respect to such securities and use its reasonable best efforts
to cause such registration statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period from the date of the effectiveness thereof through the
earlier of (1) the date which is nine (9) months after the
date of effectiveness thereof and (2) the date on which all
Supplemental Registration Shares included in such registration
statement shall have been sold or otherwise disposed of by the
Stockholder pursuant to such registration statement, and to
comply with the provisions of the Securities Act with respect
to the sale or other disposition of all shares of Common Stock
covered by such registration statement whenever the
Stockholder shall desire to sell or otherwise dispose of the
same within such period;
(iii) furnish to the Stockholder such number of
copies of a prospectus, including a preliminary prospectus and
final prospectus, in conformity with the requirements of the
Securities Act, and such other documents as may reasonably be
requested thereby in order to facilitate the public sale or
other disposition of such shares of Common Stock owned
thereby;
(iv) notify the Stockholder promptly of any request
by the Commission for the amendment or supplement of such
registration statement or prospectus or for additional
information, and notify the Stockholder promptly of the filing
of each amendment or supplement to such registration statement
or prospectus;
(v) advise the Stockholder, promptly after it shall
receive notice, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration
statement or the initiation or
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threatening of any proceeding for that purpose and promptly
use its reasonable best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order
should be issued; and
(vi) notify the Stockholder, in writing, at any time
when a prospectus relating to such shares of Common Stock is
required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) immediately
preceding, of the happening of any event as a result of which
the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
and promptly prepare (and file with the Commission) and
furnish to the Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares of Common Stock, such prospectus shall not
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 not misleading in the
light of the circumstances then existing.
(e) The Stockholder agrees to furnish the Corporation such
information regarding itself and the proposed distribution of Supplemental
Registration Shares by the Stockholder as the Corporation may from time to time
reasonably request in writing in order to prepare a registration statement and
prospectus or any supplement or amendment thereto pursuant to the Securities Act
and the rules and regulations promulgated thereunder.
(f) The Stockholder agrees that, upon receipt of a written
notice from the Corporation of the happening of any event of the kind described
in clause (vi) of Section 1(d) above, it will forthwith discontinue its
disposition of Supplemental Registration Shares pursuant to the registration
statement relating to such Supplemental Registration Shares until its receipt of
the copies of the supplemented or amended prospectus contemplated by clause (vi)
of Section 1(d) above and, if so requested by the Corporation in writing, will
deliver to the Corporation (at the Corporation's expense) all copies then in its
possession, other than permanent file copies, of the prospectus relating to such
Supplemental Registration Shares; provided, however, that in the event that the
Stockholder discontinues its disposition of Supplemental Registration Shares
pursuant to the foregoing provisions, the nine month period for the
effectiveness of the registration statement shall be extended by the period
during which the Stockholder discontinued its disposition.
(g) The Corporation shall pay all expenses (the "Registration
Expenses") necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to this Section 1 (other
than any underwriters' discounts and commissions and any brokerage commissions
and fees payable with respect to shares of Common Stock sold by the Stockholder
and legal fees and expenses of counsel to the Stockholder), including, without
limitation, printing expenses, fees of the Commission and the National
Association of Securities Dealers, Inc., expenses of compliance with blue sky
and other state securities laws, and accounting and legal fees and expenses of
counsel to the Corporation.
(h) The Stockholder agrees that, in the event the Corporation
files a registration statement under the Securities Act with respect to an
underwritten public
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offering of any securities of the Corporation for cash, primarily for the
account of the Corporation, in which the Stockholder was permitted to
participate (whether or not the Stockholder does in fact participate), if
required by an underwriter, the Stockholder will not effect any public sale or
distribution, including any sale pursuant to Rule 144 promulgated under the
Securities Act, of any equity securities of the Corporation or any securities
convertible into or exchangeable or exercisable for any equity security of the
Corporation (other than as part of such underwritten public offering) during the
seven days prior to, and such period after (not to exceed in any event 180
days), the effectiveness of such registration statement as may be required by
such underwriter.
(i) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Corporation will indemnify and hold harmless the Stockholder, and each person or
entity, if any, who controls the Stockholder within the meaning of the
Securities Act (collectively, the "Indemnitees") against any losses, claims,
damages, costs, expenses (including reasonable attorneys' fees), or liabilities
(or actions in respect thereof) to which the Stockholder or controlling person
or entity becomes subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, costs, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the related registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided, however, that the
Corporation will not be liable in any such case to an Indemnitee to the extent
that any such loss, claim, damage, cost, expense or liability arises out of or
is primarily based upon (x) an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished by any Indemnitee, specifically
for use in the preparation thereof or (y) such Indemnitee's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Corporation has furnished such Indemnitee with the same. The
Corporation also agrees to reimburse each Indemnitee for any legal or other
expenses reasonably incurred by such Indemnitee in connection with investigating
or defending any such loss, claim, damage, liability or action.
(j) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Stockholder shall indemnify and hold harmless the Corporation, each of its
directors and officers who has signed any registration statement, and each
person or entity, if any, who controls the Corporation within the meaning of the
Securities Act, against any losses, claims, damages, costs, expenses (including
reasonable attorneys' fees) or liabilities (or actions in respect thereof) to
which the Corporation or any such director, officer, or controlling person
becomes subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages, costs, expenses or liabilities (or actions in respect thereof)
primarily arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in the related registration statement, and any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or primarily arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances in which they were made, in each case to the extent, but only
to the extent, that such loss, claim, damage, cost, expense or liability
primarily arises out of or is based upon (x) an untrue statement or alleged
untrue
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statement or omission or alleged omission made in such registration statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished by the Stockholder specifically
for use in the preparation thereof or (y) the Stockholder's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Corporation has furnished the Stockholder with the same. The
Stockholder shall reimburse any legal or other expenses reasonably incurred by
the Corporation or any such director, officer, or controlling person or entity
in connection with investigating or defending any such loss, claim, damage,
liability or action. The liability of the Stockholder pursuant to this Section
1(j) shall be limited to the total proceeds from the offering (net of sales
commissions) received by the Stockholder.
(k) Promptly after receipt by an indemnified party under this
Section 1 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1, notify the indemnifying party of the commencement
thereof; provided, however, that failure to so notify the indemnifying party
shall not affect an indemnifying party's obligations hereunder, except to the
extent that the indemnifying party is materially prejudiced by such failure. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is understood,
however, that the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time.
(l) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(m) With respect to any underwritten offering, the Stockholder
(if shares of Common Stock of the Stockholder are included in the subject
registration statement) and the Corporation shall, in addition to the foregoing,
provide the underwriter
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of such offering with customary representations and warranties, and
indemnification and contribution, in each instance as shall be reasonably
requested by the underwriter, provided, however, that any such agreement to
indemnify an underwriter with respect to any preliminary prospectus shall not
inure to the benefit of any such underwriter to the extent that any loss, claim,
damage, cost, expense or liability of any such underwriter results solely from
an untrue statement of material fact contained in, or the omission of a material
fact from, such preliminary prospectus which untrue statement or omission was
corrected in the final prospectus, if such underwriter failed to send or give a
copy of the final prospectus to the person asserting such loss, claim, damage,
cost, expense or liability at or prior to the written confirmation of the sale
of such securities to such person, and provided further that any such agreement
by the Stockholder to indemnify an underwriter shall be on a several (and not
joint) basis in proportion to the number of securities sold by the Stockholder
in such underwritten offering and shall be limited in amount to the net proceeds
received by the Stockholder in such underwritten offering.
(n) If the indemnification provided for in this Section 1 is
unavailable to any indemnified party with respect to any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnified party
on the one hand, and the indemnifying party on the other hand, from the offering
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnified party on the one hand, and of the indemnifying party on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative benefits received by the
indemnified party on the one hand, and the indemnifying party on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of sales commissions) received by the indemnified party relative
to such proceeds received by the indemnifying party. The relative fault of the
indemnified party on the one hand, and the indemnifying party on the other hand,
will be determined with reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnified party or the
indemnifying party, and its relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
payable by a party as a result of the losses, claims, damages, liabilities or
expenses referred to above will be deemed to include, subject to the limitations
set forth in Section 1(o) below, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(o) The indemnified party and the indemnifying party agree
that it would not be just and equitable if contribution pursuant to this Section
1 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in
Section 1(n). No person committing fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution or indemnification from any person not committing such fraudulent
misrepresentation.
2. Legend and Compliance with Securities Laws. (a) The stock
certificates evidencing the shares of Common Stock of the Stockholder subject to
this Agreement shall bear a legend reading substantially as follows:
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"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act"), but have been issued pursuant to an exemption
from such registration. Neither such Shares nor any interest
therein may be sold, transferred, pledged, hypothecated or
otherwise disposed of until either (i) the holder thereof
shall have received an opinion from counsel reasonably
satisfactory to the Company that registration thereof under
the Act is not required or (ii) a registration statement under
the Act covering such Shares or such interest and the
disposition thereof shall have become effective under the
Act."
(b) In the event that a registration statement covering the
shares of Common Stock of the Corporation owned by the Stockholder which are
subject to this Agreement shall become effective under the Securities Act and
under any applicable state securities laws or in the event that the Corporation
shall receive an opinion of counsel to the holder of such shares of Common Stock
in form and substance reasonably satisfactory to the Corporation that, in the
opinion of such counsel, the above stated legend is not, or is no longer,
necessary or required under applicable law (including, without limitation,
because of the availability of the exemption afforded by Rule 144(k) promulgated
under the Securities Act), the Corporation shall, or shall instruct its transfer
agents and registrars to, remove the above stated legend from the stock
certificates evidencing such shares of Common Stock or issue new certificates
without such legend in lieu thereof.
(c) The Stockholder consents to the Corporation making a
notation on its records and giving instructions to any transfer agent for the
Common Stock in order to implement the restrictions on transfer established in
this Section 2.
3. Reorganization, Etc. The provisions of this Agreement shall
apply mutatis mutandi to any shares of capital stock resulting from any stock
split or reverse split, stock dividend, reclassification of the capital stock of
the Corporation, consolidation, merger or reorganization of the Corporation, and
any shares or other securities of the Corporation or of any successor company
which may be received by the Stockholder (and/or its successors, permitted
assigns, legal representatives and heirs) by virtue of its ownership of Common
Stock or other capital stock of the Corporation.
4. Notices. Any notice or other communication under this
Agreement shall be in writing and sufficient if delivered personally, by
telecopy or sent by registered or certified mail, postage prepaid, addressed as
follows:
If to the Corporation:
Capita Research Group, Inc.
591 Shippack Pike, Suite 300
Blue Bell, Pennsylvania 19422
Attention: President
Telecopy: (215) 619-0775
Telephone: (215) 619-7777
If to the Stockholder:
Mr. Jim Salim
3510 Turtle Creek Boulevard, #2D
Dallas, Texas 75219
Telecopy: (214) 526-0435
Telephone: (214) 526-0205
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All such notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally delivered, upon receipt, if sent by
telecopy, or three (3) business days after being deposited in the mail, if sent
by registered or certified mail. Any party may, upon written notice to the other
parties hereto, change the address to which notices or other communications to
such party are to be delivered or mailed.
5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
6. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
This Agreement may be amended or modified or any provision hereof may be waived
by a written agreement between the Stockholder and the Corporation. This
Agreement supersedes all prior understandings, negotiations and agreements
relating to the subject matter hereof.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles of such State which would apply the laws of
any other jurisdiction.
8. Jurisdiction; Waiver of Trial by Jury. THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY PENNSYLVANIA STATE OR
UNITED STATES FEDERAL COURT SITTING IN THE CITY OF PHILADELPHIA OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH PENNSYLVANIA STATE OR FEDERAL COURT. THE PARTIES
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. THE PARTIES FURTHER WAIVE TRIAL BY JURY, ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO ANY ACTION OR PROCEEDING
IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE PARTIES FURTHER AGREE
THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE BROUGHT ONLY IN A PENNSYLVANIA STATE OR UNITED STATES FEDERAL COURT SITTING
IN THE CITY OF PHILADELPHIA.
9. Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect the interpretation of any of the
provisions hereof.
10. Severability. If any provision herein contained shall be
held to be illegal or unenforceable, such holding shall not affect the validity
or enforceability of the other provisions of this Agreement.
11. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Corporation, the Stockholder, and each of their
respective successors, permitted assigns, executors, administrators, legal
representatives and heirs, as applicable.
<PAGE> 9
12. Construction. The parties hereto agree that this Agreement
is the product of negotiations between sophisticated parties and individuals,
all of whom were represented by counsel, and each of whom had an opportunity to
participate in, and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
* * *
<PAGE> 10
IN WITNESS WHEREOF, each of the parties hereto has executed
this Registration Rights Agreement on the date first above written.
CAPITA RESEARCH GROUP, INC.
By:
----------------------------
Name:
Title:
----------------------------
Jim Salim
