Registration Rights Agreement - North American Datacom Inc.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
September 5, 2000, is entered into by and among North American DataCom, Inc., a
Delaware corporation, with headquarters located at Tri-State Commerce Park,
Building 1000, 751 CR 989, Iuka, Mississippi 38852 (the "COMPANY"), and the
undersigned buyers (each, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among the parties dated as of September 5, 2000 (the "SECURITIES PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Buyers shares of the Company's common stock, par value $.0001 per share (the
"COMMON STOCK"); and
B. To induce the Buyers to execute and deliver the Securities
Purchase 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 applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyers hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "INVESTOR" means a Buyer, any transferee or assignee
thereof to whom a Buyer assigns its rights under this Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section
10 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 10.
b. "PERSON" means a corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a governmental
agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) 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 415"), and the declaration or ordering
of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
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d. "REGISTRABLE SECURITIES" means the Common Stock
purchased by the Buyers pursuant to the Securities Purchase Agreement and any
shares of capital stock issued or issuable with respect to such Common Stock as
a result of any stock split, stock dividend, recapitalization, exchange,
anti-dilution rights, liquidated damages payment or similar event or otherwise.
e. "REGISTRATION STATEMENT" means a registration
statement of the Company filed under the 1933 Act and pursuant to Rule 415.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare,
and, as soon as practicable, but in no event later than October 5, 2000, file
with the SEC a Registration Statement or Registration Statements (as is
necessary) on Form SB-2 (or if such form is unavailable, such other form as is
available for registration) covering the resale of all of the Registrable
Securities. The initial Registration Statement prepared pursuant hereto shall
register for resale at least that number of shares of Company Common Stock
equal to the number of Registrable Securities as of the date immediately
preceding the date the Registration Statement is initially filed with the SEC,
subject to adjustment as provided in Section 3(b). The Company shall use its
best efforts to have the Registration Statement declared effective by the SEC
as soon as practicable, but in no event later than one hundred fifty (150)
calendar days after the date hereof.
b. Piggy-Back Registrations. If at any time prior to
the expiration of the Registration Period (as defined in Section 3(a)) the
Company proposes to file with the SEC a Registration Statement relating to an
offering for its own account or the account of others under the 1933 Act of any
of its securities (other than on Form S-4 or Form S-8 (or their equivalents at
such time) relating to securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans) the Company shall
promptly send to each Investor written notice of the Company's intention to
file a Registration Statement and of such Investor's rights under this Section
2(b) and, if within twenty (20) days after receipt of such notice, such
Investor shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities such
Investor requests to be registered, subject to the priorities set forth in
Section 2(b) below. No right to registration of Registrable Securities under
this Section 2(b) shall be construed to limit any registration required under
Section 2(a). The obligations of the Company under this Section 2(b) may be
waived by the Buyers. If an offering in connection with which an Investor is
entitled to registration under this Section 2(b) is an underwritten offering,
then each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement,
on the same terms and conditions as other shares of Company common stock
included in such underwritten
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offering. If a registration pursuant to this Section 2(b) is to be an
underwritten public offering and the managing underwriter(s) advise the Company
in writing, that in their reasonable good faith opinion, marketing or other
factors dictate that a limitation on the number of shares of Company common
stock which may be included in the Registration Statement is necessary to
facilitate and not adversely affect the proposed offering, then the Company
shall include in such registration: (1) first, all securities the Company
proposes to sell for its own account, (2) second, up to the full number of
securities proposed to be registered for the account of the holders of
securities entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the
securities requested to be registered by the Investors and other holders of
securities entitled to participate in the registration, as of the date hereof,
drawn from them pro rata based on the number each has requested to be included
in such registration.
c. Allocation of Registrable Securities. The initial
number of Registrable Securities included in any Registration Statement and
each increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held, or which could be held, by each Investor at the time the
Registration Statement covering such initial number of Registrable Securities
or increase thereof is declared effective by the SEC. In the event that an
Investor sells or otherwise transfers any of such Person's Registrable
Securities, each transferee shall be allocated a pro rata portion of the then
remaining number of Registrable Securities included in such Registration
Statement for such transferor. Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to
hold any Registrable Securities shall be allocated to the remaining Investors,
pro rata based on the number of Registrable Securities then held by such
Investors.
d. Legal Counsel. Subject to Section 5 hereof, the
Buyers shall have the right to select one legal counsel to review and comment
upon any offering pursuant to this Section 2 ("LEGAL COUNSEL"), which shall be
Strategic Investment Counsel, LLC or such other counsel as thereafter
designated by the holders of a majority of Registrable Securities. The Company
shall reasonably cooperate with Legal Counsel in performing the Company's
obligations under this Agreement.
e. Ineligibility for Form S-3. In the event that Form
S-3 is not available for any registration of Registrable Securities hereunder,
the Company shall (i) register the sale of the Registrable Securities on
another appropriate form and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.
f. Rule 416. The Company and the Investors each
acknowledge that each Registration Statement prepared in accordance hereunder
shall include an indeterminate number of Registrable Securities pursuant to
Rule 416 under the 1933 Act so as to cover any and all Registrable Securities
which may become issuable (i) to prevent dilution resulting from stock
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splits, stock dividends or similar transactions and (ii) if permitted by law,
by reason of the anti-dilution provisions contained in the Securities Purchase
Agreement in accordance with the terms thereof (collectively, the "RULE 416
SECURITIES"). In this regard, the Company agrees to use all reasonable efforts
to ensure that the maximum number of Registrable Securities which may be
registered pursuant to Rule 416 under the 1933 Act are covered by each
Registration Statement and, absent guidance from the SEC or other definitive
authority to the contrary, the Company shall use all reasonable efforts to
affirmatively support and to not take any position adverse to the position that
each Registration Statement filed hereunder covers all of the Rule 416
Securities. If the Company determines that the Registration Statement filed
hereunder does not cover all of the Rule 416 Securities, the Company shall
immediately (i) provide to each Investor written evidence setting forth the
basis for the Company's position and the authority therefor and (ii) prepare
and file an amendment to such Registration Statement or a new Registration
Statement in accordance with Section 2(g).
g. Sufficient Number of Shares Registered. In the event
the number of shares available under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities or an
Investor's allocated portion of the Registrable Securities pursuant to Section
2(c) (a "DEFICIT FAILURE"), the Company shall amend the Registration Statement,
or file a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least two hundred percent (200%) of
such Registrable Securities in each case, as soon as practicable, but in any
event not later than fifteen (15) days after the necessity therefor arises. The
Company shall use it best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed "insufficient to cover
all of the Registrable Securities" if at any time the number of Registrable
Securities is greater than the quotient determined by dividing (i) the number
of shares of Common Stock available for resale under such Registration
Statement by (ii) 2.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(b) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a) or 2(g),
the Company will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following
obligations:
a. Registration. The Company shall promptly prepare and
file with the SEC a Registration Statement with respect to the Registrable
Securities (on or prior to October 5, 2000 for the registration of Registrable
Securities pursuant to Section 2(a)) and use its best efforts to cause such
Registration Statement relating to the Registrable Securities to become
effective as soon as possible after such filing (but in no event later than one
hundred fifty (150) calendar days after the date hereof for the registration of
Registrable Securities pursuant to Section 2(a)), and keep such Registration
Statement effective pursuant to Rule 415 at all times until the earlier of (i)
the date as of which the Investors may sell all of the Registrable Securities
without restriction pursuant
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to Rule 144(k) promulgated under the 1933 Act (or successor thereto) or (ii)
the date on which the Investors shall have sold all the Registrable Securities
(the "REGISTRATION PERIOD"), which Registration 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.
b. Amendments. The Company shall prepare and file with
the SEC such amendments (including post-effective amendments) and supplements
to a 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 at all times 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 seller or sellers thereof as set forth in such Registration
Statement.
c. Legal Counsel Review. The Company shall permit Legal
Counsel to review and comment upon a Registration Statement and all amendments
and supplements thereto at least seven (7) days prior to their filing with the
SEC, and not file any document in a form to which Legal Counsel reasonably
objects. The Company shall not submit a request for acceleration of the
effectiveness of a Registration Statement or any amendment or supplement
thereto without the prior approval of Legal Counsel, which consent shall not be
unreasonably withheld. The Company shall furnish to Legal Counsel, without
charge, (i) any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to any Registration Statement, (ii)
promptly after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits and (iii) upon the effectiveness of any Registration Statement,
one copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto.
d. Disclosure Materials. The Company shall furnish to
each Investor whose Registrable Securities are included in any Registration
Statement, without charge, (i) promptly after the same is prepared and filed
with the SEC, at least one copy of such Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably
request) and (iii) such other documents, including copies of any preliminary or
final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor.
e. State Securities Laws. The Company shall use
reasonable efforts to (i) register and qualify the Registrable Securities
covered by a Registration Statement under such
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other securities or "blue sky" laws of such jurisdictions in the United States
as Legal Counsel or 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(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and 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.
f. Underwriting Agreement. In the event Investors who
hold a majority of the Registrable Securities being offered in the offering
select underwriters for the offering of Registrable Securities pursuant to
Section 2(a), the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
g. Notification. As promptly as practicable after
becoming aware of such event, the Company shall notify Legal Counsel and each
Investor in writing of the happening of any event as a result of which the
prospectus included in a 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, and
promptly prepare a supplement or amendment to such Registration Statement to
correct such untrue statement or omission, and deliver ten (10) copies of such
supplement or amendment to Legal Counsel and each Investor (or such other
number of copies as Legal Counsel or such Investor may reasonably request). The
Company shall also promptly notify Legal Counsel and each Investor in writing
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and when a Registration Statement or any post-effective
amendment has become effective (notification of such effectiveness shall be
delivered to Legal Counsel and each Investor by facsimile on the same day of
such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
h. Stop-Order and Suspension. The Company shall use its
best efforts to prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any
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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 Legal Counsel and each Investor who holds Registrable Securities being
sold (and, in the event of an underwritten offering, the managing underwriters)
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.
i. Requested Information. At the request of any
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) if required by an
underwriter, a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, and (ii) an opinion, dated as
of such date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given in
an underwritten public offering, addressed to the underwriters and the
Investors.
j. Inspection. The Company shall make available for
inspection by (i) any Investor, (ii) Legal Counsel, (iii) any underwriter
participating in any disposition pursuant to a Registration Statement, (iv) one
firm of accountants or other agents retained by the Investors, and (v) one firm
of attorneys retained by such underwriters (collectively, the "INSPECTORS") all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the "RECORDS"), as shall be reasonably
deemed necessary by each Inspector, and cause the Company's officers, directors
and employees to supply all information which any Inspector may reasonably
request in connection with the filing of the Registration Statement; provided,
however, that each Inspector shall hold in strict confidence and shall not make
any disclosure (except to an Investor) or use of any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under the 1933
Act, (b) the release of such Records is ordered pursuant to a final,
non-appealable subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement of which the Inspector has knowledge. Each Investor agrees that
it shall, upon learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.
k. Confidential Information. The Company shall hold in
confidence and not make any disclosure of information concerning an 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
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in violation of this Agreement or any other agreement. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
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.
l. Listing. The Company shall promptly secure the
listing of all of the Registrable Securities upon each national securities
exchange, automated quotation system or bulletin board system, if any, upon
which shares of the Company's common stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of common
stock shall be so listed, such listing of all Registrable Securities from time
to time issuable under the terms of the Transaction Documents. The Company
shall maintain the Common Stock's authorization for quotation on the Nasdaq
National Market, Nasdaq Small-Cap Market, Nasdaq OTC Bulletin Board, The New
York Stock Exchange, Inc. or The American Stock Exchange, Inc., as applicable
(the "PRINCIPAL MARKET"). Neither the Company nor any of its Subsidiaries shall
take any action which would be reasonably expected to result in the delisting
or suspension of Company common stock on the Principal Market. The Company
shall promptly, and in no event later than the following Business Day, provide
to each Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of Company common stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section 3(l).
m. Certificates. The Company shall cooperate with the
Investors who hold Registrable Securities being offered to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Investors may reasonably request and
registered in such names as the Investors may request.
n. Transfer Agent. The Company shall provide a transfer
agent and registrar of all such Registrable Securities not later than the
effective date of such Registration Statement.
o. Underwriter Requests. If requested by the managing
underwriters or an Investor, the Company shall (i) immediately incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters and the Investors agree should be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and any other terms of the underwritten (or best
efforts underwritten) 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 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 requested by a shareholder
or any underwriter of such Registrable Securities.
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p. Best Efforts. The Company shall use its best 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.
q. Compliance With Laws. The Company shall otherwise
use its best efforts to comply with all applicable rules and regulations of the
SEC in connection with any registration hereunder and the Company shall use its
best efforts to file with the SEC in a timely manner all reports and documents
required of the Company under the 1933 Act and the 1934 Act (as defined in
Section 6(a)).
r. Confirmation. Within two (2) Business Days (as
defined in the Securities Purchase Agreement) after the Registration Statement
which includes the Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that the Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.
s. Disposition. The Company shall take all other
reasonable actions necessary to expedite and facilitate disposition by the
Investors of Registrable Securities pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's 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 a
particular Investor that such Investor shall furnish to the Company such
information regarding itself and 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 such 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 such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.
c. In the event any Investor elects to participate in
an underwritten public offering pursuant to Section 2, each such Investor
agrees to enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including, without
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limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities.
d. In connection with any sale of Registrable
Securities by an Investor pursuant to the Registration Statement, such Investor
shall use its best efforts to satisfy the prospectus delivery requirements of
Rule 415.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts
and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
and fees and disbursements of counsel for the Company and fees and
disbursements of Legal Counsel (in an amount not to exceed $5,000.00), shall be
paid by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each Investor who
holds such Registrable Securities, the directors, officers, partners,
employees, 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"), and any underwriter (as defined in the
1933 Act) for the Investors, and the directors and officers of, and each
Person, if any, who controls, any such underwriter within the meaning of the
1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
attorneys' fees, amounts paid in settlement or expenses, joint or several,
(collectively, "INDEMNIFIED DAMAGES") incurred in investigating, preparing or
defending any action, claim, 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 (collectively,
"CLAIMS"), to which any of them 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 a 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 Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the
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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, (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 a Registration Statement or (iv) any material violation
of this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "VIOLATIONS"). The Company shall reimburse the Investors and each
such underwriter or controlling person, promptly as such expenses are incurred
and are due and payable, for any 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 by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(d);
(ii) with respect to any preliminary prospectus, shall not inure to the benefit
of any such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus,
as then amended or supplemented, if such prospectus was timely made available
by the Company pursuant to Section 3(d), and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the
use giving rise to a violation and such Indemnified Person, notwithstanding
such advice, used it; (iii) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(d); and (iv) shall not apply to
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 transfer of the Registrable Securities by the Investors
pursuant to Section 10.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to severally and
not 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 (collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any
Indemnified Party 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 occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section 6(d), such
Investor will reimburse any legal or other expenses reasonably incurred by them
in
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<PAGE> 12
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 transfer of the
Registrable Securities by the Investors pursuant to Section 10. 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 was corrected
on a timely basis in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution with respect to
information such persons so furnished in writing expressly for inclusion in the
Registration Statement.
d. 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 indemnifying party, the representation by such 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 Company shall pay reasonable fees for only one separate legal
counsel for the Investors, and such legal counsel shall be selected by the
Investors holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. 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 apprised 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
12
<PAGE> 13
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 or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated 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.
e. The indemnification required by this Section 6 shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
f. 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.
7. CONTRIBUTION.
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 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 (ii) 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.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors 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 Investors to sell
securities of the Company to the public without registration ("RULE 144"), the
Company agrees to:
a. make and keep public information available, as those
terms are understood and defined in Rule 144;
13
<PAGE> 14
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 4(c) of
the Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, 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 investors to sell such securities pursuant to Rule 144 without
registration.
9. LIQUIDATED DAMAGES.
a. The Company agrees that the Buyers will suffer
damages if the Company violates any provision of or fails to fulfill its
obligations pursuant to Sections 2(b), 2(g), 3(b), 3(c), 3(e), 3(h), 3(l) and
3(q) of this Agreement, except as described in Section 9(b) below (a
"REGISTRATION DEFAULT") and that it would not be possible to ascertain the
extent of such damages. Accordingly, in the event of such Registration Default,
the Company hereby agrees to pay liquidated damages ("LIQUIDATED DAMAGES") to
each Buyer following the occurrence of such Registration Default in an amount
determined by multiplying (i) two percent (2%) of such Buyer's portion of the
Purchase Price (as defined in the Securities Purchase Agreement) by (ii) the
percentage derived by dividing (A) the actual number of days elapsed from the
last day of the date of the Registration Default or the prior 30-day period, as
applicable, to the day such Registration Default has been completely cured by
(B) 30, in cash, or at the Buyer's option, in the number of shares of Company
common stock equal to the quotient derived by dividing (v) the dollar amount of
the Liquidated Damages on the Payment Date (as defined below) by (w) the
closing bid price of the Company's common stock as of the date of the
Registration Default (as quoted in the Principal Market or the market or
exchange where the Company's common stock is then traded). The Liquidated
Damages payable pursuant hereto shall be payable within five (5) Business Days
from the end of the calendar month commencing on the first calendar month in
which the Registration Default occurs (each, a "PAYMENT DATE"). In the event
the Buyer elects to receive the Liquidated Damages amount in shares of Company
common stock, such shares shall also be considered Registrable Securities and
shall have the registration rights set forth in this Agreement.
14
<PAGE> 15
b. The Company agrees that the Buyers will suffer
damages if the Registration Statement has not been filed with the SEC by
October 5, 2000 (a "FILING REGISTRATION DEFAULT") and that it would not be
possible to ascertain the extent of such damages. Accordingly, in the event of
such Filing Registration Default, the Company hereby agrees to pay liquidated
damages ("FILING LIQUIDATED DAMAGES") to each Buyer (i) promptly following the
occurrence of such Filing Registration Default in an amount equal to two
percent (2%) of such Buyer's portion of the Purchase Price (as defined in the
Securities Purchase Agreement) and (ii) promptly following each fifteen (15)
calendar day period following such Filing Registration Default in which such
fifteen (15) calendar day period such Filing Registration Default has not been
cured, in an amount equal to two percent (2%) of such Buyer's portion of the
Purchase Price, in cash, or at the Company's option, in the number of shares of
Company common stock equal to the quotient derived by dividing (x) the dollar
amount of the Filing Liquidated Damages by (y) the closing bid price of the
Company's common stock as of the date of the Filing Registration Default (as
quoted in the Principal Market or the market or exchange where the Company's
common stock is then traded). The Filing Liquidated Damages payable pursuant
hereto shall be payable no later than five (5) Business Days from the date on
which the Filing Liquidated Damages became due and payable. In the event the
Company elects to pay the Filing Liquidated Damages amount in shares of Company
common stock, such shares shall also be considered Registrable Securities and
shall have the registration rights set forth in this Agreement.
c. The Company agrees that the Buyers will suffer
damages if the Registration Statement has not been declared effective by the
SEC by the date that is one hundred fifty (150) calendar days after the date
hereof (an "EFFECTIVENESS REGISTRATION DEFAULT") and that it would not be
possible to ascertain the extent of such damages. Accordingly, in the event of
such Effectiveness Registration Default, the Company hereby agrees to pay
liquidated damages ("EFFECTIVENESS LIQUIDATED DAMAGES") to each Buyer promptly
following the occurrence of such Effectiveness Registration Default in an
amount equal to ten percent (10%) of such Buyer's portion of the Purchase Price
(as defined in the Securities Purchase Agreement), in cash, or at the Company's
option, in the number of shares of Company common stock equal to the quotient
derived by dividing (i) the dollar amount of the Effectiveness Liquidated
Damages by (ii) the closing bid price of the Company's common stock as of the
date of the Effectiveness Registration Default (as quoted in the Principal
Market or the market or exchange where the Company's common stock is then
traded). The Effectiveness Liquidated Damages payable pursuant hereto shall be
payable no later than five (5) Business Days from the date on which the
Effectiveness Registration Default occurs. In the event the Company elects to
pay the Effectiveness Liquidated Damages amount in shares of Company common
stock, such shares shall also be considered Registrable Securities and shall
have the registration rights set forth in this Agreement.
15
<PAGE> 16
10. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any portion of
Registrable Securities if: (i) 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; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
provided, however, that the transferee or assignee may subsequently transfer or
assign all or any portion of the Registrable Securities if an exemption from
registration under the 1933 Act is applicable to such transfer or assignment;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v)
such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.
11. AMENDMENT OF REGISTRATION RIGHTS.
Provisions 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 then hold two-thirds (2/3) of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 11
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties
to this Agreement.
12. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons 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.
16
<PAGE> 17
b. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
Business 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:
North American DataCom, Inc.
Tri-State Commerce Park
Building 1000
751 CR 989
Iuka, Mississippi 38852
Telephone: (662) 424-5050
Facsimile: (662) 424-5059
Attention: David Cray
With a copy to:
Boult Cummings Connors & Berry
414 Union Street
Suite 1600
P.O. Box 198062
Nashville, TN 37219
Telephone: (615) 252-2319
Facsimile: (615) 252-2380
Attention: Davis H. Carr, Esq.
If to Legal Counsel:
Strategic Investment Counsel, LLC
666 Dundee Road, Suite 1901
Northbrook, Illinois 60062
Telephone: (847) 564-9293
Facsimile: (847) 564-5497
Attention: Anthony J. Ribaudo, Esq.
If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of Buyers, or at such other address and/or
facsimile number and/or to the attention of such other person as the recipient
party has specified by written notice given to each other party five days prior
to the effectiveness of such change.
17
<PAGE> 18
c. 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.
d. This Agreement shall be governed by and construed in
all respects by the internal laws of the State of Illinois (except for the
proper application of the United States federal securities laws), without
giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Illinois. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting the City of Chicago, for
the adjudication of any dispute hereunder. 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.
e. This Agreement and the Securities Purchase Agreement
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. This Agreement and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to
the subject matter hereof and thereof.
f. Subject to the requirements of Section 10, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in 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.
i. 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.
j. All consents and other determinations to be made by
the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by Investors holding a majority of the Registrable
Securities.
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<PAGE> 19
k. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent and no
rules of strict construction will be applied against any party.
l. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.
[Signature Page Follows]
19
<PAGE> 20
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
NORTH AMERICAN DATACOM, INC. CRANSHIRE CAPITAL, L.P.
By: By: Downsview Capital, Inc., the General
------------------------------- Partner
Name:
Title: By:
----------------------------- ---------------------------------
Name: Mitchell P. Kopin
Title: President
EURAM CAP STRAT. "A" FUND LIMITED
By: JMJ Capital, Inc.,
the Investment Manager
By:
---------------------------------
Name: Mitchell P. Kopin
Title: President
20
<PAGE> 21
SCHEDULE OF BUYERS
---------------------------------------------- --------------------------------
BUYER NAME CONTACT INFORMATION
---------------------------------------------- --------------------------------
Cranshire Capital, L.P. c/o Downsview Capital, Inc.
666 Dundee Rd., Ste. 1901
Northbrook, Illinois 60062
Attn: Mitchell P. Kopin
(p) 847/562-9030
(f) 847/562-9031
---------------------------------------------- --------------------------------
Euram Cap Strat. "A" Fund Limited c/o JMJ Capital, Inc.
666 Dundee Rd., Ste. 1901
Northbrook, Illinois 60062
Attn: Mitchell P. Kopin
(p) 847/562-9030
(f) 847/562-9031
---------------------------------------------- --------------------------------
<PAGE> 22
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn:
------------------------
Re: North American DataCom, Inc.
----------------------------
Ladies and Gentlemen:
We are counsel to North American DataCom, Inc., a Delaware corporation
(the "COMPANY"), and have represented the Company in connection with that
certain Securities Purchase Agreement (the "PURCHASE AGREEMENT") entered into
by and among the Company and the buyers named therein (collectively, the
"HOLDERS") pursuant to which the Company issued to the Holders shares of its
common stock, par value $.0001 per share (the "COMMON Stock"). Pursuant to the
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
Common Stock, under the Securities Act of 1933, as amended (the "1933 ACT"). In
connection with the Company's obligations under the Registration Rights
Agreement, on September 5, 2000, the Company filed a Registration Statement on
Form SB-2 (File No. _____________) (the "REGISTRATION STATEMENT") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER
TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:
----------------------------------
cc: [LIST NAMES OF HOLDERS]