Registration Rights Agreement - Viseon Inc. and Henry S. Mellon
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (hereinafter referred to as the
"Agreement"), dated as of the 30th day of June, 2003, is by and between VISEON,
Inc., a corporation authorized and existing pursuant to the laws of the state of
Nevada (the "Corporation"), and HENRY S. MELLON, an individual (the "Investor").
W I T N E S S E T H:
WHEREAS, the Corporation and Investor have entered into that certain
Third Amendment to Loan and Security Agreement executed contemporaneously
herewith with Investor as a Lender and the Corporation as the Borrower
(hereinafter the "Third Amendment"); and;
WHEREAS, Concurrently with the execution of this Agreement, pursuant to
the terms of the Third Amendment, the Investor is acquiring a warrant
(hereinafter the "Warrant") to purchase from the Corporation Six Hundred Forty
Four Thousand Five Hundred Ten (644,510) shares of duly authorized, validly
issued, fully paid and nonassessable Common Stock of the Corporation, par value
$0.01 per share, (the "Warrant Shares") at the purchase price per share of
Thirty Cents ($0.30), at any time or from time to time prior to 5:00 p.m.
Central Standard time, on June 30, 2008 (the "Expiration Date"), all subject to
the terms, conditions and adjustments set forth in the Warrant; and
WHEREAS, Concurrently with the execution of this Agreement, pursuant to
the terms of the Third Amendment, the Corporation is executing a promissory note
payable to the Investor (the "Term Note" as defined therein) which provides for
the conversion of the indebtedness represented thereby into equity in the
Corporation in the form of shares of duly authorized, validly issued, fully paid
and nonassessable Common Stock of the Corporation, par value $0.01 per share, at
the conversion price of Thirty Cents ($0.30) per share (the "Conversion
Shares"), all subject to the terms, conditions and adjustments set forth in the
Term Note; and
WHEREAS, the Corporation and Investor desire to make conditional
provisions for the registration of the Conversion Shares and the Warrant Shares
as set forth herein, if the same be necessary.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and Agreements herein contained, the
parties hereto agree as follows:
Section I
Definitions
1.1 As used in this Agreement, the following capitalized terms
shall have the following meanings:
"Demand Registration" shall have the meaning specified in
Section 2.1(a).
"Demanding Holder" shall mean any Holder that makes a demand
for Registration pursuant to Section 2.1(a).
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended.
"GAAP" means generally accepted accounting principles, as in
effect from time to time in the United States, consistently applied
"Governmental Authority" means any government or political
subdivision thereof, whether federal, state, local or foreign, or any
agency or instrumentality of any such government or political
subdivision.
"Holder" means the Investor, or any assignee of an Investor.
"Common Shares" means the common equity shares of the
Corporation.
"Maximum Number of Shares" shall have the meaning specified in
Section 2.1(d).
"Piggy-Back Registration" shall have the meaning specified in
Section 2.2.
"Person" means a natural person, partnership, corporation,
business trust, association, joint venture or other entity or a
government or agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Registration
Statement, as supplemented by any and all prospectus supplements and as
amended by any and all post-effective amendments and including all
material incorporated by reference in such prospectus.
"Register," "Registered" and "Registration" shall mean a
registration effected by preparing and filing a registration statement
or similar document in compliance with the Securities Act and the
applicable rules and regulations thereunder, and such registration
statement becoming effective
"Registrable Securities" means the Conversion Shares and the
Warrant Shares, owned by the Holder, and any securities issued or
issuable with respect to such Common Shares and Warrant Shares by way
of a stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or reorganization.
"Registration Statement" means the registration statement
which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included in such registration
statement, amendments (including post-effective amendments) and
supplements to such registration statement, and all exhibits to and all
material incorporated by reference in such registration statement.
"Restricted Stock" means any shares of Common Stock of the
Corporation issued to Holder for which a Registration Statement has not
become effective.
"Closing Date" shall mean June 30, 2003.
"Securities Act" means the Securities Act of 1933, as from
time to time amended.
"Selling Holder" means any holder of Restricted Stock who
exercises any Registration Rights granted hereunder
"Share" means the common stock in the Corporation and includes
any options, warrants or other rights to purchase Shares and securities
of any type whatsoever that are, or may become, convertible into Shares
with the number of any Shares which is an option, warrant, right or
convertible security being the number of such Shares which would result
upon the immediate exercise of such option, warrant or right of
conversion of such convertible security, without regard as to when such
option, warrant or right may in fact be exercised or such convertible
security may in fact be converted.
"Warrant Shares" shall mean any and all shares of Common Stock
issued or issuable upon exercise of the Warrant.
Section II
Registration Rights
2.1 Demand Registration.
(a) Request for Registration. At any time and from time to time on or
after the expiration of six months following the execution hereof,
the Demanding Holder may make a written request for registration under
the Securities Act of all or part of their Registrable Securities
(a "Demand Registration"). Any such request for a Demand Registration
shall specify the number of shares of Registrable Securities proposed
to be sold and the intended method(s) of distribution thereof. Upon
any such request, the Demanding Holder shall be entitled to have
their Registrable Securities included in the Demand Registration,
subject to Section 2.1(d) and the provisos set forth in Section
3.1(a). The Corporation shall not be obligated to effect more than
one (1) Demand Registrations with respect to the Restricted Stock
under this Section 2.1(a).
(b) Effective Registration. Except in the case of a withdrawal
governed by the last sentence of Section 2.1(e), a registration
will not count as a Demand Registration until the Registration
Statement covering the Registrable Securities that are the subject
of such Demand Registration shall have been declared effective and
the Corporation shall have complied with all of its obligations
under this Agreement with respect thereto; provided, however, that,
after such Registration Statement has been declared effective, if
the offering of Registrable Securities pursuant to such Demand
Registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or any other Governmental
Authority, such Demand Registration will be deemed not to have
become effective during the period of such interference.
(c) Underwritten Offering. If a Demanding Holder so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in
the form of an underwritten offering. The Demanding Holder may select
one or more investment banking firms to act as the managing Underwriter
or Underwriters in connection with such offering and may select any
additional managers to be used in connection with such offering.
(d) Reduction of Offering. If the managing Underwriter or Underwriters
for a Demand Registration that is to be an underwritten offering
advises the Corporation and the Demanding Holder that the dollar
amount or number of shares of Registrable Securities which the
Demanding Holder desire to sell, taken together with all other shares
of Common Stock or other securities which the Corporation desires to
sell and the shares of Common Stock, if any, as to which registration
has been requested pursuant to the piggy-back registration rights, if
any, which other shareholders of the Corporation desire to sell,
exceeds the maximum dollar amount or maximum number of shares that
can be sold in such offering without adversely affecting the proposed
offering price, the timing, the distribution method or the probability
of success of such offering (the "Maximum Number of Shares"),
then the Corporation shall include in such registration:
(i) first, the Registrable Securities as to which Demand Registration has
been requested by the Demanding Holder (pro rata in accordance with the
number of shares of Registrable Securities held by each Demanding
Holder, regardless of the number of shares of Registrable Securities
which such Demanding Holder has requested be included in such
registration) that can be sold without exceeding the Maximum Number of
Shares;
(ii) second, to the extent the Maximum Number of Shares has not been reached
under the foregoing clause (i), the shares of Common Stock or other
securities that the Corporation desires to sell that can be sold
without exceeding the Maximum Number of Shares;
(iii) third, to the extent the Maximum Number of Shares has not been reached
under the foregoing clauses (i) and (ii) above, the shares of
Common Stock for the account of other Shareholders of the
Corporation that the Corporation is obligated to register (to be
allocated among the Persons requesting inclusion in such registration
pursuant to such agreements pro rata in accordance with the number of
shares of Common Stock with respect to which such Persons has the
right to request such inclusion under such agreements, regardless
of the number of shares which such Person has actually requested be
included in such registration) that can be sold without exceeding
the Maximum Number of Shares; and
(iv) fourth, to the extent the Maximum Number of Shares has not been reached
under the foregoing clauses (i), (ii) and (iii) above, the shares of
Common Stock that other shareholders desire to sell that can be sold
without exceeding the Maximum Number of Shares.
(e) Withdrawal. (i) If the Demanding Holder disapprove of the terms of
any proposed underwritten public offering or is not entitled to
include all of its Registrable Securities in any such offering, (ii)
the Corporation takes or omits to take certain action that adversely
affects the registration process or such offering or (iii) there
shall occur any adverse market conditions of the type that is
customarily found in underwriting or similar purchase agreements
relating to public offerings and which may be relied upon by
Underwriters or purchasers to terminate such underwriting or purchase
agreement, the Demanding Holder may elect to withdraw their
Registrable Securities from such offering by giving written notice
to the Corporation of its request to withdraw prior to effectiveness
of the Registration Statement. If the Demanding Holder withdraws from
any proposed offering for any such reason or reasons, the withdrawing
Demanding Holder shall not be obligated to pay any of the
expenses incurred in connection with such Registration Statement.
In addition, the Demanding Holder may, by written notice furnished to
the Corporation prior to the effective date of a Registration
Statement, withdraw from any proposed offering relating to a Demand
Registration for any reason (other than those set forth in clauses
(i) through (iii) above) and, in such event, the withdrawing Demanding
Holder shall be obligated to pay its pro rata share (based upon the
number of Registrable Securities to be included in such Registration
Statement) of the expenses incurred in connection with such
Registration Statement and such Demand Registration shall count as a
Demand Registration for purposes of Section 2.1(a).
2.2 Piggyback Registration Rights
If following the Closing Date, thereafter the Corporation hereafter
proposes to file a registration statement under the Securities Act with respect
to an offering for its own account of any class of its equity securities (other
than a registration statement on Form S-8 (or any successor form) or any other
registration statement relating solely to employee benefit plans or filed in
connection with an exchange offer, a transaction to which Rule 145 (or any
successor provision) under the Securities Act applies or an offering of
securities solely to the Corporation's existing shareholders), then the
Corporation shall in each case give written notice of such proposed filing to
the Holder as soon as practicable (but no later than 20 business days) before
the anticipated filing date, and such notice shall offer each Holder the
opportunity to register such number of shares of Restricted Stock as such Holder
may request. Each Holder desiring to have Restricted Stock included in such
registration statement shall so advise the Corporation in writing within 10
business days after the date on which the Corporation's notice is so given,
setting forth the number of shares of Restricted Stock for which registration is
requested. If the Corporation's offering is to be an underwritten offering, the
Corporation shall, subject to the further provisions of this Agreement, use its
reasonable best efforts to cause the managing underwriter or underwriters to
permit the Holders of the Restricted Stock requested to be included in the
registration for such offering to include such Restricted Stock in such offering
on the same terms and conditions as any similar securities of the Corporation
included therein. The right of each Holder to registration pursuant to this
Section 2.2 in connection with an underwritten offering by the Corporation
shall, unless the Corporation otherwise assents, be conditioned upon such
Holder's participation as a seller in such underwritten offering and its
execution of an underwriting agreement with the managing underwriter or
underwriters selected by the Corporation. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such offering deliver a written opinion
to the Corporation that either because of (a) the kind of securities that the
Corporation, the Holders and any other persons or entities intend to include in
such offering or (b) the size of the offering that the Corporation, the Holders
and any other persons or entities intend to make, the success of the offering
would be materially and adversely affected by inclusion of the Restricted Stock
requested to be included, then (i) in the event that the size of the offering is
the basis of such managing underwriter's opinion, the number of shares of
Restricted Stock to be registered and offered for the accounts of Holders shall
be reduced pro rata on the basis of the number of securities requested by such
Holders to be registered and offered to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters (provided that if securities are
being registered and offered for the account of other persons or entities in
addition to the Corporation, such reduction shall not be proportionally greater
than any similar reductions imposed on such other persons or entities) and (ii)
in the event that the combination of securities to be offered is the basis of
such managing underwriters opinion, (x) the Restricted Stock to be included in
such registration and offering shall be reduced as described in clause (i) above
or (y) if such actions would, in the reasonable judgment of the managing
underwriter, be insufficient to substantially eliminate the adverse effect that
inclusion of the Restricted Stock requested to be included would have on such
offering, such Restricted Stock will be excluded entirely from such registration
and offering. Any Restricted Stock excluded from an underwriting shall, if
applicable, be withdrawn from registration and shall not, without the consent of
the Corporation, be transferred in a public distribution prior to the earlier of
ninety (90) days (or such other shorter period of time as the managing
underwriter may require) after the effective date of the registration statement
or ninety (90) days after the date the Holders of such Restricted Stock are
notified of such exclusion.
Section III
Registration Procedures
3.1 Whenever Holders of Restricted Stock have requested pursuant to
Section 2 that any Restricted Stock be registered, the Corporation shall,
subject to the provisions of Section 4 hereof, use its reasonable best efforts
to effect the registration and the sale or distribution of such Restricted Stock
in accordance with the intended method of disposition thereof as promptly as
practicable, and in connection with any such request, the Corporation shall:
(a) prepare and file with the Securities and Exchange
Commission, a registration statement on any form for which the
Corporation then qualifies and which counsel for the Corporation shall
deem appropriate and which form shall be available for the sale or
distribution of such Restricted Stock in accordance with the intended
method of distribution thereof, and use its reasonable best efforts to
cause such registration statement to become effective; provided that,
(i) before filing a registration statement or prospectus or any
amendments or supplements thereto, the Corporation will furnish to one
counsel selected by the Holders of a majority of the shares of
Restricted Stock covered by such registration statement copies of all
such documents proposed to be filed, which documents will be subject to
the review and comment of such counsel and (ii) after the filing of the
registration statement, the Corporation shall promptly notify each
Selling Holder of Restricted Stock of any stop order issued or, to the
knowledge of the Corporation, threatened by the Securities and Exchange
Commission and take all reasonable actions to prevent the entry of such
stop order or to remove it if entered; provided, however, that the
Corporation shall have the right to defer such registration for up to
sixty (60) days if the Corporation shall furnish to the holders a
certificate signed by the Chief Executive Officer of the Corporation
stating that, in the good faith judgment of the Board of Directors of
the Corporation, it would be materially detrimental to the Corporation
and its shareholders for such Registration Statement to be effected at
such time; provided further, however, that in the event the Corporation
elects to exercise such right with respect to any registration, it
shall not have the right to exercise such right again prior to the date
which is twelve (12) months after the date on which the Registration
Statement relating to such deferred registration is declared effective.
(b) prepare and file with the Securities and Exchange
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 of
not less than ninety (90) days or such shorter period as shall
terminate when the distribution of all Restricted Stock covered by such
registration statement shall have terminated (but not before the
expiration of the ninety day (90) period referred to in Section 4(3) of
the Securities Act and Rule 174 thereunder, if applicable) and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the Selling Holders thereof set forth in such
registration statement;
(c) as soon as reasonably practicable, furnish to each Selling
Holder, prior to filing a registration statement, copies of such
registration statement as proposed to be filed and thereafter furnish
to such Selling Holder such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus
included in such registration Statement (including each preliminary
prospectus) and such other documents as such Selling Holder may
reasonably request in order to facilitate the disposition of the
Restricted Stock owned by such Selling Holder;
(d) use its best efforts to register or qualify such
Restricted Stock under such other securities or blue sky laws of such
jurisdictions within the United States and Canada as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of
distribution) requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Selling Holder
to consummate the disposition in such jurisdictions of the Restricted
Stock owned by such Selling Holder; provided that the Corporation shall
not be required to (i) qualify generally to do business or file a
general consent to service of process in any jurisdiction or (ii) take
any action that would subject itself to taxation in any such
jurisdiction;
(e) promptly notify each Selling Holder of such Restricted
Stock, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of any event
known to the Corporation requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers or recipients of such Restricted Stock, such prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment;
(f) enter into an underwriting agreement in customary form,
the form and substance of such underwriting agreement being subject to
the reasonable satisfaction of the Corporation and a majority in
interest of the Selling Holders;
(g) make available for inspection by any Selling Holder, any
underwriter participating in any sale or distribution pursuant to such
registration statement and any attorney, accountant or other agent
retained by any such Selling Holder or underwriter (collectively, the
"Inspectors") all financial and other records, pertinent corporate
documents and properties of the Corporation (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Corporation,
Corporation's officers and employees to supply all information
reasonably requested for such purpose by any such Inspector in
connection with such registration statement; provided that the
Corporation shall have no obligation to permit such access to the
Records or its officers or employees in a manner that would
unreasonably disrupt the normal conduct of its business operations.
Each such Selling Holder and Inspector that actually reviews Records
supplied by the Corporation that include information that the
Corporation identifies, in good faith, as being confidential or
proprietary ("Confidential Information") shall be required at the
Corporation Corporation's option, prior to any such review, to execute
an agreement with the Corporation providing that such Inspector shall
not publicly disclose any Confidential Information unless such
disclosure is required by applicable law or legal process and shall not
use such information for any purpose other than the limited purpose
contemplated by this subsection (g). Each such Selling Holder and
Inspector shall be required further to agree that it shall, upon
learning that disclosure of Confidential Information is sought in a
court of competent jurisdiction, give notice to the Corporation and
allow the Corporation, at its expense, to undertake appropriate action
to prevent disclosure of the Confidential Information;
(h) in the event such sale is pursuant to an underwritten
offering, use its reasonable best efforts to obtain a comfort letter or
letters from the Corporation Corporation's independent public
accountants in customary form and covering such matters of the type
customarily covered by comfort letters as the managing underwriter
reasonably requests; and
(i) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Securities and Exchange
Commission and make available to its security holders, as soon as
reasonably practicable, an earnings statement complying with the
provisions of Section 11(a) of the Securities Act (including, at the
option of the Corporation, pursuant to Rule 158 (or any successor
provision) under the Securities Act).
Upon receipt of any notice from the Corporation of the occurrence of any event
of the kind described in subsection (e) hereof, such Selling Holder shall
forthwith discontinue all offerings, sales and other dispositions of Restricted
Stock pursuant to the registration statement covering such Restricted Stock
until such Selling Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (e) hereof. In the event the Corporation
shall give any such notice, the Corporation shall extend the period during which
such registration statement shall be maintained effective pursuant to this
Agreement (including the period referred to in subsection (b) hereof) by the
number of days during the period from and including the date of the giving of
such notice pursuant to subsection (b) hereof to and including the first date on
which each Selling Holder of Restricted Stock covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by subsection (e) hereof. Each Selling Holder shall
notify the Corporation if any event relating to such Selling Holder occurs which
would require the preparation of a supplement or amendment to the prospectus so
that such prospectus will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
Section IV
Conditions and Limitations.
4.1 The Corporation Corporation's obligations under this Section 3
shall be subject to the Corporation having received the information and
documents specified in Section 5 hereof and each Selling Holder shall have
observed or performed its other covenants contained in Sections 5 and 7 hereof.
4.2 The Corporation Corporation's obligation under Section 4 hereof
shall be subject to the limitations and conditions specified in such section,
and to the condition that the Corporation may at any time terminate its proposal
to register equity securities for its own account and discontinue its efforts to
cause a registration statement to become or remain effective as to any and all
shares of Restricted Stock that would otherwise have been eligible for inclusion
in such registration.
Section V
Certain Covenants of Holders of Restricted Stock
5.1 Notices and requests delivered to the Corporation by Holders for
whom Restricted Stock is to be registered pursuant to this Agreement shall
contain such information regarding the Restricted Stock to be so registered, the
Holder and the intended method of disposition of such Restricted Stock as shall
reasonably be required in connection with the actions contemplated to be taken
pursuant to this Agreement. Any Holder whose Restricted Stock is included in a
registration statement pursuant to this Agreement shall execute all consents,
powers of attorney, registration statements and other documents reasonably
required to be executed by it in order to cause such registration statement to
became effective. Each Selling Holder covenants that, in disposing of such
Holder's shares, such Holder will comply with Rules 10b-2, 10b-5, 10b-6 and
10b-7 (or any successor provisions) under the Exchange Act and all other
requirements of applicable law.
Section VI
Registration Expenses
6.1 All Registration Expenses (as defined herein) will be borne by the
Corporation. Underwriting fees, discounts and commissions applicable to the sale
of Restricted Stock shall be borne by the Holder of the Restricted Stock to
which such discount or commission relates, and each Selling Holder shall be
responsible for the fees and expenses of any legal counsel, accountants or other
agents retained by such Selling Holder and all other out-of-pocket expenses
incurred by such Selling Holder in connection with any registration under this
Agreement.
6.2 As used herein, the term Registration Expenses means all expenses
incident to the Corporation's performance of or compliance with this Agreement
(whether or not the registration in connection with which such expenses are
incurred ultimately becomes effective), including without limitation all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Restricted Stock), rating agency
fees, printing expenses, the fees and expenses incurred in connection with the
listing or admission for quotation of the securities to be registered an any
securities exchange or quotation system and fees and disbursements of counsel
for the Corporation and its independent certified public accountants (including
the expenses of any special audit or comfort letters required by or incident to
such performance), securities act liability insurance (if the Corporation elects
to obtain such insurance), the reasonable fees and expenses of any special
expert retained by the Corporation in connection with such registration and the
fees and expenses of other persons retained by the Corporation. Registration
Expenses does not include any Underwriting fees, discounts or commissions
applicable to the sale of Restricted Stock.
<PAGE>
Section VII
Indemnification; Contribution
7.1 Indemnification by the Corporation. In connection with any offering
of Restricted Stock pursuant to this Agreement, the Corporation shall indemnify
and hold harmless each Selling Holder, its officers, directors and agents and
each person, if any, who controls such Selling Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages, liabilities and expenses
(including reasonable fees and disbursements of counsel) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to Restricted
Stock or in any amendment or supplement thereto or in any preliminary prospectus
relating to Restricted Stock or arising out of or based upon any 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 under which they were made, except insofar as such losses, claims,
damages, liabilities or expenses arise out of, or are based upon, any such
untrue statement or alleged untrue statement or omission or alleged omission
based upon information furnished in writing to the Corporation by such Selling
Holder or on such Selling Holder's behalf expressly for use therein. In
connection with any underwritten offering of Restricted Stock registered
pursuant to this Agreement, the Corporation shall cause to be included in any
underwriting agreement with the underwriters of such offering provisions
indemnifying and providing for contribution to such underwriters and their
officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 7.1 indemnifying
and providing for contribution to the Selling Holders.
7.2 Indemnification by Holders of Restricted Stock. In connection with
any offering of Restricted Stock pursuant to this Agreement, each Selling
Holder, severally and not jointly, shall indemnify and hold harmless the
Corporation, its officers, directors and agents and each person, if any, who
controls the Corporation within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and, in accordance with
industry practice, in the case of an offering of Restricted Stock pursuant to
this Agreement, each underwriter of such Restricted Stock if requested by such
underwriter, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable fees and disbursements of counsel) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
Restricted Stock or in any amendment or supplement thereto or in any preliminary
prospectus relating to Restricted Stock, or arising out of or based upon any
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 under which they were made, provided that (i) such
losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any such untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished in writing to the Corporation
by such Selling Holder or on such Selling Holder's behalf expressly for use
therein and (ii) no Selling Holder shall be liable for any indemnification under
this Section 7.2 in an aggregate amount which exceeds the total net proceeds
received by such Selling Holder from such offering. In connection with any
underwritten offering of Restricted Stock registered pursuant to this Agreement,
each Selling Holder shall cause to be included in any underwriting agreement
with the underwriters of such offering provisions indemnifying and providing for
contribution to such underwriters, their officers and directors and each person
who controls such underwriters on substantially the same basis as the provisions
of this Section 4.6(b) indemnifying and providing for contribution to the
Corporation.
7.3 Conduct of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or asserted against
any indemnified party hereunder in respect of which indemnity may be sought from
an indemnifying party hereunder, such indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party, and shall assume the payment of all expenses. Such
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, (ii) the
indemnifying party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such indemnified party,
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both such indemnified party and such indemnifying
party, and such indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to such indemnified party which are
different from or additional to those available to the indemnifying party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action or proceeding on behalf of such indemnified party; it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for such indemnified party, which firm shall be designated
in writing by such indemnified party and reasonably satisfactory to the
indemnifying party). The indemnifying party shall not be liable for any
settlement of any such action or proceeding erected without its written consent,
but if settled with its written consent, or if there is a final judgment for the
plaintiff in any such action or proceeding, the indemnifying party shall
indemnify and hold harmless the indemnified party from and against any loss or
liability (to the extent stated above) by reason of such settlement or judgment.
7.4 Contribution. If the indemnification provided for in this Section 4
is unavailable to the Corporation or the Selling Holders in respect of any
losses, claims, damages, liabilities or judgments referred to herein, then each
such indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments in such proportion as
is appropriate to reflect the relative fault of each such party in connection
with such statements or omissions or alleged statements or omissions, as well as
any other relevant equitable considerations. The relative fault of each such
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Corporation
and the Selling Holders agree that it would not be just and equitable if
contribution pursuant to this Section 4(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding sentences.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding sentences shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claims.
Notwithstanding the provisions of this Section 4(d), no Selling Holder shall be
required to contribute an amount in excess of the amount by which the total
price at which the Restricted Stock of such Selling Holder was offered to the
public exceeds the amount of any fee which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
Section VIII
Representations and Warranties
The Corporation represents and warrants that:
8.1 Existence and Rights. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Minnesota. The Corporation has all requisite corporate power and authority, to
carry on its business and to own and use the properties owned and used by it.
True and correct copies of the Corporation's Articles of Incorporation and
Bylaws, as amended to date, have been delivered to Holder. The Corporation is
qualified to conduct business and is in good standing under the laws of each
jurisdiction wherein the nature of its business or its ownership of property
requires it to be so qualified, except where the failure to be so qualified,
would not individually or in the aggregate, have a material adverse effect on
the assets or business of the Corporation. The Corporation has no Subsidiaries.
8.2 Corporate Authorization. The Corporation has all necessary power
and authority to enter into this Agreement and has taken all action,
specifically including, without limitation, all corporate action, necessary to
execute, deliver and perform this Agreement. This Agreement has been duly
authorized, executed and delivered by the Corporation and is a legally valid and
binding obligation of the Corporation enforceable against the Corporation in
accordance with its terms.
8.3 No Conflict. The execution, delivery and performance of this
Agreement and of the related documents by the Corporation will not violate any
provision of the Corporation's Articles of Incorporation or the Bylaws; or
violate any law or rule or regulation of any administrative agency or
governmental body; or any order, writ, injunction or decree of any court,
arbiter, administrative agency or governmental authority having jurisdiction
over the Corporation; or violate any indenture, mortgage, contract, will,
agreement or other undertaking to which the Corporation is a party or is
subject, or result in the creation or imposition of any lien or encumbrance on
any of the properties of the Corporation under any of the foregoing.
8.4 Litigation. There is no litigation, proceeding, dispute, tax audit
or other governmental investigation pending, or to the best of the Corporation's
knowledge, threatened against, or affecting the Corporation's business or its
assets before any court or governmental agency or other body, which would
materially adversely affect the financial condition of the Corporation, its
assets, or the conduct of the Corporation's business, or which may impede the
transaction contemplated herein. There are no outstanding and unpaid judgments,
tax deficiencies, statements, or notices of assessments or other demands for
payment of taxes served on or filed against the Corporation. The Corporation is
not in default with respect to an order, writ, injunction, decree or demand of
any court or other governmental or regulatory authority.
Section IX
Miscellaneous
9.1 Notices. Any notice or other communication required or permitted
hereunder shall be deemed given if in writing and delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally or sent by overnight air courier or facsimile
transmission or, if mailed, two days after the date of deposit in the United
States mails, as follows:
If to the Corporation:
VISEON, Inc.
2620 S. Maryland Parkway, #309
Las Vegas, Nevada 89109
Facsimile: 972-818-7343
With copies to:
Albert B. Greco, Jr.
16901 Dallas Parkway
Suite 230
Addison, Texas 75001
Facsimile: 972-818-7343
If to the Investor:
Henry S. Mellon
4 Driftwood Landing
Gulfstream, Florida 33483
Any party may be given notice in accordance with this Section by any other party
at another address or person for receipt of notices, if such party so designates
such other person or address in writing in accordance with this Section 9,
paragraph 9.1
9.2 Partial Invalidity. Each part of this Agreement is intended to be
separate. If any term, covenant, condition or provision hereof is illegal or
invalid or unenforceable for any reason whatsoever, such illegality, invalidity
or unenforceability shall not affect the legality, validity or enforceability of
the remaining parts of this Agreement and all such remaining parts hereto shall
not be impaired or invalidated in any way, but shall be legal, valid and
enforceable and have full force and effect as if the illegal, invalid,
unenforceable part has not been included.
9.3 Law Governing Agreement. This Agreement is made and entered into
and is to be at least partially performed in Clark County, Nevada. It shall be
interpreted, construed and enforced and its construction and performance shall
be governed by the laws of the State of Nevada applicable to Agreements made and
to be performed entirely within such State without regard to principles of
conflicts of laws, except to the extent that Federal law may apply.
9.4 Entire Agreement. This Agreement constitutes the entire
understanding and Agreement of the parties hereto, and supersedes any and all
prior understandings or other Agreements, either oral or in writing, if any,
among such parties with respect to the subject matter hereof and contains all of
the covenants and Agreements between the parties with respect thereto. Each
party to this Agreement acknowledges that no representations, inducements, or
Agreements, oral or otherwise, have been made by such party, or anyone acting on
behalf of such party, which are not embodied herein, and no other Agreement,
statement or promise not contained in this Agreement shall be valid or binding.
The parties hereto have had an opportunity to consult with their respective
attorneys concerning the meaning and the import of this Agreement and each has
read this Agreement, as signified by their signatures below, and is executing
the same for the purposes and consideration herein expressed.
9.5 Waivers. No delay on the part of any party in exercising any right,
power, or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. The rights and remedies of any party based upon, arising out of or
otherwise in respect of any inaccuracy in or breach by any other party of any
representation, warranty, covenant or Agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or Agreement contained in this Agreement (or in any other Agreement
between the parties) as to which there is no inaccuracy or breach.
9.6 Tax Consultation. Each Party acknowledges that it has had the
opportunity to and has consulted with their own separate independent accounting
and tax advisors in connection with the accounting and tax treatment for the
transactions contemplated hereby and the tax ramifications thereof. Each Party
shall bear all risk in connection with the accounting and tax treatment of the
transactions contemplated by this Agreement and no Party is relying on the other
Party in connection with the same.
9.7 Variations in Pronouns. Wherever the context shall so require, all
words herein in the male gender shall be deemed to include the female or neuter
gender and vice versa, all singular words shall include the plural, and all
plural words shall include the singular. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
9.8 Headings. The headings used in this Agreement are for
administrative purposes only and do not constitute substantive matter to be
considered in construing the terms and shall not affect the interpretation of
this Agreement. All references herein to Sections, subsections, and clauses,
shall be deemed references to such parts of this Agreement, unless the context
shall otherwise require. A reference to an article or section will mean an
article or section in this Agreement, unless otherwise explicitly set forth. The
titles and headings in this Agreement are for reference purposes only and will
not in any manner limit the construction of this Agreement. For the purposes of
such construction, this Agreement will be considered as a whole. The terms
"including" and "include" as used in this Agreement will be deemed to include
the phrase "without limitation."
9.9 Attorney's Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements, but only from the offending party, in addition to any other
relief to which it may be entitled.
9.10 Representation by Counsel. Each party acknowledges that it has had
the opportunity to be represented by separate independent counsel in the
negotiation of this Agreement, that any such respective attorneys were of its
own choosing, that each authorized representative has read this Agreement and
that he understands its meaning and legal consequences to each party. Each Party
warrants and represents that he has consulted with his attorney of choice, or
voluntarily chose not to do so, concerning the execution, the meaning and the
import of this Agreement, and has read this Agreement and fully understands the
terms hereof as signified by his signature below, and is executing the same of
his own free will for the purposes and consideration herein expressed. Each
Party warrants and represents that he has had sufficient time to consider
whether to enter into this Agreement and that he is relying solely on his own
judgment and the advice of his own counsel, if any, in deciding to execute this
Agreement. Each Party warrants and represents that he has read this Agreement in
its entirety and has consulted with his attorney, if any concerning the
execution of this Agreement. If any or all Parties have chosen not to seek
counsel, said party or parties hereby acknowledge that he or they refrained from
seeking counsel entirely of his or their own volition and with full knowledge of
the consequences of such a decision.
9.11 Presumption Against Scrivener. Each party waives the presumption
that this Agreement is presumed to be in favor of the party which did not
prepare it, in case of a dispute as to interpretation.
9.12 Capacity. Each party represents and warrants that he has the
authority to enter into this Agreement either on his own behalf or in an
official capacity on behalf of a corporate party.
9.13 Further Assurances. At any time and from time to time after the
date hereof, at the request of any Party, and without further consideration,
every other party will execute and deliver such other and further instruments
and documents, and take such other action as the other Party may reasonably deem
necessary, convenient or desirable in order to more effectively assist any Party
in exercising all rights with respect thereto, and carrying out the business,
duties, and obligations created by this Agreement.
9.14 Amendments. This Agreement may not be modified, amended,
superceded, cancelled, renewed or extended, except in writing, signed by the
party or parties to be bound thereby or signed by their respective attorneys.
9.15 Binding Effect and Assignment. This Agreement and the terms,
covenants, conditions, provisions, obligations, undertakings, rights and
benefits hereof, shall be binding upon, and shall inure to the benefit of, the
undersigned parties and their respective heirs, executors, administrators,
representatives, officers, directors, Corporation, successors, agents, servants,
employees, attorneys, and assigns. This Agreement and any rights hereunder are
freely assignable by Investor to the extent that Investor has assigned or sold
any Restricted Stock or portion thereof. This Agreement shall inure to the
benefit of and bind the Parties hereto and their respective legal
representatives, successors, and permitted assigns.
9.16 Counterparts. This Agreement may be executed in several
counterparts by one or more of the undersigned and all such counterparts so
executed shall together be deemed and constitute one final Agreement, as if one
document had been signed by all parties hereto; and each such counterpart shall
be deemed an original, binding the parties subscribed hereto and multiple
signature pages affixed to a single copy of this Agreement shall be deemed to be
a fully executed original Agreement. Several counterparts consisting of multiple
copies hereof each signed by less than all parties, but together signed by all
parties shall constitute and be deemed a fully executed original Agreement.
9.17 Corporate Authority. Each Party represents and warrants to each
other that each has previously taken the necessary corporate action authorizing
the execution of this Agreement and the undertakings to e accomplished hereunder
by their officer recited below.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date first written hereinabove.
INVESTOR:
HENRY S. MELLON
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CORPORATION:
VISEON, INC.
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By: John Harris
Its: President