REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.1
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of this 3rd
day of
August, 2006 (the “Effective
Date”)
by and
among Ethanex Energy North America, Inc. (f/k/a Xxxxxxxxx Energy, Inc.), a
Delaware corporation (the “Company”),
and
the parties set forth on the signature page and Exhibit
A
hereto
(each, a “Purchaser”
and
collectively, the “Purchasers”).
RECITALS:
WHEREAS,
the Company and a shell public company to be identified at a later date
(“PubCo”)
currently contemplate that they will enter into an Agreement and Plan of Merger
and Reorganization (the “Merger
Agreement”),
pursuant to which a wholly-owned subsidiary of PubCo, will merge with and into
the Company, with the Company remaining as the surviving entity and becoming
a
wholly-owned subsidiary of PubCo (the “Merger”),
upon
the effective date of the Merger (the “Merger Effective
Date”);
WHEREAS,
prior to the closing of the Merger and until the Merger Effective Date, the
holders of the Class A Common Stock of the Company shall place into escrow
all
of their shares of Class A Common Stock and shall execute an irrevocable proxy
in favor of Xxxxxxxx Capital Group (“TCG”),
or
its designee, giving such proxy holder the power, until August 31, 2007, to
vote
the shares of the Class A Common Stock in favor of the Merger;
WHEREAS,
as a condition to the consummation of the Merger, and to provide the capital
required by the Company for working capital purposes, the Company is offering
in
compliance with Rule 506 of Regulation D of the Securities Act of 1933, as
amended (the “Securities
Act”)
and
available prospectus exemptions in Canada, to accredited investors in a private
placement transaction (the “Offering”),
a
minimum (the “Minimum”)
of
12,000,000 units (the “Units”)
and a
maximum (the “Maximum”)
of
15,000,000 Units of its securities, each Unit consisting of (i) one share of
Class B Common Stock of the Company (“Common
Stock”)
and
(ii) a warrant (the “Investor
Warrant”)
to
purchase one share of Class B Common Stock of the Company exercisable for a
period of five (5) years at an exercise price of $1.50 per share (collectively,
the “Securities”);
WHEREAS,
the Offering will terminate upon the earlier of (i) the receipt of acceptable
subscriptions from the Investor and all other investors totaling $15,000,000,
and (ii) at the election of the Company, upon receipt of subscriptions from
the
Investor and all other investors totaling at least $12,000,000 (the
“Closing
Date”);
WHEREAS,
on the Merger Effective Date, each share of the Company’s Class B Common Stock
will automatically convert into one share of the PubCo’s common stock, and each
Investor Warrant will entitle the holder thereof to purchase one share of the
PubCo’s common stock for an exercise price of $1.50 per share and on the same
terms and conditions as the Investor Warrants issued in this
Offering;
WHEREAS,
the Purchasers, in connection with their intent to purchase Units in the
Offering, shall execute and deliver: (i) Subscription Agreements (the
“Subscription
Agreements”)
and
Investor Questionnaires (the “Investor
Questionnaires”)
memorializing the Purchasers’ agreement to purchase and the Company’s agreement
to sell the number of Units set forth therein at the purchase price of $1.00
per
Unit (the “Purchase
Price”),
(ii)
this Agreement, pursuant to which the Company will provide certain registration
rights related to the shares of Common Stock underlying the Units and the
Investor Warrants on the terms set forth herein, and (iii) Irrevocable Proxies
(the “Irrevocable
Proxies”)
in
favor of TCG giving TCG the power, through August 31, 2007, to vote the shares
of the Class B Common Stock acquired by the Purchasers in favor of the Merger
(the Subscription Agreements, Investor Questionnaires, Registration Rights
Agreements, and Irrevocable Proxies are collectively referred to as the
“Transaction
Documents”);
and
WHEREAS,
as a condition to the closing of the Merger and as of the Merger Effective
Date,
PubCo shall assume all rights and obligations of the Company under this
Agreement and by virtue of such assumption, PubCo shall undertake to register
the Registrable Securities pursuant to the terms of this Agreement.
NOW,
THEREFORE,
in
consideration of the mutual promises, representations, warranties, covenants,
and conditions set forth herein, the parties mutually agree as follows:
1. Certain
Definitions.
As used
in this Agreement, the following terms shall have the following respective
meanings:
“Approved
Market”
means
the NASD Over-The-Counter Bulletin Board, the Nasdaq National Market, the Nasdaq
Capital Market, the New York Stock Exchange, Inc. or the American Stock
Exchange, Inc.
“Blackout
Period”
means,
with respect to a registration, a period, in each case commencing on the day
immediately after the Company notifies the Purchasers that they are required,
because of the occurrence of an event of the kind described in Section 4(f)
hereof, to suspend offers and sales of Registrable Securities during which
the
Company, in the good faith judgment of its board of directors, determines
(because of the existence of, or in anticipation of, any acquisition, financing
activity, or other transaction involving the Company, or the unavailability
for
reasons beyond the Company’s control of any required financial statements,
disclosure of information which is in its best interest not to publicly
disclose, or any other event or condition of similar significance to the
Company) that the registration and distribution of the Registrable Securities
to
be covered by such registration statement, if any, would be seriously
detrimental to the Company and its stockholders and ending on the earlier of
(1)
the date upon which the material non-public information commencing the Blackout
Period is disclosed to the public or ceases to be material and (2) such time
as
the Company notifies the selling Holders that the Company will no longer delay
such filing of the Registration Statement, recommence taking steps to make
such
Registration Statement effective, or allow sales pursuant to such Registration
Statement to resume; provided,
that
(a) the Company shall limit its use of Blackout Periods, in the aggregate,
to 30
Trading Days in any 12-month period and (b) no Blackout Period may commence
sooner than 60 days after the end of a prior Blackout Period.
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“Business
Day”
means
any day of the year, other than a Saturday, Sunday, or other day on which the
Commission is required or authorized to close.
“Closing
Date”
means
the date set forth in the Recitals of this Agreement.
“Commission”
means
the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
“Common
Stock”
means
the common stock of the Company and any and all shares of capital stock or
other
equity securities of: (i) the Company which are added to or exchanged or
substituted for the Common Stock by reason of the declaration of any stock
dividend or stock split, the issuance of any distribution or the
reclassification, readjustment, recapitalization or other such modification
of
the capital structure of the Company; and (ii) any other corporation, now or
hereafter organized under the laws of any state or other governmental authority,
with which the Company is merged, which results from any consolidation or
reorganization to which the Company is a party, or to which is sold all or
substantially all of the shares or assets of the Company, if immediately after
such merger, consolidation, reorganization or sale, the Company or the
stockholders of the Company own equity securities having in the aggregate more
than 50% of the total voting power of such other corporation.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder.
“Family
Member”
means
(a) with respect to any individual, such individual’s spouse, any descendants
(whether natural or adopted), any trust all of the beneficial interests of
which
are owned by any of such individuals or by any of such individuals together
with
any organization described in Section 501(c)(3) of the Internal Revenue Code
of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
“Holder”
means
each Purchaser or any of such Purchaser’s respective successors and Permitted
Assigns who acquire rights in accordance with this Agreement with respect to
the
Registrable Securities directly or indirectly from a Purchaser or from any
Permitted Assignee.
“Investor
Warrants” mean
the
warrants issued in connection with the Purchasers purchase of Units in the
Offering and any equity securities of: (i) the Company which are added to or
exchanged or substituted for the Investor Warrants by reason of the declaration
of any stock dividend or stock split, the issuance of any distribution or the
reclassification, readjustment, recapitalization or other such modification
of
the capital structure of the Company; and (ii) any other corporation, now or
hereafter organized under the laws of any state or other governmental authority,
with which the Company is merged, which results from any consolidation or
reorganization to which the Company is a party, or to which is sold all or
substantially all of the shares or assets of the Company, if immediately after
such merger, consolidation, reorganization or sale, the Company or the
stockholders of the Company own equity securities having in the aggregate more
than 50% of the total voting power of such other corporation.
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“Majority
Holders”
means
at any time Holders representing a majority of the Registrable
Securities.
“Permitted
Assignee”
means
(a) with respect to a partnership, its partners or former partners in
accordance with their partnership interests; (b) with respect to a
corporation, its stockholders in accordance with their interest in the
corporation; (c) with respect to a limited liability company, its members
or former members in accordance with their interest in the limited liability
company; (d) with respect to an individual party, any Family Member of such
party; (e) an entity that is controlled by, controls, or is under common control
with a transferor; or (f) a party to this Agreement.
“Piggyback
Registration”
means,
in any registration of Common Stock as set forth in Section 3(b), the ability
of
holders of Common Stock to include Registrable Securities in such registration.
“Purchase
Price”
means
the Purchase Price per Unit set forth in the Subscription Agreement.
The
terms
“register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing a registration statement
in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
“Registrable
Securities”
means
the shares of Common Stock issued or issuable to each Purchaser in connection
with such Purchaser’s purchase of Units pursuant to the Subscription Agreements,
including the shares of Common Stock issuable on exercise of the Investor
Warrants issued to the Purchasers in connection with their purchase of Units
but
excluding (i) any Registrable Securities that have been publicly sold or may
be
sold immediately without registration under the Securities Act either pursuant
to Rule 144 of the Securities Act or otherwise; (ii) any Registrable Securities
sold by a person in a transaction pursuant to a registration statement filed
under the Securities Act; or (iii) any Registrable Securities that are at the
time subject to an effective registration statement under the Securities Act.
“Registration
Default Date”
means
the date that is 120 days following the Registration Filing Date.
“Registration
Default Period”
means
the period following the Registration Default Date during which any Registration
Event occurs and is continuing.
“Registration
Event”
means
the occurrence of any of the following events:
(a) the
Company fails to file with the Commission the Registration Statement on or
before the Registration Filing Date (as defined in Section 3(a));
(b) the
Registration Statement is not declared effective by the Commission on or before
the Registration Default Date;
(c) after
the
SEC Effective Date, sales cannot be made pursuant to the Registration Statement
for any reason (including without limitation by reason of a stop order,
or
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the
Company’s failure to update the Registration Statement) except as excused
pursuant to Section 3(a); or
(d) the
Common Stock generally or the Registrable Securities specifically are not listed
or included for quotation on an Approved Market, or trading of the Common Stock
is suspended or halted on the Approved Market, which at the time constitutes
the
principal market for the Common Stock, for more than two full, consecutive
Trading Days; provided, however, a Registration Event shall not be deemed to
occur if all or substantially all trading in equity securities (including the
Common Stock) is suspended or halted on the Approved Market for any length
of
time.
“Registration
Filing Date”
means
the date that is 120 days after the Merger Effective Date.
“Registration
Statement”
means
the registration statement that the Company is required to file pursuant to
this
Agreement to register the Registrable Securities.
“Rule
144”
means
Rule 144 promulgated by the Commission under the Securities Act.
“Securities
Act”
means
the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
“SEC
Effective Date”
means
the date the Registration Statement is declared effective by the
Commission.
“Subscription
Agreement”
means
the Subscription Agreement dated as of the date hereof between the Company
and
the Purchaser setting forth the terms and conditions of the Company’s offer of
Units and the Purchaser’s purchase of Units.
“Trading
Day”
means
any day on which the national securities exchange, the Nasdaq Stock Market,
the
NASD Over the Counter Bulletin Board or such other securities market or
quotation system, which at the time constitutes the principal securities market
for the Common Stock, is open for general trading of securities.
“Units”
mean
the units offered by the Company and purchased by the Purchaser pursuant to
the
Subscription Agreement which consist of one share of Class B Common Stock and
an
Investor Warrant representing the right of the Purchaser to purchase one share
of Class B Common Stock at the exercise price of $1.50 per share.
2. Term.
This
Agreement shall continue in full force and effect for a period of two years
from
the Effective Date, unless terminated sooner hereunder.
3. Registration.
(a) Registration
on Form SB-2.
Not
later than the Registration Filing Date, the Company shall file with the
Commission a registration statement on Form SB-2, or other applicable form,
relating to the resale by the Holders of all of the Registrable Securities,
and
the
-5-
Company
shall use its commercially reasonable best efforts to cause such registration
statement to be declared effective prior to the Registration Default Date;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification, or compliance pursuant to this Section, or keep
such registration effective pursuant to the terms hereunder: (i) in any
particular jurisdiction in which the Company would be required to qualify to
do
business as a foreign corporation or as a dealer in securities under the
securities or blue sky laws of such jurisdiction or to execute a general consent
to service of process in effecting such registration, qualification or
compliance, in each case where it has not already done so; or (ii) during any
Blackout Period, in which case the Registration Filing Date shall be extended
to
the date immediately following the last day of such Blackout Period.
(b) Piggyback
Registration.
If the
Company shall determine to register for sale for cash any of its Common Stock,
for its own account or for the account of others (other than the Holders),
other
than (i) a registration relating solely to employee benefit plans or securities
issued or issuable to employees, consultants (to the extent the securities
owned
or to be owned by such consultants could be registered on Form S-8) or any
of
their Family Members (including a registration on Form S-8) or (ii) a
registration relating solely to a Commission Rule 145 transaction, a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, or similar event, the Company shall promptly give to the Holders
written notice thereof (and in no event shall such notice be given less than
20
calendar days prior to the filing of such registration statement), and shall,
subject to Section 3(c), include as a Piggyback Registration all of the
Registrable Securities specified in a written request delivered by the Holder
within 10 calendar days after receipt of such written notice from the Company.
However, the Company may, without the consent of the Holders, withdraw such
registration statement prior to its becoming effective if the Company or such
other stockholders have elected to abandon the proposal to register the
securities proposed to be registered thereby.
(c) Underwriting.
If a
Piggyback Registration is for a registered public offering involving an
underwriting, the Company shall so advise the Holders. In such event, the right
of any Holder to Piggyback Registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to include the Registrable Securities they hold through such
underwriting shall (together with the Company and any other stockholders of
the
Company selling their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter selected for
such
underwriting by the Company or the selling stockholders, as applicable.
Notwithstanding any other provision of this Section, if the underwriter or
the
Company determines that marketing factors require a limitation of the number
of
shares of Common Stock or the amount of other securities to be underwritten,
the
underwriter may exclude some or all Registrable Securities from such
registration and underwriting. The Company shall so advise all Holders (except
those Holders who failed to timely elect to include their Registrable Securities
through such underwriting or have indicated to the Company their decision not
to
do so), and indicate to each such Holder the number of shares of Registrable
Securities that may be included in the registration and underwriting, if any.
The number of shares of Registrable Securities to be included in such
registration and underwriting shall be allocated among such Holders as follows:
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(i) In
the
event of a Piggyback Registration that is initiated by the Company, the number
of shares that may be included in the registration and underwriting shall be
allocated first to the Company and then, subject to obligations and commitments
existing as of the date hereof, to all selling stockholders, including the
Holders, who have requested to sell in the registration on a pro rata basis
according to the number of shares requested to be included; and
(ii) In
the
event of a Piggyback Registration that is initiated by the exercise of demand
registration rights by a stockholder or stockholders of the Company (other
than
the Holders), then the number of shares that may be included in the registration
and underwriting shall be allocated first to such selling stockholders who
exercised such demand and then, subject to obligations and commitments existing
as of the date hereof, to all other selling stockholders, including the Holders,
who have requested to sell in the registration, on a pro rata basis according
to
the number of shares requested to be included.
No
Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw their Registrable Securities therefrom by delivery of written
notice to the Company and the underwriter. The Registrable Securities so
withdrawn from such underwriting shall also be withdrawn from such registration;
provided,
that,
if by the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities pursuant to the terms and limitations set forth herein in the same
proportion used above in determining the underwriter limitation.
(d) Other
Registrations.
Prior
to the SEC Effective Date, the Company will not, without the prior written
consent of the Majority Holders, file or request the acceleration of any other
registration statement filed with the Commission, and during any time subsequent
to the SEC Effective Date when the Registration Statement for any reason is
not
available for use by any Holder for the resale of any Registrable Securities,
the Company shall not, without the prior written consent of the Majority
Holders, file any other registration statement or any amendment thereto with
the
Commission under the Securities Act or request the acceleration of the
effectiveness of any other registration statement previously filed with the
Commission, other than (i) any registration statement on Form S-8 or Form S-4
and (ii) any registration statement or amendment which the Company is required
to file or as to which the Company is required to request acceleration pursuant
to any obligation in effect on the date of execution and delivery of this
Agreement.
(e) Occurrence
of Registration Event.
If a
Registration Event occurs, then the Company will make payments to each Purchaser
(a “Qualified
Purchaser”),
as
partial liquidated damages for the minimum amount of damages to the Qualified
Purchaser by reason thereof, and not as a penalty, at a rate equal to 1% of
the
Purchase Price per share of Registrable Securities then held by a Qualified
Purchaser monthly, for each calendar month of the Registration Default Period
(pro rated for any period less than 30 days); provided, however, if a
Registration Event occurs (or is continuing) on a date more than one-year after
the Qualified
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Purchaser
acquired the Registrable Securities (and thus the one-year holding period under
Rule 144(d) has elapsed), liquidated damages shall be paid only with respect
to
that portion of the Qualified Purchaser’s Registrable Securities that cannot
then be immediately resold in reliance on Rule 144. Each such payment shall
be
due and payable within five days after the end of each calendar month of the
Registration Default Period until the termination of the Registration Default
Period and within five days after such termination. Such payments shall
constitute the Qualified Purchaser’s exclusive remedy for such events. The
Registration Default Period shall terminate upon (i) the filing of the
Registration Statement in the case of clause (a) of the definition of
Registration Event, (ii) the SEC Effective Date in the case of clause (b) of
the
definition of Registration Event, (iii) the ability of the Qualified Purchaser
to effect sales pursuant to the Registration Statement in the case of clause
(c)
of the definition of Registration Event, (iv) the listing or inclusion and/or
trading of the Common Stock on an Approved Market, as the case may be, in the
case of clause (d) of the definition of Registration Event, and (v) in the
case
of the events described in clauses (b) and (c) of the definition of Registration
Event, the earlier termination of the Registration Default Period. The amounts
payable as partial liquidated damages pursuant to this paragraph shall be
payable in lawful money of the United States. Amounts payable as liquidated
damages to each Qualified Purchaser hereunder with respect to each share of
Registrable Securities shall cease when the Qualified Purchaser no longer holds
such shares of Registrable Securities or such shares of Registrable Securities
can be immediately sold by the Qualified Purchaser in reliance on Rule 144(k).
4. Registration
Procedures.
The
Company will keep each Holder reasonably advised as to the filing and
effectiveness of the Registration Statement. At its expense with respect to
the
Registration Statement, the Company will:
(a) prepare
and file with the Commission with respect to the Registrable Securities, a
registration statement on Form SB-2, or any other form for which the Company
then qualifies or which counsel for the Company shall deem appropriate and
which
form shall be available for the sale of the Registrable Securities in accordance
with the intended methods of distribution thereof, and use its commercially
reasonable efforts to cause such registration statement to become and remain
effective at for a period of two years or for such shorter period ending on
the
earlier to occur of (i) the sale of all Registrable Securities and (ii) the
availability under Rule 144(k) for the Holder to sell the Registrable Securities
(in either case, the “Effectiveness
Period”);
(b) if
a
registration statement is subject to review by the Commission, promptly respond
to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission;
(c) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be
necessary to keep such registration statement effective during the Effectiveness
Period;
(d) furnish,
without charge, to each Holder of Registrable Securities covered by such
registration statement (i) a reasonable number of copies of such registration
statement (including any exhibits thereto other than exhibits incorporated
by
reference), each amendment and supplement thereto as such Holder may reasonably
request, (ii) such number of copies of the
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prospectus
included in such registration statement (including each preliminary prospectus
and any other prospectus filed under Rule 424 under the Securities Act) as
such
Holders may reasonably request, in conformity with the requirements of the
Securities Act, and (iii) such other documents as such Holder may require to
consummate the disposition of the Registrable Securities owned by such Holder,
but only during the Effectiveness Period;
(e) use
its
commercially reasonable best efforts to register or qualify such registration
under such other applicable securities or blue sky laws of such jurisdictions
as
any Holder of Registrable Securities covered by such registration statement
reasonably requests and as may be necessary for the marketability of the
Registrable Securities (such request to be made by the time the applicable
registration statement is deemed effective by the Commission) and do any and
all
other acts and things necessary to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder; provided, however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph, (ii) subject itself to taxation
in
any such jurisdiction, or (iii) consent to general service of process in any
such jurisdiction;
(f) as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities, the disposition of which requires delivery of a
prospectus relating thereto under the Securities Act, of the happening of any
event, which comes to the Company’s attention, that will after the occurrence of
such event cause the prospectus included in such registration statement, if
not
amended or supplemented, to contain an untrue statement of a material fact
or an
omission to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading and the Company shall promptly
thereafter prepare and furnish to such Holder a supplement or amendment to
such
prospectus (or prepare and file appropriate reports under the Exchange Act)
so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall 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, unless suspension of the use of such
prospectus otherwise is authorized herein or in the event of a Blackout Period,
in which case no supplement or amendment need be furnished (or Exchange Act
filing made) until the termination of such suspension or Blackout Period;
(g) comply,
and continue to comply during the Effectiveness Period, in all material respects
with the Securities Act and the Exchange Act and with all applicable rules
and
regulations of the Commission with respect to the disposition of all securities
covered by such registration statement;
(h) as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement;
(i) use
its
best efforts to cause all the Registrable Securities covered by the Registration
Statement to be quoted on the NASD OTC Bulletin Board or such other
principal
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securities
market on which securities of the same class or series issued by the Company
are
then listed or traded;
(j) provide
a
transfer agent and registrar, which may be a single entity, for the shares
of
Common Stock at all times;
(k) cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to issue and deliver, or cause its transfer agent to
issue and deliver, certificates representing Registrable Securities to be
offered pursuant to the Registration Statement within a reasonable time after
the delivery of certificates representing the Registrable Securities to the
transfer agent or the Company, as applicable, and enable such certificates
to be
in such denominations or amounts as the Holders may reasonably request and
registered in such names as the Holders may request;
(l) during
the Effectiveness Period, refrain from bidding for or purchasing any Common
Stock or any right to purchase Common Stock or attempting to induce any person
to purchase any such security or right if such bid, purchase or attempt would
in
any way limit the right of the Holders to sell Registrable Securities by reason
of the limitations set forth in Regulation M under the Exchange Act;
and
(m) take
all
other reasonable actions necessary to expedite and facilitate the disposition
by
the Holders of the Registrable Securities pursuant to the Registration
Statement.
5. Suspension
of Offers and Sales.
Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(f) hereof or of the commencement
of an Blackout Period, such Holder shall discontinue the disposition of
Registrable Securities included in the Registration Statement until such
Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4(f) hereof or notice of the end of the Blackout Period,
and, if so directed by the Company, such Holder shall deliver to the Company
(at
the Company’s expense) all copies (including, without limitation, any and all
drafts), other than permanent file copies, then in such Holder’s possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
6. Registration
Expenses.
The
Company shall pay all expenses in connection with any registration obligation
provided herein, including, without limitation, all registration, filing, stock
exchange fees, printing expenses, all fees and expenses of complying with
securities or blue sky laws, and the fees and disbursements of counsel for
the
Company and of its independent accountants; provided that, in any underwritten
registration, each party shall pay for its own underwriting discounts and
commissions and transfer taxes. Except as provided in this Section and Section
9, the Company shall not be responsible for the expenses of any attorney or
other advisor employed by a Holder.
7. Assignment
of Rights.
No
Holder may assign its rights under this Agreement to any party without the
prior
written consent of the Company; provided, however, that a Holder may assign
its
rights under this Agreement without such consent to a Permitted Assignee as
long
as: (a) such transfer or assignment is effected in accordance with applicable
securities laws; (b)
-10-
such
transferee or assignee agrees in writing to become subject to the terms of
this
Agreement; and (c) the Company is given written notice by such Holder of such
transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned.
8. Information
by Holder.
Holders
included in any registration shall furnish to the Company such information
as
the Company may reasonable request in writing regarding such Holders and the
distribution proposed by such Holders.
9. Indemnification.
(a) In
the
event of the offer and sale of Registrable Securities under the Securities
Act,
the Company shall, and hereby does, indemnify and hold harmless, to the fullest
extent permitted by law, each Holder, its directors, officers, partners, each
other person who participates as an underwriter in the offering or sale of
such
securities, and each other person, if any, who controls or is under common
control with such Holder or any such underwriter within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, and expenses to which the Holder or any such director,
officer, partner or underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities, or expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement of any material fact contained in any registration statement prepared
and filed by the Company under which shares of Registrable Securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission to state therein 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, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter
and
controlling person for any legal or any other expenses reasonably incurred
by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement in or omission from such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of such Holder specifically stating that it is for
use
in the preparation thereof or (ii) if the person asserting any such loss, claim,
damage, liability (or action or proceeding in respect thereof) who purchased
the
Registrable Securities that are the subject thereof did not receive a copy
of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the
sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final prospectus (or
the
final prospectus as amended or supplemented). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf
of
the Holders, or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder.
-11-
(b) As
a
condition to including Registrable Securities in any registration statement
filed pursuant to this Agreement, each Holder agrees to be bound by the terms
of
this Section 9 and to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers, and each other
person, if any, who controls the Company within the meaning of Section 15 of
the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as
such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) that arises out of or is based
upon
an untrue statement in or omission from such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Holder through an instrument duly executed by or on behalf of the Company
specifically stating that it is for use in the preparation thereof, and such
Holder shall reimburse the Company, and each such director, officer, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating, defending, or settling and such loss, claim,
damage, liability, action, or proceeding; provided, however, that such indemnity
agreement found in this Section 9 shall in no event exceed the gross proceeds
from the offering received by such Holder. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer by any Holder of such shares.
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in this Section (including
any governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to
the
indemnifying party of the commencement of such action; provided that the failure
of any indemnified party to give notice as provided herein shall not relieve
the
indemnifying party of its obligations under this Section, except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified party, unless
in the reasonable judgment of counsel to such indemnified party a conflict
of
interest between such indemnified and indemnifying parties may exist or the
indemnified party may have defenses not available to the indemnifying party
in
respect of such claim, the indemnifying party shall be entitled to participate
in and to assume the defense thereof, with counsel reasonably satisfactory
to
such indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party’s reasonable judgment a
conflict of interest between such indemnified and indemnifying parties arises
in
respect of such claim after the assumption of the defenses thereof or the
indemnifying party fails to defend such claim in a diligent manner, other than
reasonable costs of investigation. Neither an indemnified nor an indemnifying
party shall be liable for any settlement of any action or proceeding effected
without its consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement, which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. Notwithstanding anything
to
the contrary set forth herein, and without limiting any of the rights set forth
above, in any event any
-12-
party
shall have the right to retain, at its own expense, counsel with respect to
the
defense of a claim.
(d) In
the
event that an indemnifying party does or is not permitted to assume the defense
of an action pursuant to Sections 9(c) or in the case of the expense
reimbursement obligation set forth in Sections 9(a) and (b), the indemnification
required by Sections 9(a) and (b) hereof shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are
incurred.
(e) If
the
indemnification provided for in this Section is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any
loss,
liability, claim, damage or expense referred to herein, the indemnifying party,
in lieu of indemnifying such indemnified party hereunder, shall (i) contribute
to the amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage or expense as is appropriate to reflect the
proportionate relative fault of the indemnifying party on the one hand and
the
indemnified party on the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
relates to information supplied by the indemnifying party or the indemnified
party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or (ii)
if
the allocation provided by clause (i) above is not permitted by applicable
law
or provides a lesser sum to the indemnified party than the amount hereinafter
calculated, not only the proportionate relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as
well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.
(f) Other
Indemnification.
Indemnification similar to that specified in this Section (with appropriate
modifications) shall be given by the Company and each Holder of Registrable
Securities with respect to any required registration or other qualification
of
securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
10. Rule
144.
For
a
period of at least 24 months following the Closing Date,
the
Company will use its commercially reasonable best efforts to timely file all
reports required to be filed by the Company after the date hereof under the
Securities Act and the Exchange Act and the rules and regulations adopted by
the
Commission thereunder, and if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as
is
required for the Purchasers to sell shares of Common Stock under Rule
144.
11. Independent
Nature of Each Purchaser’s Obligations and Rights.
The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein and no
-13-
action
taken by any Purchaser pursuant hereto, shall be deemed to constitute such
Purchasers as a partnership, an association, a joint venture, or any other
kind
of entity, or create a presumption that the Purchasers are in any way acting
in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.
12. Miscellaneous.
(a) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York and the United States of America, both substantive and
remedial, without regard to New York conflicts of law principles. Any
judicial proceeding brought against either of the parties to this agreement
or
any dispute arising out of this Agreement or any matter related hereto shall
be
brought in the courts of the State of New York, New York County, or in the
United States District Court for the Southern District of New York and, by
its
execution and delivery of this agreement, each party to this Agreement accepts
the jurisdiction of such courts. The foregoing consent to jurisdiction shall
not
be deemed to confer rights on any person other than the parties to this
Agreement.
(b) Successors
and Assigns.
Except
as otherwise provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, Permitted Assignees, executors and
administrators of the parties hereto. Each Purchaser hereby consents to the
assignment of the rights and obligations of the Company to PubCo on the Merger
Effective Date and to PubCo’s assumptions of such rights and obligations. After
such assignment and assumption, PubCo shall be solely liable for the performance
of all obligations to the Holders under this Agreement. In the event the Company
merges with, or is otherwise acquired by, a publicly traded company, or a direct
or indirect subsidiary of a publicly traded company, the Company shall condition
the merger or acquisition on the assumption by such public company of the
Company’s rights and obligations under this Agreement.
(c) Entire
Agreement.
This
Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subjects hereof.
(d) Notices,
etc.
All
notices or other communications which are required or permitted under this
Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic
mail, or by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so delivered:
If
to the
Company to:
Ethanex
Energy North America, Inc.
c/o
McGuireWoods LLP
1345
Avenue of the Xxxxxxxx, 0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
-14-
Attention:
Xxxxx Xxxxxxxxx, President and Chief Executive Officer
Facsimile:
(000) 000-0000
If
to the
Purchasers:
To
each
Purchaser at the address
set
forth
on Exhibit A
or
at
such other address as any party shall have furnished to the other parties in
writing.
(e) Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any Holder,
upon any breach or default of the Company under this Agreement, shall impair
any
such right, power or remedy of such Holder nor shall it be construed to be
a
waiver of any such breach or default, or an acquiescence therein, or of or
in
any similar breach or default thereunder occurring; nor shall any waiver of
any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of
any kind or character on the part of any Holder of any breach or default under
this Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
(f) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties actually executing such counterparts, and all
of
which together shall constitute one instrument. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid
and
binding obligation of the party executing (or on whose behalf such signature
is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
(g) Severability.
In the
case any provision of this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall
not
in any way be affected or impaired thereby.
(h) Amendments.
The
provisions of this Agreement may be amended at any time and from time to time,
and particular provisions of this Agreement may be waived, with and only with
an
agreement or consent in writing signed by the Company and the Majority Holders.
The Purchasers acknowledge that by the operation of this Section, the Majority
Holders may have the right and power to diminish or eliminate all rights of
the
Purchasers under this Agreement.
(i) Limitation
on Subsequent Registration Rights.
After
the date of this Agreement, the Company shall not, without the prior written
consent of the Majority Holders, enter into any agreement with any holder or
prospective holder of any securities of the Company that would grant such holder
registration rights senior to those granted to the Holders
hereunder.
[SIGNATURE
PAGES FOLLOW]
-15-
This
Registration Rights Agreement is hereby executed as of the date first above
written.
COMPANY
Ethanex
Energy North America, Inc.
By:
/s/
Xxxxx Xxxxxxxxx
Name:
Xxxxx Xxxxxxxxx
Its: President
and Chief Executive Officer
[SIGNATURE
PAGE OF PURCHASER FOLLOWS]
-16-
This
Registration Rights Agreement is hereby executed as of the date first above
written.
| PURCHASER: (individual) | |
|
(Print
Name)
|
|
|
PURCHASER:
(ENTITY)
___________________________________
(Entity
Name)
|
|
|
By:
|
|
|
Name:
|
|
|
(Print
Name)
|
|
|
Its:
|
|
-17-
Exhibit
A
Purchasers
|
Purchaser
Name
|
Purchaser
Address
|
Number
of Units
|
||
ETHANEX ENERGY NORTH AMERICA, INC.
CONSENT
AND ACKNOWLEDGEMENT
PLEASE
BE
ADVISED, you have elected to subscribe for, purchase and acquire from Ethanex
Energy North America, Inc. (the “Company”) units of its securities (“Units”)
(consisting of one share of Class B Common Stock common stock (the “Common
Stock”) and a warrant to purchase one share of Class B Common Stock) in the
Company’s pending private placement offering (the “Offering”) of a minimum of
$12,000,000 worth of Units and a maximum of $15,000,000 worth of Units. The
Offering is being conducted in connection with a proposed merger of the Company
and a shell public company to be identified at a later date
("PubCo").
ALSO
BE
ADVISED, that as the result of the significant demand by potential investors
in
the Offering, the Company has determined to increase the size of the Offering
to
$20,000,000.
ALSO
BE
ADVISED, where the Company previously agreed to file a registration statement
with the Securities and Exchange Commission (the “Commission”) 120 days after
the effective date of the merger, the Company now shall file a registration
statement 90 days after the effective date of the merger. Furthermore, where
the
Company previously agreed to use its best efforts to cause such registration
statement to be declared effective 120 days after it is filed with the
Commission, the Company now shall use its best efforts to cause such
registration statement to be declared effective 90 days after it is filed with
the Commission if it is not reviewed by the Commission. If, however, the
registration statement is reviewed by the Commission, then the Company shall
use
its best efforts to cause it to be declared effective 120 days after it is
filed
with the Commission.
ALSO
BE
ADVISED, where one of the conditions related to the Company’s right to require
any warrant to be exercised after the Commission declares the registration
effective required that the
closing sales price of the Common Stock for each trading day of any 20
consecutive trading day period equals or exceeds $5.00 per share, such condition
is now revised by decreasing the closing sales price to $2.50 per share.
Therefore, the
conditions related to the Company’s right to require any warrant to be exercised
after the Commission declares the registration effective shall be: (i)
the
closing sales price of the Common Stock for each trading day of any 20
consecutive trading day period equals or exceeds $2.50 per share; (ii) the
Registration Statement has been effective for a period of 45 trading days and
remains effective or the holders would be entitled to sell the shares underlying
the Warrant upon the exercise of the Investor Warrant pursuant to the Rule
144(k) under the Securities Act; (iii) the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, or is quoted on the Nasdaq
National Market; and (iv) the average daily trading volume of the Common Stock
over such 20 consecutive Trading Day period equals or exceeds 4,000,000 shares.
ALSO
BE
ADVISED, that if you are interested in continuing your participation in the
Offering pursuant to the subscription agreement that you have already submitted,
YOU MUST execute this notice and return the executed notice via facsimile to
the
escrow agent at the number provided below no later than 12:00 p.m. eastern
time
on Friday, July 28, 2006. In the event that the escrow agent does not receive
an
executed notice from you by such date and time, your subscription will be deemed
cancelled and the purchase price submitted with your subscription agreement,
if
any, will be returned to you.
Escrow
Agent:
McGuireWoods
LLP
Attn:
Xxxxx X. Xxxxx
Facsimile
Number: 000-000-0000
Telephone
Number: 000-000-0000
ALSO
BE
ADVISED, that we expect that the Offering will terminate on the receipt of
acceptable subscriptions totaling $20,000,000 and will close on or before July
28, 2006.
ALSO
BE
ADVISED, that the following table sets forth the Company’s pro forma
capitalization on a fully diluted basis after giving effect to the sale of
$20,000,000 worth of Units (and transactions related thereto).
-2-
|
As
Adjusted
|
|||
|
$12
million offering
|
$15
million offering
|
$20
million offering
|
|
|
No.
of Units Offered
|
12,000,000
|
15,000,000
|
20,000,000
|
|
Ownership
Percentage (1)
|
|||
|
Class
A Stockholders (2)
|
38.81%
|
35.62%
|
31.33%
|
|
Investors
(3)
|
35.82%
|
41.10%
|
48.19%
|
|
PubCo
Stockholders (4)
|
20.90%
|
19.18%
|
16.87%
|
|
(1)
|
Calculated
based on the number of shares of Common Stock issued and outstanding
on a
fully diluted basis, after giving effect to the merger and the Offering
(the “Transactions”),
including 2,000,000 shares reserved for issuance under the Company’s stock
option plan after the merger and the issuance of 1,000,000 shares
to
finders in connection with the Transactions, the shares reserved
for
issuance for the warrants, and the shares reserved for the placement
agent.
|
| (2) |
Ethanex
Energy Stockholders; will own 26,000,000 shares.
|
|
(3)
|
Calculated
based upon 24,000,000, 30,000,000, and 40,000,000 investor shares,
respectively, that will become owned of record upon exercise of the
warrants.
|
| (4) |
Will
own 14,000,000 shares.
|
The
undersigned subscriber acknowledges receipt of the consent and acknowledgement
provided by the Company providing notice of the Company’s intent to increase the
offering size as indicated therein and by its execution of such notice hereby
elects to continue its participation in the Offering.
|
INVESTOR
(individual)
|
INVESTOR
(entity)
|
|
______________________________________
|
____________________________________
|
|
Signature
|
Name
of Entity
|
|
______________________________________
|
____________________________________
|
|
Print
Name
|
Signature
|
|
Print
Name: __________________________
|
Title:
________________________________
|
-3-
