REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.2
THIS
REGISTRATION RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of June 1, 2007, by and among HOMELAND
SECURITY CAPITAL CORPORATION,
a
Delaware corporation (the “Company”),
and
the undersigned Buyers listed on Schedule I attached hereto (each, a
“Buyer”
and
collectively, the “Buyers”).
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities
Purchase Agreement”),
the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers (i) secured
convertible debentures (the “Convertible
Debentures”)
which
shall be convertible into shares of the Company’s common stock, par value $0.001
per share (the “Common
Stock,”
as
converted, the “Conversion
Shares”)
in
accordance with the terms of the Convertible Debentures, and (ii) warrants
(the
“Warrants”),
which
will be exercisable to purchase shares of Common Stock (as exercised,
collectively, the “Warrant
Shares”).
Capitalized terms not defined herein shall have the meaning ascribed to them
in
the Securities Purchase Agreement.
B. To
induce
the Buyers to execute and deliver the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act
of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “Securities
Act”),
and
applicable state securities laws.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and the Buyers hereby agree as
follows:
1. DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following
meanings:
(a) “Effectiveness
Deadline”
means,
with respect to the initial Registration Statement required to be filed
hereunder, the 120th calendar day following the receipt of a written demand
from
the Buyers requesting the filing of such Registration Statement and, with
respect to any Subsequent Registration Statements which may be required pursuant
to Section 3(c), the 60th calendar day following the date on which the Company
first knows, or reasonably should have known, that it is obligated to file
such
Subsequent Registration Statement; provided, however, in the event the Company
is notified by the U.S. Securities and Exchange Commission (“SEC”)
that
one of the above Registration Statements will not be reviewed or is no longer
subject to further review and comments, the Effectiveness Date as to such
Registration Statement shall be the fifth Trading Day following the date on
which the Company is so notified if such date precedes the dates required
above.
(b) “Filing
Deadline”
means,
with respect to the initial Registration Statement required hereunder, the
30th
calendar day following the receipt of a written demand from the Buyers
requesting the filing of such Registration Statement and, with respect to any
Subsequent Registration Statements which may be required pursuant to Section
3(c), the 30th day following the date on which the Company first knows, or
reasonably should have known that it is obligated to file such Subsequent
Registration Statement.
(c) “Initial
Required Registration Amount”
means
717,389,652 shares of Common Stock issued or to be issued upon conversion of
the
Convertible Debentures or exercise of the series Warrants.
(d) “Person”
means
a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
(e) “Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(f) “Registrable
Securities”
means
all of (i) the Conversion Shares issuable upon conversion of the Convertible
Debentures, (ii) the Warrant Shares issued or issuable upon exercise of the
Warrants, (iii) any additional shares issuable in connection with any
anti-dilution provisions in the Warrants or the Convertible Debentures (without
giving effect to any limitations on exercise set forth in the Warrants or
Convertible Debentures) and (iv) any shares of Common Stock issued or issuable
with respect to the Conversion Shares, the Convertible Debentures, the Warrant
Shares, or the Warrants as a result of any stock split, dividend or other
distribution, recapitalization or similar event or otherwise, without regard
to
any limitations on the conversion of the Convertible Debentures or exercise
of
the Warrants.
(g) “Registration
Statement”
means
the registration statements required to be filed hereunder and any additional
registration statements contemplated by Section 3(c), including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
(h) “Rule
415”
means
Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule
may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC having substantially the same purpose and effect as such
Rule.
2. REGISTRATION.
(a) On
or
prior to each Filing Deadline, the Company shall prepare and file with the
SEC a
Registration Statement on Form S-1 or SB-2 (or, if the Company is then eligible,
on Form S-3) covering the resale of all of the Registrable Securities. The
Registration Statement prepared pursuant hereto shall register for resale at
least the number of shares of Common Stock equal to the Required Registration
Amount as of date the Registration Statement is initially filed with the SEC.
The Registration Statement shall contain the “Selling
Stockholders”
and
“Plan
of Distribution”
sections in substantially the form attached hereto as Exhibit
A
and
contain all the required disclosures set forth on Exhibit
B.
The
Company shall use its best efforts to have the Registration Statement declared
effective by the SEC as soon as practicable, but in no event later than the
Effectiveness Deadline. By 9:30 am on the date following the date of
effectiveness, the Company shall file with the SEC in accordance with Rule
424
under the 1933 Act the final Prospectus to be used in connection with sales
pursuant to such Registration Statement. The Company shall cause the
Registration Statement to remain effective until all of the Registrable
Securities have been sold or may be sold without volume restrictions pursuant
to
Rule 144(k), as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent and the affected Holders (“Registration
Period”).
Prior
to the filing of the Registration Statement with the SEC, the Company shall
furnish a draft of the Registration Statement to the Buyers for their review
and
comment. The Buyers shall furnish comments on the Registration Statement to
the
Company within twenty-four (24) hours of the receipt thereof from the
Company.
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(b) Failure
to File or Obtain Effectiveness of the Registration Statement.
If: (i)
a Registration Statement is not filed on or prior to its Filing Date (if the
Company files a Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by Section 3(a),
the
Company shall not be deemed to have satisfied this clause (i)), or (ii) the
Company fails to file with the SEC a request for acceleration in accordance
with
Rule 461 promulgated under the Securities Act, within five Trading Days of
the
date that the Company is notified (orally or in writing, whichever is earlier)
by the SEC that a Registration Statement will not be “reviewed,” or not subject
to further review, or (iii) a Registration Statement filed or required to be
filed hereunder is not declared effective by the SEC by its Effectiveness
Deadline, or (iv) after the effectiveness, a Registration Statement ceases
for
any reason to remain continuously effective as to all Registrable Securities
for
which it is required to be effective, or the Holders are otherwise not permitted
to utilize the Prospectus therein to resell such Registrable Securities for
more
than 30 consecutive calendar days or more than an aggregate of 40 calendar
days
during any 12-month period (which need not be consecutive calendar days) (any
such failure or breach being referred to as an “Event”),
then
in addition to any other rights the holders of the Convertible Debentures may
have hereunder or under applicable law, on each such Event date and on each
monthly anniversary of each such Event date (if the applicable Event shall
not
have been cured by such date) until the applicable Event is cured, the Company
shall pay to each holder of Convertible Debentures an amount in cash, as partial
liquidated damages (“Liquidated
Damages”)
and
not as a penalty, equal to 2.0% of the aggregate purchase price paid by such
holder pursuant to the Securities Purchase Agreement for any Convertible
Debentures then held by such holder. The parties agree that (1) the Company
shall not be liable for Liquidated Damages under this Agreement with respect
to
any Warrants or Warrant Shares and (2) the maximum aggregate Liquidated Damages
payable to a holder of Convertible Debentures under this Agreement shall be
forty eight percent (48%) of the aggregate Purchase Price paid by such holder
pursuant to the Securities Purchase Agreement. The partial Liquidated Damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of an Event.
3
(c) Liquidated
Damages.
The
Company and the Buyer hereto acknowledge and agree that the sums payable under
subsection 2(b) above shall constitute liquidated damages and not penalties
and
are in addition to all other rights of the Buyer, including the right to call a
default. The parties further acknowledge that (i) the amount of loss or damages
likely to be incurred is incapable or is difficult to precisely estimate, (ii)
the amounts specified in such subsections bear a reasonable relationship to,
and
are not plainly or grossly disproportionate to, the probable loss likely to
be
incurred in connection with any failure by the Company to obtain or maintain
the
effectiveness of a Registration Statement, (iii) one of the reasons for the
Company and the Buyer reaching an agreement as to such amounts was the
uncertainty and cost of litigation regarding the question of actual damages,
and
(iv) the Company and the Buyer are sophisticated business parties and have
been
represented by sophisticated and able legal counsel and negotiated this
Agreement at arm’s length.
3. RELATED
OBLIGATIONS.
(a) The
Company shall, not less than three (3) Trading Days prior to the filing of
each
Registration Statement and not less than one (1) Trading Day prior to the filing
of any related amendments and supplements to all Registration Statements (except
for annual reports on Form 10-K or Form 10-KSB), furnish to each Buyer copies
of
all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to
the
reasonable and prompt review of such Buyers, The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Buyers shall reasonably object in good faith; provided
that,
the Company is notified of such objection in writing no later than two (2)
Trading Days after the Buyers have been so furnished copies of a Registration
Statement.
(b) The
Company shall (i) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
Prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
may
be necessary to keep such Registration Statement effective at all times during
the Registration Period, and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the Securities
Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and as so supplemented or amended to be filed pursuant
to Rule 424; (iii) respond as promptly as reasonably possible to any comments
received from the SEC with respect to a Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Buyers true and
complete copies of all correspondence from and to the SEC relating to a
Registration Statement (provided that the Company may excise any information
contained therein which would constitute material non-public information as
to
any Buyer which has not executed a confidentiality agreement with the Company);
and (iv) comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant
to
this Section 3(b)) by reason of the Company’s filing a report on Form 10-KSB,
Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”),
the
Company shall incorporate such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the Exchange Act report is filed which created
the
requirement for the Company to amend or supplement the Registration Statement.
4
(c) To
the
extent that the Buyer holds any Registrable Securities that are prohibited
from
being included on a the initial Registration Statement or any other Registration
Statement (the “Non-Registered
Shares”)
under
Rule 415, as interpreted by the SEC, then the Company shall become obligated
to
file an additional Registration Statement (each, a “Subsequent
Registration Statement”)
on the
first day after such Subsequent Registration Statement may be filed without
objection by the SEC under Rule 415 covering the resale by the Buyers of the
maximum number of such Non-Registered Shares allowed under Rule 415 as
interpreted by the SEC.
(d) The
Company shall furnish to each Buyer whose Registrable Securities are included
in
any Registration Statement, without charge, (i) at least one (1) copy of such
Registration Statement as declared effective by the SEC and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, all exhibits and each preliminary prospectus,
(ii) ten (10) copies of the final prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number
of
copies as such Buyer may reasonably request) and (iii) such other documents
as
such Buyer may reasonably request from time to time in order to facilitate
the
disposition of the Registrable Securities owned by such Buyer.
(e) The
Company shall use its best efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities
or
“blue sky” laws of such jurisdictions in the United States as any Buyer
reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not
be
required in connection therewith or as a condition thereto to (w) make any
change to its articles of incorporation or by-laws, (x) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but
for
this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Buyer who holds Registrable
Securities of the receipt by the Company of any notification with respect to
the
suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
5
(f) As
promptly as practicable after becoming aware of such event or development,
the
Company shall notify each Buyer in writing of the happening of any event as
a
result of which the Prospectus included in a Registration Statement, as then
in
effect, includes an untrue statement of a material fact or omission to state
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to each Buyer. The Company
shall
also promptly notify each Buyer in writing (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and when
a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Buyer by
facsimile on the same day of such effectiveness), (ii) of any request by the
SEC
for amendments or supplements to a Registration Statement or related prospectus
or related information, and (iii) of the Company’s reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
(g) The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension
at
the earliest possible moment and to notify each Buyer who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(h) If,
after
the execution of this Agreement, a Buyer believes, after consultation with
its
legal counsel, that it could reasonably be deemed to be an underwriter of
Registrable Securities, at the request of any Buyer, the Company shall furnish
to such Buyer, on the date of the effectiveness of the Registration Statement
and thereafter from time to time on such dates as a Buyer may reasonably request
(i) a letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as
is
customarily given in an underwritten public offering, addressed to the
Buyers.
(i) If,
after
the execution of this Agreement, a Buyer believes, after consultation with
its
legal counsel, that it could reasonably be deemed to be an underwriter of
Registrable Securities, at the request of any Buyer, the Company shall make
available for inspection by (i) any Buyer and (ii) one (1) firm of
accountants or other agents retained by the Buyers (collectively, the
“Inspectors”)
all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree,
and
each Buyer hereby agrees, to hold in strict confidence and shall not make any
disclosure (except to a Buyer) or use any Record or other information which
the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the Securities Act, (b) the release
of
such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
6
(j) The
Company shall hold in confidence and not make any disclosure of information
concerning a Buyer provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning a Buyer is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
(k) The
Company shall use its best efforts either to cause all the Registrable
Securities covered by a Registration Statement (i) to be listed on each
securities exchange on which securities of the same class or series issued
by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) the
inclusion for quotation on the National Association of Securities Dealers,
Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).
(l) The
Company shall cooperate with each Buyer who holds Registrable Securities being
offered and, to the extent applicable, to facilitate the timely preparation
and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case
may
be, as the Buyers may reasonably request and registered in such names as the
Buyers may request.
(m) The
Company shall use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved
by
such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
(n) The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of
Rule 158 under the Securities Act) covering a twelve (12) month period beginning
not later than the first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement.
7
(o) The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
(p) Within
two (2) business days after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent
for
such Registrable Securities (with copies to the Buyer whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
C.
(q) The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by each Buyer of Registrable Securities pursuant to
a
Registration Statement.
4. OBLIGATIONS
OF THE BUYERS.
(a) Each
Buyer agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(f) or the first sentence of
Section 3(e), such Buyer will immediately discontinue disposition of Registrable
Securities pursuant to any Registration Statement covering such Registrable
Securities until such Buyer’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or the first sentence of Section
3(e) or receipt of notice that no supplement or amendment is required.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended certificates for shares of Common Stock to a
transferee of a Buyer in accordance with the terms of the Securities Purchase
Agreement in connection with any sale of Registrable Securities with respect
to
which a Buyer has entered into a contract for sale prior to the Buyer’s receipt
of a notice from the Company of the happening of any event of the kind described
in Section 3(f) or the first sentence of 3(e) and for which the Buyer has not
yet settled.
(b) Each
Buyer covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it or an exemption therefrom
in connection with sales of Registrable
Securities pursuant to the Registration Statement.
5. EXPENSES
OF REGISTRATION.
All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall
be
paid by the Company.
6. INDEMNIFICATION.
With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:
(a) To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Buyer, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls
any
Buyer within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue
Sky Filing”),
or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation there under
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, “Violations”).
The
Company shall reimburse the Buyers and each such controlling person promptly
as
such expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
be
available to the extent such Claim is based on a failure of the Buyer to deliver
or to cause to be delivered the prospectus made available by the Company, if
such prospectus was timely made available by the Company pursuant to Section
3(c); and (z) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain
in
full force and effect regardless of any investigation made by or on behalf
of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Buyers pursuant to Section 9 hereof.
8
(b) In
connection with a Registration Statement, each Buyer agrees to severally and
not
jointly indemnify, hold harmless and defend, to the same extent and in the
same
manner as is set forth in Section 6(a), the Company, each of its directors,
each
of its officers, employees, representatives, or agents and each Person, if
any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (each an “Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or is based upon any Violation,
in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Buyer expressly for use in connection with such Registration
Statement; and, subject to Section 6(d), such Buyer will reimburse any legal
or
other expenses reasonably incurred by them in connection with investigating
or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Buyer, which consent shall not be unreasonably withheld; provided, further,
however, that the Buyer shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds
to
such Buyer as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Buyers
pursuant to Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
prospectus was corrected and such new prospectus was delivered to each Buyer
prior to such Buyer’s use of the prospectus to which the Claim
relates.
9
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not
more than one (1) counsel for such Indemnified Person or Indemnified Party
to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for
any
settlement of any action, claim or proceeding effected without its prior written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of
a
release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter
for
which indemnification has been made. The failure to deliver written notice
to
the indemnifying party within a reasonable time of the commencement of any
such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
10
(d) The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
(e) The
indemnity agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by
such seller from the sale of such Registrable Securities.
8. REPORTS
UNDER THE EXCHANGE ACT.
With
a
view to making available to the Buyers the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that
may
at any time permit the Buyers to sell securities of the Company to the public
without registration (“Rule
144”)
the
Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) file
with
the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements (it being understood that nothing herein
shall limit the Company’s obligations under Section 4(c) of the Securities
Purchase Agreement) and the filing of such reports and other documents as are
required by the applicable provisions of Rule 144; and
11
(c) furnish
to each Buyer so long as such Buyer owns Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Buyers to sell such
securities pursuant to Rule 144 without registration.
9. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Buyers who
then
hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
or
waiver effected in accordance with this Section 9 shall be binding upon
each Buyer and the Company. No such amendment shall be effective to the extent
that it applies to fewer than all of the holders of the Registrable Securities.
No consideration shall be offered or paid to any Person to amend or consent
to a
waiver or modification of any provision of any of this Agreement unless the
same
consideration also is offered to all of the parties to this
Agreement.
10. MISCELLANEOUS.
(a) A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities or owns the right to
receive the Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two (2) or more Persons with respect
to
the same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) No
Piggyback on Registrations.
Except
as set forth on Schedule
10(b)
attached
hereto, neither the Company nor any of its security holders (other than the
Buyers in such capacity pursuant hereto) may include securities of the Company
in the initial Registration Statement other than the Registrable Securities.
The
Company shall not file any other registration statements until the initial
Registration Statement required hereunder is declared effective by the SEC,
provided that this Section 10(b) shall not prohibit the Company from filing
amendments to registration statements already filed.
(c) Piggy-Back
Registrations.
If at
any time during the Registration Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the SEC a registration statement relating
to
an offering for its own account or the account of others under the Securities
Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any
entity or business or equity securities issuable in connection with the stock
option or other employee benefit plans, then the Company shall send to each
Buyer a written notice of such determination and, if within fifteen (15) days
after the date of such notice, any such Buyer shall so request in writing,
the
Company shall include in such registration statement all or any part of such
Registrable Securities such Buyer requests to be registered; provided,
however,
that,
the Company shall not be required to register any Registrable Securities
pursuant to this Section 10(c) that are eligible for resale pursuant to Rule
144(k) promulgated under the Securities Act or that are the subject of a then
effective Registration Statement.
12
(d) Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
|
If
to the Company, to:
|
|
|
0000
Xxxxx Xxxxxxx Xxxxx, Xxxxx 0000
|
|
|
Xxxxxxxxx,
Xxxxxxxx 00000
|
|
|
Attention: C.
Xxxxxx XxXxxxxx
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000 0000
|
|
|
With
Copy to:
|
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxx Xxxxx Xxxxx, LLP
|
|
000
Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
|
|
|
Xxxxx,
Xxxxxxx 00000
|
|
|
Attention: Xxxxxxx
X. Xxxxxx, Esq.
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
If
to an
Buyer, to its address and facsimile number on the Schedule of Buyers attached
hereto, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers or to such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of
such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service shall
be
rebuttable evidence of personal service, receipt by facsimile or receipt from
a
nationally recognized overnight delivery service in accordance with clause
(i),
(ii) or (iii) above, respectively.
(e) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
(f) The
laws
of the State of New Jersey shall govern all issues concerning the relative
rights of the Company and the Buyers as its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New Jersey,
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of New Jersey or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
of the Superior Courts of the State of New Jersey, sitting in Xxxxxx County,
New
Jersey and federal courts for the District of New Jersey sitting Newark, New
Jersey, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way
any
right to serve process in any manner permitted by law. If any provision of
this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
13
(g) This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
(h) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(i) This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
(j) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(k) The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
14
(l) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
15
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their signature page to this Registration
Rights Agreement to be duly executed as of the date first above
written.
|
COMPANY:
|
|
|
By:
/s/ C. Xxxxxx XxXxxxxx
|
|
|
Name: C.
Xxxxxx XxXxxxxx
|
|
|
Title: Chief
Executive Officer
|
|
16
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their signature page to this Registration
Rights Agreement to be duly executed as of the date first above
written.
|
BUYER:
|
|
|
CORNELL
CAPITAL PARTNERS, L.P.
|
|
|
By: Yorkville
Advisors, LLC
|
|
|
Its: Investment
Manager
|
|
|
By:
/s/ Xxxx Xxxxxx
|
|
|
Name: Xxxx
Xxxxxx
|
|
|
Title: Portfolio
Manager
|
17
SCHEDULE
I
SCHEDULE
OF BUYERS
|
Buyer
|
Address/Facsimile
Number
of Buyer
|
Address/Facsimile
Number
of Buyer’s Representative
|
||
|
Cornell
Capital Partners, L.P.
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
||
|
Xxxxxx
Xxxx, XX 00000
|
Xxxxxx
Xxxx, XX 00000
|
|||
|
Facsimile: (000)
000-0000
|
Facsimile: (000)
000-0000
|
|||
|
Attention:
Xxxxx Xxxxxxxx, Esq.
|
||||
EXHIBIT
A
SELLING
STOCKHOLDERS
AND
PLAN OF DISTRIBUTION
Selling
Stockholders
The
shares of Common Stock being offered by the selling stockholders are issuable
upon conversion of the convertible debentures and upon exercise of the warrants.
For additional information regarding the issuance of those convertible notes
and
warrants, see “Private Placement of Convertible Debentures and Warrants” above.
We are registering the shares of Common Stock in order to permit the selling
stockholders to offer the shares for resale from time to time. Except as
otherwise notes and except for the ownership of the convertible Debentures
and
the warrants issued pursuant to the Securities Purchase Agreement, the selling
stockholders have not had any material relationship with us within the past
three years.
The
table
below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of Common Stock by each of the selling
stockholders. The second column lists the number of shares of Common Stock
beneficially owned by each selling stockholder, based on its ownership of the
convertible debentures and warrants, as of ________, 200_, assuming conversion
of all convertible debentures and exercise of the warrants held by the selling
stockholders on that date, without regard to any limitations on conversions
or
exercise.
The
third
column lists the shares of Common Stock being offered by this prospectus by
the
selling stockholders.
In
accordance with the terms of a registration rights agreement with the selling
stockholders, this prospectus generally covers the resale of at least (i) 300%
of the number of Conversion Shares issued and issuable pursuant to the
convertible debentures as of the trading day immediately preceding the date
the
registration statement is initially filed with the SEC, and (ii) 100% of the
number of warrant shares issued and issuable pursuant to the warrants as of
the
trading day immediately preceding the date the registration statement is
initially filed with the SEC.
Because
the conversion price of the convertible debentures and the exercise price of
the
warrants may be adjusted, the number of shares that will actually be issued
may
be more or less than the number of shares being offered by this prospectus.
The
fourth column assumes the sale of all of the shares offered by the selling
stockholders pursuant to this prospectus.
Under
the
terms of the convertible debentures and the warrants, a selling stockholder
may
not convert the convertible debentures or exercise the warrants to the extent
such conversion or exercise would cause such selling stockholder, together
with
its affiliates, to beneficially own a number of shares of Common Stock which
would exceed 4.99% of our then outstanding shares of Common Stock following
such
conversion or exercise, excluding for purposes of such determination shares
of
Common Stock issuable upon conversion of the convertible debentures which have
not been converted and upon exercise of the warrants which have not been
exercised. The number of shares in the second column does not reflect this
limitation. The selling stockholders may sell all, some or none of their shares
in this offering. See "Plan of Distribution."
|
Name
of Selling Stockholder
|
Number
of Shares Owned Prior to Offering
|
Maximum
Number of Shares to be Sold Pursuant to this
Prospectus
|
Number
of Shares Owned After Offering
|
|||
|
Cornell
Capital Partners, L.P. (1)
|
(1) Cornell
Capital Partners, L.P. is a Cayman Island exempt limited partnership. Cornell
is
managed by Yorkville Advisors, LLC. Investment decisions for Yorkville Advisors
are made by Xxxx Xxxxxx, its portfolio manager.
Plan
of
Distribution
Each
Selling Stockholder (the “Selling
Stockholders”)
of the
common stock and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their shares of common stock on
the
__________ or any other stock exchange, market or trading facility on which
the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
|
|
·
|
a
combination of any such methods of sale;
or
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities
Act”),
if
available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance
with
NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with NASDR IM-2440.
In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
4
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In
no
event shall any broker-dealer receive fees, commissions and markups which,
in
the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under
the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the Selling Stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the date on which
the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities
Act
or any other rule of similar effect. The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not
be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged
in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including
by
compliance with Rule 172 under the Securities Act).
5
EXHIBIT
B
OTHER
DISCLOSURES
See
attachment provided separately.
6
EXHIBIT
C
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Attention:
|
Re:
|
Ladies
and Gentlemen:
We
are
counsel to Homeland Security Capital Corporation, a Nevada corporation (the
“Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities
Purchase Agreement”)
entered into by and among the Company and the Buyers named therein
(collectively, the “Buyers”)
pursuant to which the Company issued to the Buyers shares of its Common Stock,
par value $0.001 per share (the “Common
Stock”).
Pursuant to the Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Buyers (the “Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the “Securities
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ____, the Company filed a Registration Statement
on
Form ________ (File No. 333-_____________) (the “Registration
Statement”)
with
the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names each of the Buyers as a
selling stockholder there under.
In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and we
have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.
| Very truly yours, | ||
| [Law Firm] | ||
| |
|
|
| By: | ||
|
|
||
cc: [LIST
NAMES OF BUYERS]
7
