REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of
this 31st day of December, 2007, by and among Long-E International, Inc., a
Utah
corporation (the “Company”), and the purchasers listed on Schedule I hereto (the
“Purchasers”).
RECITALS
WHEREAS,
as of December 29, 2006, the Company (formerly Inncardio, Inc.) and certain
of
the Purchasers entered into a Registration Rights Agreement further to a
Securities Purchase Agreement dated as of December 29, 2006 (the “December
Purchase Agreement”) whereby shares of Common Stock and shares of Common Stock
underlying warrants purchased by said purchasers further to such agreement
were
to be registered;
WHEREAS,
of even date herewith, the Company and certain of the Purchasers entered into
a
Securities Purchase Agreement (the “January Purchase Agreement”) further to
which shares of Common Stock underlying convertible notes and Series A
Convertible Preferred Stock issuable upon conversion of such notes and shares
of
Common Stock underlying warrants purchased by said Purchasers further to such
agreement were to be registered;
WHEREAS,
the Company and the Purchasers agreed that all registration rights granted
to
the Purchasers with respect securities purchased further to the December
Purchase Agreement and the January Purchase Agreement are to be governed by
an
Amended and Restated Registration Rights Agreement dated January 25, 2007 (the
“Senior Agreement”);
WHEREAS,
pursuant to the Senior Agreement the Company owes the Purchasers certain cash
liquidated damages for its failure to file a registration statement on Form
SB-2
by the specified event date of April 30, 2007;
WHEREAS,
the Company and the Purchasers have entered into a Securities Purchase,
Settlement and Release Agreement dated December 31, 2007 (the “Purchase
Agreement”), whereby the Company has agreed to convert the liquidated damages
owed through December 31, 2007 into notes convertible into shares of the
Company’s Common Stock on certain terms and under specified conditions (the
“Notes”); and
WHEREAS,
the Company and the Purchasers acknowledge that Section7(c) of the Senior
Agreement prohibits the granting of any rights to registration of securities
which are not subject in all respects to the prior rights in full set forth
in
the Senior Agreement, and requires that such rights otherwise not conflict
with
the provisions of the Senior Agreement.
In
acknowledgement of the foregoing and in consideration of the mutual promises
herein and in the Purchase Agreement, the Company and the Purchasers hereby
agree as follows:
1. Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
“Advice”
shall
have the meaning set forth in Section 3(l).
“Affiliate”
means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For
the
purposes of this definition, “control,”
when
used with respect to any Person, means the possession, direct or indirect,
of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or
otherwise; and the terms “affiliated,”
“controlling”
and
“controlled”
have
meanings correlative to the foregoing.
“Board”
shall
have the meaning set forth in Section 3(m).
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the state of New York generally are
authorized or required by law or other government actions to close.
“Closing
Date”
means
the date of the closing of the issuance of convertible promissory notes pursuant
to the Purchase Agreement.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the Company’s Common Stock, par value $0.001 per share.
“Effectiveness
Date”
means
with respect to each Registration Statement the earlier of (A) the one hundred
twentieth (120th) day following the initial filing date of such Registration
Statement (or in the event the Registration Statement receives a “full review”
by the Commission, the one hundred fiftieth (150th) day following the initial
filing date), or (B) the date which is within three (3) Business Days after
the
date on which the Commission informs the Company (i) that the Commission will
not review the Registration Statement or (ii) that the Company may request
the
acceleration of the effectiveness of the Registration Statement and the Company
makes such request; provided
that,
if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall
be a
legal holiday or a day on which the Commission is authorized or required by
law
or other government actions to close, the Effectiveness Date shall be the
following Business Day.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Filing
Date”
means
the ninetieth (90th)
day
following the earlier of (i) the date upon which the Company satisfies all
obligations to file registration statements pursuant to the Senior Agreement
(including, but not limited to, the registration of all Series A Warrants
exercisable at $0.48 per share registrable pursuant to the Senior Agreement),
or
(ii) the date upon which all of the securities registrable pursuant to the
Senior Agreement are eligible for resale pursuant to Rule 144; provided
that,
if the
Filing Date falls on a Saturday, Sunday or any other day which shall be a legal
holiday or a day on which the Commission is authorized or required by law or
other government actions to close, the Filing Date shall be the following
Business Day.
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“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities who agrees in writing to be bound by the terms of this
Agreement.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Initially
Registrable Shares”
shall
have the meaning set forth in Section 2.
“Losses”
shall
have the meaning set forth in Section 5(a).
“Person”
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
the prospectus included in the 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 the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
“Registrable
Securities”
means
the shares of Common Stock issuable upon conversion of convertible promissory
notes issued further to the Purchase Agreement.
“Registration
Statement”
means
the registration statements contemplated by Section 2, 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 in such registration
statement.
“Rule
144”
means
Rule 144 promulgated by the Commission 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 Commission having substantially the same effect as
such
Rule.
“Rule
158”
means
Rule 158 promulgated by the Commission 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 Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission 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 Commission having substantially the same effect as
such
Rule.
3
“Rule
424”
means
Rule 424 promulgated by the Commission 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 Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Subsequent
Registration Statement”
shall
have the meaning set forth in Section 2.
“Transaction
Documents”
means
the Purchase Agreement, the Notes and this Agreement.
2. Resale
Registrations.
On or
prior to the Filing Date, the Company shall prepare and file with the Commission
a “resale” Registration Statement providing for the resale of the portion of
Registrable Securities corresponding to twenty percent (20%) of the Company’s
Common Stock outstanding following the Closing for an offering to be made on
a
continuous basis pursuant to Rule 415; the Holders and securities to be subject
to such initial registration statement shall set forth on Schedule II hereto
(as
such Schedule II may be revised from time to time as described in Section 7(a)
herein) (such shares called “Initially
Registrable Shares”).
The
Holders of the balance of the Registrable Securities will have registration
rights entitling them to request that one additional registration statement
only
(the “Subsequent
Registration Statement”)
covering said shares be filed with the Commission no earlier than six (6) months
after the effective date of the Initial Registration Statement and no later
than
nine (9) months from said effective date, provided
however, that
such
Subsequent Registration Statement shall not be filed if such shares are, at
the
time of eligibility for such Subsequent Registration Statement, are either
(i)
subject to and covered by an effective registration statement (ii) or eligible
for sale pursuant to Rule 144.
Each
Registration Statement shall be on Form SB-2 (except if the Company is not
then
eligible to register for resale the Registrable Securities on Form SB-2, in
which case such registration shall be on another appropriate form in accordance
herewith and with the Securities Act and the rules promulgated thereunder).
Such
Registration Statements shall cover to the extent allowable under the Securities
Act and the rules promulgated thereunder (including Rules 415 and 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. The Company shall (i) not permit any securities other than the
Registrable Securities to be included in each Registration Statement and (ii)
use its best efforts to cause each Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the Effectiveness Date, and to keep such
Registration Statement continuously effective under the Securities Act until
such date as is the earlier of (y) the date when all Registrable Securities
covered by such Registration Statement have been sold by the Purchasers or
(z)
the date on which the Registrable Securities may be sold without any restriction
pursuant to Rule 144(k) as determined by the counsel to the Company pursuant
to
a written opinion letter to such effect, addressed to the Company’s transfer
agent (the “Effectiveness
Period”).
The
Company shall request that the effective time of the Registration Statement
be
4:00 p.m. Eastern Time on the effective date.
4
If
at any
time following the effective date of the Registration Statements referenced
elsewhere in this Section 2, and for any reason, an additional Registration
Statement is required to be filed because at such time the actual number of
shares of Common Stock and shares of Common Stock into which the Notes are
convertible exceeds the number of shares of Registrable Securities remaining
under the Registration Statement, the Company shall file such additional
Registration Statement on the first Business Day following the three-month
anniversary of the Subsequent Registration Statement, and the Company shall
use
its best efforts to cause such additional Registration Statement to be declared
effective by the Commission as soon as reasonably possible, but in no event
later than sixty (60) days after filing.
Notwithstanding
anything to the contrary set forth in this Section 2, in the event the
Commission does not permit the Company to register the “resale” of all of the
Registrable Securities anticipated to be so registered on such Registration
Statement pursuant to Rule 415, the Company shall register in the Registration
Statement such number of Registrable Securities as is permitted by the
Commission, that the number of Registrable Securities to be included in such
Registration Statement or any subsequent registration statement shall be
determined on a pro rata basis among the Holders, the amount of shares of Common
Stock and shares of Common Stock underlying Notes, if any, to be registered
for
a Holder to cut back proportionately. In the event the Commission does not
permit the Company to register all of the Registrable Securities in the
Registration Statement, the Company shall use its best efforts to register
the
Registrable Securities, subject to the foregoing sentence, that were not
registered in the Registration Statement as promptly as possible and in a manner
permitted by the Commission, in accordance with the provisions of this Section
2.
3. Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) Prepare
and file with the Commission, on or prior to the Filing Date, a Registration
Statement on Form SB-2 (or if the Company is not then eligible to register
for
resale the Registrable Securities on Form SB-2 such registration shall be on
another appropriate form in accordance herewith and the Securities Act and
the
rules promulgated thereunder) in accordance with the plan of distribution as
set
forth on Exhibit
A
hereto
and in accordance with applicable law, regulations and Commission policies,
and
cause the Registration Statement to become effective and remain effective as
provided herein; provided,
however,
that
not less than ten (10) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto,
the
Company shall (i) furnish to the Holders, copies of all such documents proposed
to be filed, which documents will be subject to the reasonable review of such
Holders, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion the Company, to conduct a reasonable review of such
documents. The Company shall not file the Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders of
a
majority of the Registrable Securities shall reasonably object in writing within
five (5) Business Days of their receipt thereof.
5
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements as necessary 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, and as so supplemented or amended to be filed pursuant to Rule
424
(or any similar provisions then in force) promulgated under the Securities
Act;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
Act on the Business Day following the date the Registration Statement is
declared effective by the Commission; and (v) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect
to
the disposition of all Registrable Securities covered by the Registration
Statement during the Effectiveness Period in accordance with the intended
methods of disposition by the Holders thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify
the Holders of Registrable Securities as promptly as possible (and, in the
case
of (i)(A) below, not less than five (5) Business Days prior to such filing,
and
in the case of (iii) below, on the same day of receipt by the Company of such
notice from the Commission) and (if requested by any such Person) confirm such
notice in writing no later than three (3) Business Days following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment
to
the Registration Statement is filed; (B) when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement
and
(C) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or
any
other Federal or state governmental authority for amendments or supplements
to
the Registration Statement or Prospectus or for additional information; (iii)
of
the issuance by the Commission of any stop order suspending the effectiveness
of
the Registration Statement covering any or all of the Registrable Securities
or
the initiation or threatening of any Proceedings for that purpose; (iv) of
the
receipt by the Company of any notification with respect to the suspension of
the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any
Proceeding for such purpose; and (v) of the occurrence of any event that makes
any statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any 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, in the light of the
circumstances under which they were made, not misleading.
(d) Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of,
as promptly as possible, (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction.
6
(e) If
requested by any Holder in writing, furnish to such Holder, without charge,
at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished
or
incorporated by reference) within three (3) Business Days of the Company’s
receipt of such request.
(f) Deliver
to each Holder, without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto
as
such Persons may reasonably request; and subject to the provisions of Sections
3(l) and 3(m), the Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered
by
such Prospectus and any amendment or supplement thereto.
(g) Prior
to
any public offering of Registrable Securities, use commercially reasonable
best
efforts to register or qualify or reasonably cooperate with the selling Holders
in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable
the
disposition in such jurisdictions of the Registrable Securities covered by
a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is
not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then
so
subject.
(h) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by the
Purchase Agreement and applicable federal and state securities laws, shall
be
free of all restrictive legends, and to enable such Registrable Securities
to be
in such denominations and registered in such names as any Holder may request
in
connection with any sale of Registrable Securities.
(i) Upon
the
occurrence of any event contemplated by Section 3(c)(v) hereof, as promptly
as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to
the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
7
(j) Use
its
best efforts to cause all Registrable Securities relating to the Registration
Statement to be listed or quoted on the OTC Bulletin Board or any other
securities exchange, quotation system or market, if any, on which similar
securities issued by the Company are then listed or traded as and when required
pursuant to the Purchase Agreement.
(k) Comply
in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders all documents
filed or required to be filed with the Commission, including, but not limited,
to, earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 90 days after the end of any 12-month
period if such period is a fiscal year commencing on the first day of the first
fiscal quarter of the Company after the effective date of the Registration
Statement, which statement shall conform to the requirements of Rule
158.
(l) The
Company may, at its option, require each selling Holder to furnish to the
Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, Prospectus, or any amendment or supplement thereto, and the Company
may, at its option, exclude from such registration the Registrable Securities
of
any such Holder who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
If
the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal or applicable state law then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each
Holder covenants and agrees that it will not sell any Registrable Securities
under the Registration Statement until the Company has electronically filed
the
Prospectus as then amended or supplemented as contemplated in Section 3(b)
and
notice from the Company that the Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(c).
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), or 3(c)(v), such Holder
will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated
by
Section 3(i), or until it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
8
(m) If
(i)
there is material non-public information regarding the Company which the
Company’s Board of Directors (the “Board”)
determines not to be in the Company’s best interest to disclose and which the
Company is not otherwise required to disclose, (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board determines not to be in the Company’s best interest
to disclose, or (iii) the Company is required to file a post-effective amendment
to the Registration Statement to incorporate the Company’s quarterly and annual
reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
Company may (y) postpone or suspend filing of a registration statement for
a
period not to exceed thirty (30) consecutive days or (z) postpone or suspend
effectiveness of a registration statement for a period not to exceed thirty
(30)
consecutive days; provided, that the Company may not postpone or suspend
effectiveness of a registration statement under this Section 3(m) for more
than
sixty (60) days in the aggregate during any three hundred sixty (360) day
period; provided, however, that no such postponement or suspension shall be
permitted for consecutive thirty (30) day periods arising out of the same set
of
facts, circumstances or transactions.
4. Registration
Expenses.
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in this Section 4, shall
be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in
the
foregoing sentence shall include, without limitation, (i) all registration
and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the OTC Bulletin Board and each other
securities exchange or market on which Registrable Securities may be listed,
if
any and solely to the extent the Registrable Securities are eligible for such
quotation or listing, (B) with respect to filing fees required to be paid to
FINRA, if any, (C) in compliance with state securities or Blue Sky laws
(including, without limitation, fees and disbursements of counsel for the
Holders in connection with Blue Sky qualifications of the Registrable Securities
and determination of the eligibility of the Registrable Securities for
investment under the laws of such jurisdictions as the Holders of a majority
of
Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by
the
Holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company, at its option, elects to obtain such insurance,
and
(vi) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, the Company’s independent public
accountants (including the expenses of any comfort letters or costs associated
with the delivery by independent public accountants of a comfort letter
or
comfort letters). In addition, the Company shall be responsible for all of
its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. The Company shall not be responsible
for any discounts, commissions, transfer taxes or other similar fees incurred
by
the Holders in connection with the sale of the Registrable
Securities.
9
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, managers, partners, members,
shareholders, agents, brokers, investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section
15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and reasonable attorneys’ fees) and expenses (collectively, “Losses”)
, as
incurred, arising out of or relating to any violation of securities laws by
the
Company or untrue or alleged untrue statement of a material fact contained
in
the Registration Statement, any Prospectus or any form of prospectus or in
any
amendment or supplement thereto or in any preliminary prospectus, or arising
out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case
of
any Prospectus or form of prospectus or supplement thereto, in the light of
the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder or such other Indemnified Party
furnished in writing to the Company by such Holder expressly for use therein.
The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with
the
transactions contemplated by this Agreement.
(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents and employees
of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as determined by a court of competent jurisdiction
in a final judgment not subject to appeal or review), as incurred, arising
solely out of or based solely upon any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out
of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in
any
information so furnished in writing by such Holder to the Company specifically
for inclusion in the Registration Statement or such Prospectus. Notwithstanding
anything to the contrary contained herein, in no event shall any indemnity
under
this Section 5(b) exceed the net proceeds actually received by such Holder
as a
result of the sale of Registrable Securities pursuant to a Registration
Statement.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall be entitled to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to
the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
10
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless: (1)
the Indemnifying Party has agreed in writing to pay such fees and expenses;
or
(2) the Indemnifying Party shall have failed promptly to assume the defense
of
such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such parties shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which any Indemnified Party is a party
and
indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnified Party shall reimburse all such fees
and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable
to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce Section 5(a) or 5(b) in accordance with its terms (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other from the offering
of the Common Stock. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault, as applicable, of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined
by
reference to, among other things, whether any action in question, including
any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and
the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys’ fees or
other reasonable fees or expenses incurred by such party in connection with
any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section 5 was available
to
such party in accordance with its terms. In no event shall any selling Holder
be
required to contribute an amount under this Section 5(d) in excess of the net
proceeds actually received by such Holder upon sale of such Holder’s Registrable
Securities pursuant to the Registration Statement giving rise to such
contribution obligation.
11
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(e) Non-exclusive
Remedy.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties pursuant to the law.
(f) Underwritten
Offering; Conflict.
Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with an underwritten public offering are in conflict with
the
foregoing provisions, the provisions of the underwriting agreement shall
control.
(g) Survival
of Obligations.
The
obligations of the Company and the Holders under this Section 5 shall survive
the completion of any offering of Registrable Securities in a registration
statement under Section 2 of this Agreement or otherwise.
6. Rule
144.
The
Holders hereby acknowledge that the Company has not been timely in filing and
is
not current in all of its reports required to be filed prior to the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. From such time as the
Company becomes current in its reporting obligation and as long as any Holder
owns Registrable Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
all
reports required to be filed by the Company after the date hereof. As long
as
any Holder owns Registrable Securities, if the Company is not required to file
reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare
and furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell the Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, including providing
any legal opinions relating to such sale pursuant to Rule 144. Upon the request
of any Holder, the Company shall deliver to such Holder a written certification
of a duly authorized officer as to whether it has complied with such
requirements.
12
7. Miscellaneous.
(a) Notwithstanding
anything to the contrary contained herein, if the Company shall issue additional
Notes pursuant to the Purchase Agreement, any purchaser of such Notes may become
a party to this Agreement by executing and delivering an additional counterpart
signature page to this Agreement and shall be deemed a “Purchaser” hereunder and
Schedules I and II hereto shall be revised accordingly.
(b) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, such Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
(c) No
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has, as of the date hereof entered
into
and currently in effect, nor shall the Company or any of its subsidiaries,
on or
after the date of this Agreement, enter into any agreement with respect to
its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Without limiting
the generality of the foregoing, without the written consent of the Holders
of a
majority of the then outstanding Registrable Securities, the Company shall
not
grant to any Person the right to request the Company to register any securities
of the Company under the Securities Act unless the rights so granted are subject
in all respects to the prior rights in full of the Holders set forth herein,
and
are not otherwise in conflict with the provisions of this
Agreement.
(d) No
Piggyback on Registrations.
The
Holders shall not have any right to piggyback on any registration statement
made
by the Company for its own account or for the account of others with
registration rights senior to those provided hereunder. The Company shall not
after the date hereof enter into any agreement providing such piggyback right
to
any of its securityholders, unless the right so granted is subject in all
respects to the prior rights in full of the Holders set forth herein, and is
not
otherwise in conflict with the provisions of this Agreement.
13
(e) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and the Holders of at least a majority of the Registrable
Securities outstanding.
(f) Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy, e-mail or facsimile at the address or number designated
below (if delivered on a Business Day during normal business hours where such
notice is to be received), or the first business day following such delivery
(if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second Business Day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
|
If
to the Company:
|
X-0X,
Xxxxx Xxxxxxxxx Xxxxx, Xxxxxx Xxxx,
Xx-Xxxx
Industry Xxxx,
Xxxxxxxx,
000000, Xxxxxxxxx, Xxxxx
Telephone:
(00) 000 0000 0000
Attention:
Chairman of the Board
Fax:
00-000-0000-0000
|
|
|
with
copies (which shall not constitute notice) to:
|
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP
00000
Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxxxxx X. Xxxx, Esq.
E-mail:
xxxxxxxxxx.xxxx@xxxxxxx.xxx
Fax:
(000) 000-0000
|
|
|
If
to any Purchaser:
|
At
the address of such Purchaser as provided on the Signature Page to
this
Agreement, with copies to Purchaser’s counsel as specified in writing by
such:
|
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Holder and its successors and assigns. The Company may not assign this Agreement
or any of its rights or obligations hereunder without the prior written consent
of each Holder. Each Purchaser may assign its rights hereunder in the manner
and
to the Persons as permitted under the Purchase Agreement.
14
(h) Assignment
of Registration Rights.
The
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of
this
Agreement, shall be automatically assignable by each Holder to any Person of
all
or a portion of the Common Stock or the Registrable Securities if: (i) the
Holder agrees in writing with the transferee or assignee to assign such rights,
and a copy of such agreement is furnished to the Company within a reasonable
time after such assignment, (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (a) the name
and
address of such transferee or assignee, and (b) the securities with respect
to
which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment the further disposition of such securities
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all
of
the provisions of this Agreement, and (v) such transfer shall have been made
in
accordance with the applicable requirements of the Purchase Agreement. The
rights to assignment shall apply to the Holders’ (and to subsequent) successors
and assigns.
(i) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or
on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(j) Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts
of
law principles that would result in the general application of the substantive
law of another jurisdiction. This Agreement shall not be interpreted or
construed with any presumption against the party causing this Agreement to
be
drafted. The Company and the Holders agree that venue for any dispute arising
under this Agreement will lie exclusively in the state or federal courts located
in New York County, New York, and the parties irrevocably waive any right to
raise forum
non conveniens
or any
other argument that New York is not the proper venue. The Company and the
Holders irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York. The Company and the Holders consent to process
being served in any such suit, action or proceeding by delivering a copy thereof
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section 7(j) shall affect or limit
any right to serve process in any other manner permitted by law. The Company
and
the Holders hereby agree that the prevailing party in any suit, action or
proceeding arising out of or relating to this Agreement or the Purchase
Agreement, shall be entitled to reimbursement for reasonable legal fees from
the
non-prevailing party. The parties hereby waive all rights to a trial by
jury.
(k) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
15
(l) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void
or
unenforceable.
(m) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(n) Shares
Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the
Company or its Affiliates (other than any Holder or transferees or successors
or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason
of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(o) Independent
Nature of Purchasers.
The
Company acknowledges that the obligations of each Purchaser under the
Transaction Documents are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under the Transaction
Documents. The Company acknowledges that the decision of each Purchaser to
purchase Securities pursuant to the Purchase Agreement has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of its subsidiaries
which may have been made or given by any other Purchaser or by any agent or
employee of any other Purchaser, and no Purchaser or any of its agents or
employees shall have any liability to any Purchaser (or any other person)
relating to or arising from any such information, materials, statements or
opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Document, and no action taken by any Purchaser pursuant hereto
or
thereto (including, but not limited to, the (i) inclusion of a Purchaser in
the
Registration Statement and (ii) review by, and consent to, such Registration
Statement by a Purchaser) shall be deemed to constitute the 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
the
Transaction Documents. The Company acknowledges that each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser
to
be joined as an additional party in any proceeding for such purpose. The Company
acknowledges that the Purchasers are in no way acting in concert or as a group
with respect to the Transaction Documents or the transactions contemplated
hereby or thereby.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
16
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
| |
|
|
| Date: | By: | /s/ Bu Shengfu |
|
Name:
Bu Shengfu
|
||
|
Title:
President and Chief Executive
Officer
|
||
17
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
|
PURCHASER:
|
||
|
Xxxxx
Family Trust
|
|||
|
By:
|
/s/
Xxxxx X. Xxxxx, Trustee
|
||
|
Name:
|
Xxxxx
X. Xxxxx
|
||
|
Title:
|
Trustee
|
||
| Notice to: |
Xxxxx
Xxxxx
|
||
| 0000 Xxxxxxx Xxxx Xxxx, #0000 | |||
|
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
|
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
|
PURCHASER:
|
||
|
WestPark
Capital Financial Services, LLC
|
|||
|
By:
|
/s/
X. Xxxxxxxxx
|
||
|
Name:
|
Xxxxxxx
Xxxxxxxxx
|
||
|
Title:
|
CEO
|
||
| Notice to: |
|
||
|
|
|
|
PURCHASER:
|
||
|
Vision
Opportunity Master Fund, Ltd.
|
|||
|
By:
|
/s/
Xxxx Xxxxxxxx
|
||
|
Name:
|
Xxxx
Xxxxxxxx
|
||
|
Title:
|
Director
|
||
| Notice to: |
see
SPA
|
||
|
|
[Signature
page to Registration Rights Agreement]
|
|
PURCHASER:
|
||
|
MidSouth
Investor Fund, L.P.
|
|||
|
By:
|
/s/
Xxxxx X. Xxxxxxx, G.P.
|
||
|
Name:
|
Xxxxx
X. Xxxxxxx (“Buzz”)
|
||
|
Title:
|
General
Partner
|
||
| Notice to: |
|
||
|
|
[Signature
page to Registration Rights Agreement]
|
|
PURCHASER:
|
||
|
Xxxxxx
Partners, L.P.
|
|||
|
By:
|
/s/
Xxxxxx Xxxxxx
|
||
|
Name:
|
Xxxxxx
Xxxxxx Xxxxxx
|
||
|
Title:
|
Managing
Partner
|
||
| Notice to: |
|
||
|
|
[Signature
page to Registration Rights Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
|
PURCHASER:
|
||
|
JCAR
Funds Ltd.
|
|||
|
By:
|
/s/
Xxx Xxxxxx
|
||
|
Name:
|
Xxx
Xxxxxx
|
||
|
Title:
|
President
|
||
| Notice to: |
|
||
|
|
[Signature
page to Registration Rights Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
|
PURCHASER:
|
||
|
Xxxxx
Xxxxx
|
|||
|
By:
|
/s/
Xxxxx Xxxxx
|
||
|
Name:
|
Xxxxx
Xxxxx
|
||
|
|
|
||
| Notice to: |
|
||
|
|
[Signature
page to Registration Rights Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
|
PURCHASER:
|
||
|
Xxxxxxx
Xxxxxx
|
|||
|
By:
|
/s/
Xxxxxxx Xxxxxx
|
||
|
Name:
|
Xxxxxxx
Xxxxxx
|
||
|
|
|
||
| Notice to: |
Xxxxxxx
Xxxxxx
|
||
| CRT Capital Group LLC | |||
|
000
Xxxxxx Xxxxx
|
|||
|
Xxxxxxxx,
XX 00000
|
[Signature
page to Registration Rights Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
|
PURCHASER:
|
||
|
Xxx
Xxxxxx
|
|||
|
By:
|
/s/
Xxx Xxxxxx
|
||
|
Name:
|
Xxx
Xxxxxx
|
||
|
|
|
||
| Notice to: |
|
||
|
|
[Signature
page to Registration Rights Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
|
PURCHASER:
|
||
|
Xxxxxx
Xxxx
|
|||
|
By:
|
/s/
Xxxxxx Xxxx
|
||
|
Name:
|
Xxxxxx
Xxxx
|
||
|
|
|
||
| Notice to: |
|
||
|
|
[Signature
page to Registration Rights Agreement]
Schedule
I
Purchasers
Xxxxx
Family Trust
WestPark
Capital Financial Services, LLC
Vision
Opportunity Master Fund, Ltd.
MidSouth
Investor Fund, X.X.
Xxxxxx
Partners, LP
JCAR
Funds Ltd.
Xxxxx
Xxxxx
Xxxxxxx
Xxxxxx
Xxx
Xxxxxx
Xxxxxx
Xxxx
____________
*
Further
to the Purchase Agreement, up to an additional $57,656.67 of Convertible Notes
may be issued by the Company. Further to Section 7(a) of the Agreement, these
parties shall be deemed Purchasers hereunder and this Schedule I shall be
revised accordingly.
Schedule
II
Initially
Registrable Securities
|
Investor
|
|
Common
Shares Underlying
Convertible
Notes for Initial Registration*
|
|
|
|
|
|
Xxxxxx
Partners, LP
|
|
3,080,669
|
|
Vision
Opportunity Master Fund, Ltd.
|
|
1,721,550
|
|
MidSouth
Investor Fund LP
|
|
453,039
|
|
WestPark
Capital Financial Services, LLC
|
|
226,520
|
|
JCAR
Funds Ltd.
|
|
362,431
|
|
Xxxxx
Xxxxx
|
|
90,608
|
|
Xxxxxxx
Xxxxxx
|
|
90,608
|
|
Xxx
Xxxxxx
|
|
90,608
|
|
Xxxxxx
Xxxx
|
|
90,608
|
|
Xxxxx
Family Trust
|
|
45,304
|
____________
*
This
table gives effect to the Purchasers to date in the Purchase Agreement, totaling
an aggregate anticipated registration of up to 6,629,408 shares of Common Stock
underlying Convertible Notes, of which 6,251,943 are eligible for registration
under the Initial Registration Statement based on the Company’s Common Stock
outstanding on the date hereof. Further to the Purchase Agreement, up to an
additional $57,656.67
of
Convertible Notes may be issued by the Company. Assuming the sale of a maximum
number of Notes, an aggregate of 6,251,943 shares of Common Stock underlying
the
Convertible Notes will still be offered in the Initial Registration Statement,
however the securities offered by the Purchasers listed here will be
proportionately decreased and this Schedule II shall be revised accordingly
to allow for registration on a proportional basis by the other participating
Purchaser(s).
Exhibit
A
Plan
of Distribution
The
selling security holders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock being offered under this prospectus on any stock exchange,
market or trading facility on which shares of our common stock are traded or
in
private transactions. These sales may be at fixed or negotiated prices. The
selling security holders may use any one or more of the following methods when
disposing of shares:
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·
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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 resales by the broker-dealer
for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
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privately
negotiated transactions;
|
|
·
|
to
cover short sales made after the date that the registration statement
of
which this prospectus is a part is declared effective by the
Commission;
|
|
·
|
broker-dealers
may agree with the selling security holders to sell a specified number
of
such shares at a stipulated price per
share;
|
|
·
|
a
combination of any of these methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
shares may also be sold under Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), if available, rather than under this prospectus. The
selling security holders have the sole and absolute discretion not to accept
any
purchase offer or make any sale of shares if they deem the purchase price to
be
unsatisfactory at any particular time.
The
selling security holders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling security holder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers
engaged by the selling security holders may arrange for other broker-dealers
to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling security holders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, which
commissions as to a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.
If
sales
of shares offered under this prospectus are made to broker-dealers as
principals, we would be required to file a post-effective amendment to the
registration statement of which this prospectus is a part. In the post-effective
amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such
sales.
The
selling security holders and any broker-dealers or agents that are involved
in
selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
sales. Commissions received by these 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. Any broker-dealers or agents
that are deemed to be underwriters may not sell shares offered under this
prospectus unless and until we set forth the names of the underwriters and
the
material details of their underwriting arrangements in a supplement to this
prospectus or, if required, in a replacement prospectus included in a
post-effective amendment to the registration statement of which this prospectus
is a part.
The
selling security holders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M. These provisions may restrict activities
of,
and limit the timing of purchases and sales of any of the shares by, the selling
security holders or any other person. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to those securities
for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may
affect the marketability of the shares.
If
any of
the shares of common stock offered for sale pursuant to this prospectus are
transferred other than pursuant to a sale under this prospectus, then subsequent
holders could not use this prospectus until a post-effective amendment or
prospectus supplement is filed, naming such holders. We offer no assurance
as to
whether any of the selling security holders will sell all or any portion of
the
shares offered under this prospectus.
We
have
agreed to pay all fees and expenses we incur incident to the registration of
the
shares being offered under this prospectus. However, each selling security
holder and purchaser is responsible for paying any discounts, commissions and
similar selling expenses they incur.
We
and
the selling security holders have agreed to indemnify one another against
certain losses, damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.
