REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of March 31, 2008, is by and among Generex Biotechnology Corporation, a
Delaware corporation with headquarters located at 00 Xxxxxxx Xxxxxx, Xxxxx
000,
Xxxxxxx, Xxxxxxx, Xxxxxx (the “Company”),
and
the undersigned buyers (each, a “Buyer”,
and
collectively, the “Buyers”).
RECITALS
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto, dated as of March 31, 2008 (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 each Buyer (i) the Notes
(as
defined in the Securities Purchase Agreement) which will be convertible into
Conversion Shares (as defined in the Securities Purchase Agreement) in
accordance with the terms of the Notes and (ii) the Warrants (as defined in
the
Securities Purchase Agreement) which will be exercisable to purchase Warrant
Shares (as defined in the Securities Purchase Agreement) in accordance with
the
terms of the Warrants.
B. To
induce
the Buyers to execute and deliver the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act
of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “1933
Act”),
and
applicable state securities laws.
AGREEMENT
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:
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1.
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Definitions.
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Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
(a) “Business
Day”
means
any day other than Saturday, Sunday or any other day on which commercial banks
in New York, New York are authorized or required by law to remain
closed.
(b) “Closing
Date”
shall
have the meaning set forth in the Securities Purchase Agreement.
(c) “Effective
Date”
means
the date that the applicable Registration Statement has been declared effective
by the SEC.
(d) “Effectiveness
Deadline”
means
(i) with respect to the initial Registration Statement required to be filed
to
cover the resale by the Investors of the Registrable Securities the
90th
calendar
day after the Closing Date (or the 120th
calendar
day after the Closing Date in the event that such Registration Statement is
subject to review by the SEC) and (b) with respect to any additional
Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, the 90th
calendar
day following the date on which the Company was required to file such additional
Registration Statement (or the 120th
calendar
day after such date in the event that such Registration Statement is subject
to
review by the SEC).
(e) “Filing
Deadline”
means
(i) with respect to the initial Registration Statement required to be filed
to
cover the resale by the Investors of the Registrable Securities, the
30th
calendar
day after the Closing Date and (ii) with respect to any additional Registration
Statements that may be required to be filed by the Company pursuant to this
Agreement, the date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this Agreement.
(f) “Investor”
means
a
Buyer or any transferee or assignee
of
any Registrable Securities, Notes or Warrants, as applicable, to whom a Buyer
assigns its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9
and any
transferee or assignee thereof to whom a transferee or assignee of any
Registrable Securities, Notes or Warrants, as applicable, assigns its rights
under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
(g) “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(h) “register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration of effectiveness of such Registration Statement(s) by the
SEC.
(i) “Registrable
Securities”
means
(i) the Conversion Shares issued or issuable upon conversion of the Notes,
(ii) the Warrant Shares issued or issuable upon exercise of the Warrants
and (iii) any capital stock of the Company issued or issuable with respect
to
the Conversion Shares, the Warrant Shares, the Notes or the Warrants, including,
without limitation, (1) as a result of any share split, share dividend,
recapitalization, exchange or similar event or otherwise and (2) shares of
capital stock of the Company into which the shares of Common Stock (as defined
in the Securities Purchase Agreement) are converted or exchanged and shares
of
capital stock of a Successor Entity (as defined in the Warrants) into which
the
shares of Common Stock are converted or exchanged, in each case, without regard
to any limitations on conversion of the Notes or exercise of the
Warrants.
(j) “Registration
Statement”
means
a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
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(k) “Required
Holders”
means
the holders of at least eighty percent (80%) of the Registrable
Securities.
(l) “Required
Registration Amount”
means
120% of the sum of (i) the maximum number of Conversion Shares issued and
issuable pursuant to the Notes and (ii) the maximum number of Warrant Shares
issued and issuable pursuant to the Warrants as of the Trading Day (as defined
in the Securities Purchase Agreement) immediately preceding the applicable
date
of determination (without taking into account any limitations on the conversion
of the Notes or the exercise of the Warrants set forth therein), all subject
to
adjustment as provided in Section 2(d).
(m) “Rule
144”
means
Rule 144 promulgated by the SEC under the 1933 Act or any other similar or
successor rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without
registration.
(n) “Rule
415”
means
Rule 415 promulgated by the SEC under the 1933 Act or any successor rule
providing for offering securities on a continuous or delayed basis.
(o) “SEC”
means
the United States Securities and Exchange Commission.
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2.
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Registration.
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(a) Mandatory
Registration.
The
Company shall prepare, and, as soon as practicable, but in no event later than
the Filing Deadline, file with the SEC a Registration Statement on Form S-3
covering the resale of all of the Registrable Securities. In the event that
Form
S-3 is unavailable for such a registration, the Company shall use such other
form as is available for such a registration on another appropriate form
reasonably acceptable to the Required Holders, subject to the provisions of
Section 2(c).
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 the date such Registration Statement is initially filed with the
SEC. The Registration Statement shall contain (except if otherwise directed
by
the Required Holders) the “Selling
Shareholders”
and
“Plan
of Distribution”
sections in substantially the form attached hereto as Exhibit
B.
The
Company shall use its best efforts to have such Registration Statement declared
effective by the SEC as soon as practicable, but in no event later than the
Effectiveness Deadline. By 9:30 a.m. on the Business Day immediately following
the Effective Date of the applicable Registration Statement, 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.
Notwithstanding anything to the contrary contained in this Agreement, other
than
during an Allowable Grace Period, the Company shall ensure that, when filed
and
at all times while effective, each Registration Statement and the prospectus
used in connection with such Registration Statement will disclose (whether
directly or through incorporation by reference to other SEC filings to the
extent permitted) all material information regarding the Company and its
securities. In no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of the Required Holders. The Company shall not after the date hereof
until the Effective Date of the Registration Statement required to be filed
pursuant to this Section 2(a)
enter
into any agreement providing any such right to any of its security
holders.
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(b) Legal
Counsel.
Subject
to Section 5
hereof,
Cranshire Capital, L.P. shall have the right to select one (1) legal counsel
to
review and oversee, solely on its behalf, any registration pursuant to this
Section 2
(“Legal
Counsel”),
which
shall be Xxxxxxxxx Xxxxxxx, LLP or such other counsel as thereafter designated
by Cranshire Capital, L.P.
(c) Ineligibility
for Form S-3.
In the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale
of
the Registrable Securities on another appropriate form reasonably acceptable
to
the Required Holders and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided
that the
Company shall maintain the effectiveness of the Registration Statement then
in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.
(d) Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a)
is
insufficient to cover all of the Registrable Securities required to be covered
by such Registration Statement, the Company shall amend the applicable
Registration Statement, or file a new Registration Statement (on the short
form
available therefor, if applicable), or both, so as to cover at least the
Required Registration Amount as of the Trading Day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15)
days
after the necessity therefor arises. The Company shall use its best efforts
to
cause such amendment and/or new Registration Statement to become effective
as
soon as practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed “insufficient to cover all of the Registrable Securities” if at any
time the number of shares of Common Stock available for resale under the
Registration Statement is less than the product determined by multiplying (i)
the Required Registration Amount as of such time by (ii) 0.90. The calculation
set forth in the foregoing sentence shall be made without regard to (i) any
limitations on the conversion of the Notes (and such calculation shall assume
that the Notes are then fully convertible into shares of Common Stock at the
then prevailing applicable Conversion Price) or (ii) any limitations on the
exercise of the Warrants (and such calculation shall assume that the Warrants
are then fully exercisable for shares of Common Stock at the then prevailing
applicable Exercise Price).
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(e) Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If (i)
a Registration Statement covering the resale of all of the Registrable
Securities required to be covered thereby and required to be filed by the
Company pursuant to this Agreement is (A) not filed with the SEC on or before
the Filing Deadline (a “Filing
Failure”)
(it
being understood that if the Company files a Registration Statement without
affording each Investor the opportunity to review and comment on the same as
required by Section 3(c)
hereof,
the
Company shall not be deemed to have satisfied this clause (i)(A) and such event
shall be deemed to be a Filing Failure)
or (B)
not declared effective by the SEC on or before the Effectiveness Deadline (an
“Effectiveness
Failure”)
(it
being understood that if on the Business Day immediately following the Effective
Date the Company shall not have filed a “final” prospectus for such Registration
Statement with the SEC under Rule 424(b) in accordance with Section 2(a)
above
(whether or not such a prospectus is technically required by such rule), the
Company shall not be deemed to have satisfied this clause (i)(B) and such event
shall be deemed to be an Effectiveness Failure), (ii) on any day after the
Effective Date of such Registration Statement sales of all of the Registrable
Securities required to be included on such Registration Statement cannot be
made
(other than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement, a suspension or delisting of (or a failure to timely list) the shares
of Common Stock on its principal trading market or exchange, or to register
a
sufficient number of shares of Common Stock) (a “Maintenance
Failure”),
or
(iii) after the expiration of the Registration Period (as defined below) the
Company fails to file with the SEC any required reports under Section 13 or
15(d) of the 1934 Act such that it is not in compliance with Rule 144(c)(1)
(a
“Current
Public Information Default”)
as a
result of which any of the Buyers are unable to sell all Registrable Securities
without restriction under Rule 144 (including, without limitation, volume
restrictions), then, as partial relief for the damages to any holder by reason
of any such delay in or reduction of its ability to sell the underlying shares
of Common Stock (which remedy shall not be exclusive of any other remedies
available at law or in equity), the Company shall pay to each holder of
Registrable Securities relating to such Registration Statement an amount in
cash
equal to four percent (4%) of such Investor’s original principal amount stated
in such Investor’s Note on the Closing Date (1) on the date of such Filing
Failure, Effectiveness Failure, Maintenance Failure or Current Public
Information Default, as applicable, and (2) on every thirty (30) day anniversary
of (I) a Filing Failure until such Filing Failure is cured; (II) an
Effectiveness Failure until such Effectiveness Failure is cured; (III) a
Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current
Public Information Default until the earlier of (i) the date such Current Public
Information Default is cured and (ii) such time that such public information
is
no longer required pursuant to Rule 144 (in each case, pro rated for periods
totaling less than thirty (30) days). The payments to which a holder shall
be
entitled pursuant to this Section 2(e)
are
referred to herein as “Registration
Delay Payments.”
Following the initial Registration Delay Payment for any particular event or
failure (which shall be paid on the date of such event or failure, as set forth
above), without limiting the foregoing, if an event or failure giving rise
to
the Registration Delay Payments is cured prior to any thirtieth (30th)
day
anniversary of such event or failure, then such Registration Delay Payment
shall
be made on the third (3rd)
Business Day after such cure. In the event the Company fails to make
Registration Delay Payments in a timely manner in accordance with the foregoing,
such Registration Delay Payments shall bear interest at the rate of one and
one-half percent (1.5%) per month (prorated for partial months) until paid
in
full.
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(f) Offering.
Notwithstanding anything to the contrary contained in this Agreement, but
subject to the payment of the Registration Delay Payments pursuant to Section
2(e),
in the
event the staff of the SEC (the “Staff”)
or the
SEC seeks to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of securities
by or on behalf of the Company, or in any other manner, such that the Staff
or the SEC do not permit such Registration Statement to become
effective and used for resales in a manner that does not constitute such an
offering and that permits the continuous resale at the market by the Investors
participating therein (or as otherwise may be acceptable to each
Investor) without being named therein as an “underwriter,” then the Company
shall reduce the number of shares to be included in such Registration Statement
by all Investors until such time as the Staff and the SEC shall so permit
such Registration Statement to become effective as aforesaid. In making
such reduction, the Company shall reduce the number of shares to be included
by
all Investors on a pro rata basis (based upon the number of Registrable
Securities otherwise required to be included for each Investor) unless the
inclusion of shares by a particular Investor or a particular set of Investors
are resulting in the Staff or the SEC’s “by or on behalf of the Company”
offering position, in which event the shares held by such Investor or set of
Investors shall be the only shares subject to reduction (and if by a set of
Investors on a pro rata basis by such Investors or on such other basis as would
result in the exclusion of the least number of shares by all such
Investors). In addition, in the event that the Staff or the SEC requires
any Investor seeking to sell securities under a Registration Statement
filed pursuant to this Agreement to be specifically identified as
an “underwriter” in order to permit such Registration Statement to
become effective, and such Investor does not consent to being so named as an
underwriter in such Registration Statement, then, in each such case, the
Company shall reduce the total number of Registrable Securities to be
registered on behalf of such Investor, until such time as the
Staff or the SEC does not require such identification or until such Investor
accepts such identification and the manner thereof. Any reduction pursuant
to this paragraph will first reduce all Registrable Securities other than
those issued pursuant to the Securities Purchase Agreement. In the event of
any reduction in Registrable Securities pursuant to this paragraph, an
affected Investor shall have the right to require, upon delivery of a written
request to the Company signed by such Investor, the Company to file a
registration statement within thirty (30) days of such request (subject to
any
restrictions imposed by Rule 415 or required by the Staff or the SEC)
for resale by such Investor in a manner acceptable to such Investor, and the
Company shall following such request cause to be and keep effective such
registration statement in the same manner as otherwise contemplated in this
Agreement for registration statements hereunder, in each case until such
time as: (i) all Registrable Securities held by such Investor have been
registered and sold pursuant to an effective Registration Statement in a manner
acceptable to such Investor or (ii) all Registrable Securities may be
resold by such Investor without restriction (including volume limitations)
pursuant to Rule 144 (taking account of any Staff position with respect to
“affiliate” status) or (iii) such Investor agrees to be named as an underwriter
in any such Registration Statement in a manner acceptable to such Investor
as to
all Registrable Securities held by such Investor and that have not theretofore
been included in a Registration Statement under this Agreement (it being
understood that the special demand right under this sentence may be exercised
by
an Investor multiple times and with respect to limited amounts of Registrable
Securities in order to permit the resale thereof by such Investor as
contemplated above).
(g) Piggyback
Registrations.
If, at
any time during the period in which a Registration Statement is required to
be
kept effective, 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 1933 Act of any of its equity
securities (other than on Form S-4 or Form S-8 (each as promulgated under the
0000 Xxx) 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 Company’s stock option or other
employee benefit plans), then the Company shall deliver to each Investor a
written notice of such determination and, if within fifteen (15) days after
the
date of the delivery of such notice, any such Investor shall so request in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such Investor requests to be registered;
provided,
however,
that
the Company shall not be required to register any Registrable Securities
pursuant to this Section 2(g) that are eligible for resale pursuant to Rule
144
(without volume restrictions) or that are the subject of a then effective
Registration Statement.
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(h) Allocation
of Registrable Securities.
The
initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein shall
be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor’s Registrable Securities, each transferee that becomes an
Investor shall be allocated a pro rata portion of the then-remaining number
of
Registrable Securities included in such Registration Statement for such
transferor. Any shares of Common Stock included in a Registration Statement
and
which remain allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be allocated to the
remaining Investors, pro rata based on the number of Registrable Securities
then
held by such Investors which are covered by such Registration
Statement.
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3.
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Related
Obligations.
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The
Company shall use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities (but in no event later than the
Filing Deadline) and use its best efforts to cause such Registration Statement
relating to the Registrable Securities to become effective as soon as
practicable after such filing (but in no event later than the Effectiveness
Deadline). Subject to allowable Grace Periods (as defined below), the Company
shall keep each Registration Statement effective pursuant to Rule 415 for sale
on a continuous basis in an at-the-market offering at all times until the
earlier of (i) the date as of which all of the Investors may sell all of the
Registrable Securities required to be covered by such Registration Statement
without restriction pursuant to Rule 144 and without the need for current public
information as required thereunder or (ii) the date on which the Investors
shall
have sold all of the Registrable Securities covered by such Registration
Statement (the “Registration
Period”).
The
Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein, or necessary to make the statements therein (in the case
of
prospectuses, in the light of the circumstances in which they were made) not
misleading. The Company shall submit to the SEC, within two (2) Business Days
after the later of the date that (i) the Company learns that no review of a
particular Registration Statement will be made by the Staff or that the Staff
has no further comments on a particular Registration Statement (as the case
may
be) and (ii) the approval of Legal Counsel is obtained pursuant to Section
3(c)
(which
approval shall be immediately sought), a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request.
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(b) Subject
to Section 3(r)
of this
Agreement, the Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition
of
all Registrable Securities of the Company required to be 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 filing a report on Form 10-Q or Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934
Act”),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
(c) The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor
to review and comment upon (i) each Registration Statement at least five (5)
Business Days prior to its filing with the SEC and (ii) all amendments and
supplements to all Registration Statements (except for Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any
similar or successor reports) within a reasonable number of days prior to their
filing with the SEC, and (B) not file any Registration Statement or amendment
or
supplement thereto in a form to which Legal Counsel or any legal counsel for
any
other Investor reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld. The Company shall furnish to Legal Counsel
and legal counsel for each other Investor, without charge, (i) copies of any
correspondence from the SEC or the Staff to the Company or its representatives
relating to any Registration Statement, provided
that
such correspondence shall not contain any material, non-public information
regarding the Company or any of its Subsidiaries (as defined in the Securities
Purchase Agreement), (ii) promptly after the same is prepared and filed
with the SEC, one (1) copy of any Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, if requested by an Investor, and all exhibits
and (iii) upon the effectiveness of any Registration Statement, one (1)
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate
with
Legal Counsel and legal counsel for each other Investor in performing the
Company’s obligations pursuant to this Section 3.
(d) The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same
is
prepared and filed with the SEC, at least one (1) copy of any Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by
an
Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request
from time to time) and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
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(e) The
Company shall use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or “blue sky” laws of all applicable jurisdictions in the
United States, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations
and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary
to
maintain such registrations and qualifications in effect at all times during
the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e),
(y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify Legal Counsel, legal counsel for each other Investor
and
each Investor who holds Registrable Securities of the receipt by the Company
of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.
(f) The
Company shall notify Legal Counsel, legal counsel for each other Investor and
each Investor in writing of the happening of any event, as promptly as
practicable after becoming aware of such 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
the light of the circumstances under which they were made, not misleading
(provided
that in
no event shall such notice contain any material, non-public information
regarding the Company or any of its Subsidiaries), and, subject to Section
3(r),
promptly prepare a supplement or amendment to such Registration Statement to
correct such untrue statement or omission and deliver ten (10) copies of such
supplement or amendment to Legal Counsel, legal counsel for each other Investor
and each Investor (or such other number of copies as Legal Counsel, legal
counsel for each other Investor or such Investor may reasonably request). The
Company shall also promptly notify Legal Counsel, legal counsel for each other
Investor and each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, when a Registration
Statement or any post-effective amendment has become effective (notification
of
such effectiveness shall be delivered to Legal Counsel, legal counsel for each
other Investor and each Investor by facsimile or e-mail on the same day of
such
effectiveness and by overnight mail), and when the Company receives written
notice from the SEC that a Registration Statement or any post-effective
amendment will be reviewed by the SEC, (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.
9
(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 and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and
to
notify Legal Counsel, legal counsel for each other Investor and each Investor
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
any
Investor may be required under applicable securities law to be described in
a
Registration Statement as an underwriter and such Investor consents to so being
named an underwriter, at the request of any Investor, the Company shall furnish
to such Investor, on the date of the effectiveness of such Registration
Statement and thereafter from time to time on such dates as an Investor 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, addressed to the Investors, 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 Investors.
(i) If
any
Investor may be required under applicable securities law to be described in
a
Registration Statement as an underwriter and such Investor consents to so being
named an underwriter, upon the written request of such Investor, the Company
shall make available for inspection by (i) such Investor, (ii) legal counsel
for
such Investor and (iii) one (1) firm of accountants or other agents retained
by
such Investor (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 in writing to hold in strict confidence and not
to
make any disclosure (except to such Investor) or use of any Record or other
information which the Company’s Board of Directors determines in good faith to
be confidential, and of which determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct
a
misstatement or omission in any Registration Statement or is otherwise required
under the 1933 Act, (b) the release of such Records is ordered pursuant to
a
final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this
Agreement or any other Transaction Document. Such Investor agrees that it shall,
upon learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and such Investor, if any) shall
be deemed to limit any Investor’s ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and
regulations.
10
(j) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
to be disclosed in the Registration Statement pursuant to the 1933 Act, (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
Transaction Document. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a
court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
(k) Without
limiting any obligation of the Company under the Securities Purchase Agreement,
the Company shall use its best efforts either to (i) cause all of the
Registrable Securities covered by a Registration Statement 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) secure
designation and quotation of all of the Registrable Securities covered by a
Registration Statement on The
Nasdaq Capital Market,
or
(iii) if, despite the Company’s best efforts to satisfy the preceding clauses
(i) or (ii) the Company is unsuccessful in satisfying the preceding clauses
(i)
or (ii), without limiting the generality of the foregoing, to use its best
efforts to arrange for at least two market makers to register with the Financial
Industry Regulatory Authority (f/k/a the National Association of Securities
Dealers, Inc.) as such with respect to such Registrable Securities. The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 3(k).
(l) The
Company shall cooperate with the Investors who hold Registrable Securities
being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts (as the case
may
be) as the Investors may reasonably request from time to time and registered
in
such names as the Investors may request.
(m) If
requested by an Investor, the Company shall as soon as practicable after receipt
of notice from such Investor and subject to Section 3(r)
hereof,
(i) incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or
make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.
(n) The
Company shall use its best efforts to cause the Registrable Securities covered
by a 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.
11
(o) 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, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering
a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the effective date of the Registration
Statement.
(p) 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.
(q) Within
one (1) Business Day 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 Investors 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
A.
(r) Notwithstanding
anything to the contrary herein (but subject to the last sentence of this
Section 3(r)),
at any
time after the Effective Date of the applicable Registration Statement, the
Company may delay the disclosure of material, non-public information concerning
the Company or any of its Subsidiaries the disclosure of which at the time
is
not, in the good faith opinion of the Board of Directors of the Company, in
the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a “Grace
Period”);
provided,
that
the Company shall promptly (i) notify the Investors in writing of the existence
of material, non-public information giving rise to a Grace Period (provided
that in
each notice the Company will not disclose the content of such material,
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which
the Grace Period ends; and, provided
further,
that no
Grace Period shall exceed ten (10) consecutive days and during any three hundred
sixty five (365) day period such Grace Periods shall not exceed an aggregate
of
thirty (30) days and the first day of any Grace Period must be at least five
(5)
Trading Days after the last day of any prior Grace Period (each, an
“Allowable
Grace Period”);
provided,
that no
Allowable Grace Period may exist during the first sixty (60) Business Days
after
the Effective Date of the applicable Registration Statement. For purposes of
determining the length of a Grace Period above, the Grace Period shall begin
on
and include the date the Investors receive the notice referred to in clause
(i)
and shall end on and include the later of the date the Investors receive the
notice referred to in clause (ii) and the date referred to in such notice.
The
provisions of Section 3(g)
hereof
shall not be applicable during the period of any Allowable Grace Period. Upon
expiration of each Grace Period, the Company shall again be bound by the first
sentence of Section 3(f)
with
respect to the information giving rise thereto unless such material, nonpublic
information is no longer applicable.
(s) The
Company shall use its best efforts to maintain eligibility for use of Form
S-3
(or any successor form thereto) for the registration of the resale of the
Registrable Securities.
12
|
4.
|
Obligations
of the Investors.
|
(a) At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of
the
information the Company requires from each such Investor. It shall be a
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held
by it
and the intended method of disposition of the Registrable Securities held by
it,
as shall be reasonably required to effect and maintain the effectiveness of
the
registration of such Registrable Securities and shall execute such documents
in
connection with such registration as the Company may reasonably request.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g)
or the
first sentence of 3(f),
such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g)
or the
first sentence of Section 3(f) or receipt of notice that no supplement or
amendment is required.
(d) Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it in connection with sales of
Registrable
Securities pursuant to the Registration Statement.
|
5.
|
Expenses
of Registration.
|
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2
and
3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company. The Company shall also reimburse
Cranshire Capital, L.P. for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections
2
and
3
of this
Agreement which amount shall be limited to $10,000.
|
6.
|
Indemnification.
|
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
13
(a) To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, 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
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the 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 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”).
Subject to Section 6(b),
the
Company shall reimburse the Indemnified Persons, promptly as such expenses
are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any
such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a):
(i)
shall not apply to a Claim by an Indemnified Person arising out of or based
upon
a Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of
such
Registration Statement or any such amendment thereof or supplement thereto
and
(ii) shall not be available to the extent such Claim is based on a failure
of
the Investor to deliver or to cause to be delivered the prospectus made
available by the Company (to the extent applicable), including a corrected
prospectus, if such prospectus or corrected prospectus was timely made available
by the Company pursuant to Section 3(d)
and then
only if, and to the extent that, following the receipt of the corrected
prospectus no grounds for such Claim would have existed; and (iii) 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 or delayed. 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 any of the Registrable Securities
by
any of the Investors pursuant to Section 9.
14
(b) In
connection with any Registration Statement in which an Investor is
participating, such Investor agrees to severally and not jointly indemnify,
hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a),
the
Company, each of its directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within the meaning
of the 1933 Act or the 1934 Act (each, an “Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or
Indemnified Damages arise out of or are based upon any Violation, in each case,
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by
such
Investor expressly for use in connection with such Registration Statement;
and,
subject to Section 6(b),
such
Investor will reimburse any legal or other expenses reasonably incurred by
an
Indemnified Party 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 Investor, which consent
shall
not be unreasonably withheld or delayed; provided,
further,
however,
that
such Investor shall be liable under this Section 6(b)
for only
that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of any of the Registrable
Securities by any of the Investors pursuant to Section 9.
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may
be)
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 (as the case may be) 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 (as the case may be) shall have the
right to retain its own counsel with the fees and expenses of such counsel
to be
paid by the indemnifying party if: (i) the indemnifying party has agreed in
writing to pay such fees and expenses; (ii) the indemnifying party shall have
failed promptly to assume the defense of such Claim and to employ counsel
reasonably satisfactory to such Indemnified Person or Indemnified Party (as
the
case may be) in any such Claim; or (iii) the named parties to any such Claim
(including any impleaded parties) include both such Indemnified Person or
Indemnified Party (as the case may be) and the indemnifying party, and such
Indemnified Person or such Indemnified Party (as the case may be) shall have
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Person or such Indemnified
Party
and the indemnifying party (in which case, if such Indemnified Person or such
Indemnified Party (as the case may be) notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, then 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, provided
further,
that in
the case of clause (iii) above the indemnifying party shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel
for such Indemnified Person or Indemnified Party (as the case may be). The
Indemnified Party or Indemnified Person (as the case may be) shall reasonably
cooperate 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 (as the case may be) which relates
to
such action or Claim. The indemnifying party shall keep the Indemnified Party
or
Indemnified Person (as the case may be) reasonably 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 (as the case may be), 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 (as the case may be) of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party
or
Indemnified Person (as the case may be) 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 (as the case may be) under this Section 6,
except
to the extent that the indemnifying party is materially and adversely prejudiced
in its ability to defend such action.
15
(d) No
Person
involved in the sale of Registrable Securities who is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) in
connection with such sale shall be entitled to indemnification from any Person
involved in such sale of Registrable Securities who is not guilty of fraudulent
misrepresentation.
(e) The
indemnification required by this Section 6
shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
(f) The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
|
7.
|
Contribution.
|
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6
to the
fullest extent permitted by law; provided,
however,
that:
(i) no contribution shall be made under circumstances where the maker would
not
have been liable for indemnification under the fault standards set forth in
Section 6
of this
Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities
who
was not guilty of fraudulent misrepresentation; and (iii) 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
pursuant to such Registration Statement. Notwithstanding the provisions of
this
Section 7, no Investor shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the net proceeds actually received
by
such Investor from the sale of the Registrable Securities subject to the Claim
exceeds the amount of any damages that such Investor has otherwise been required
to pay, or would otherwise be required to pay under Section 6(b), by reason
of
such untrue or alleged untrue statement or omission or alleged
omission.
16
|
8.
|
Reports
Under the 1934 Act.
|
With
a
view to making available to the Investors the benefits of 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 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company’s obligations under Section 4(c) of the Securities Purchase
Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144 and the 1934 Act, (ii)
a
copy of the most recent annual or quarterly report of the Company and such
other
reports and documents so filed by the Company with the SEC if such reports
are
not publicly available via XXXXX, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant
to
Rule 144 without registration.
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9.
|
Assignment
of Registration Rights.
|
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor’s Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to
the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws if so
required; (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein; (v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement; and (vi) such transfer shall
have been conducted in accordance with all applicable federal and state
securities laws.
17
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10.
|
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 the Required
Holders, provided
that any
Investor may give a waiver in writing as to itself. Any amendment or waiver
effected in accordance with this Section 10
shall be
binding upon each Investor and the Company. No such amendment or waiver (unless
given pursuant to the foregoing proviso) shall be effective to the extent that
it applies to less than all of the holders of the Registrable Securities. No
consideration shall be offered or paid to any Person to amend or consent to
a
waiver or modification of any provision of this Agreement unless the same
consideration also is offered to all of the parties to this
Agreement.
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11.
|
Miscellaneous.
|
(a) Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such Registrable
Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
(iii) with respect to Section 3(c),
by
electronic mail (provided confirmation of transmission is electronically
generated and kept on file by the sending party); or (iv) one (1) Business
Day
after deposit with a nationally recognized overnight delivery service with
next
day delivery specified, in each case, properly addressed to the party to receive
the same. The addresses and facsimile numbers for such communications shall
be:
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If
to the Company:
|
||
|
Generex
Biotechnology Corporation
|
||
|
00
Xxxxxxx Xxxxxx
|
||
|
Xxxxx
000
|
||
|
Xxxxxxx,
Xxxxxx
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
Attention:
CEO
|
||
|
With
a copy (for informational purposes only) to:
|
||
|
Xxxxxx
Xxxxxxx Xxxxxx & Xxxxxxx, LLC
|
||
|
0
Xxxxxxx Xxxxx, 00 X. 00xx
Xxxxxx
|
||
|
00xx
Xxxxx
|
||
|
Xxxxxxxxxxxx,
XX 00000
|
||
|
Telephone:
(000)000-0000
|
||
|
Facsimile:
215 851-8383
|
||
|
Attention:
Xxxx X. Xxxxxx, Esq.
|
||
18
|
If
to the Transfer Agent:
|
||
|
StockTrans,
Inc
|
||
|
00
X. Xxxxxxxxx Xxx
|
||
|
Xxxxxxx,
XX 00000
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
Attention:
Xxx Xxxxxxxx, VP Operations
|
||
|
If
to Legal Counsel:
|
||
|
Xxxxxxxxx
Xxxxxxx, LLP
|
||
|
00
X. Xxxxxx Xxxxx, Xxxxx 0000
|
||
|
Xxxxxxx,
Xxxxxxxx 00000
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
Attention:
|
Xxxxx
X. Xxxxxxxxx, Esq.
|
|
|
Xxxx
X. Xxxxx, Esq.
|
||
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached to the Securities Purchase Agreement, 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; provided
that
Xxxxxxxxx Xxxxxxx, LLP shall only be provided notices sent to Cranshire Capital,
L.P. 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 or electronic mail transmission
containing the time, date, recipient facsimile number or electronic mail address
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.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
19
(d) All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, 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.
(e) This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement), the schedules and exhibits attached hereto and thereto
and
the instruments referenced herein and therein constitute the entire agreement
among the parties hereto and thereto with respect to the subject matter hereof
and thereof. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein and therein. This Agreement,
the other Transaction Documents, the schedules and exhibits attached hereto
and
thereto and the instruments referenced herein and therein supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof (provided that nothing in this paragraph
shall
have any effect on any agreements any Buyer has entered into with the Company
or
any of its Subsidiaries prior to the date hereof with respect to any prior
investment made by such Buyer in the Company).
(f) Subject
to the requirements of Section 9,
this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
(g) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,”
“includes,”
“include”
and
words of like import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,”
“hereunder,”
“hereof”
and
words of like import refer to this entire Agreement instead of just the
provision in which they are found.
(h) This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains an electronic file of an executed signature page, such
signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or electronic file signature page (as the case
may be) were an original thereof.
20
(i) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(j) All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
(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. Terms used in this Agreement but defined in the
other Transaction Documents shall have the meanings ascribed to such terms
on
the Closing Date in such other Transaction Documents unless otherwise consented
to in writing by each Holder.
(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, other than the Persons
referred to in Section 6
and
7
hereof.
(m) The
obligations of each Investor under this Agreement and the other Transaction
Documents are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under this Agreement or any other Transaction
Document. Nothing contained herein or in any other Transaction Document, and
no
action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as, and the Company acknowledges that the Investors
do
not so constitute, a partnership, an association, a joint venture or any other
kind of group or entity, or create a presumption that the Investors are in
any
way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters,
and the Company acknowledges that the Investors are not acting in concert or
as
a group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by this Agreement or any of the
other the Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation,
the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained was solely
in
the control of the Company, not the action or decision of any Investor, and
was
done solely for the convenience of the Company and not because it was required
or requested to do so by any Investor. It is expressly understood and agreed
that each provision contained in this Agreement and in each other Transaction
Document is between the Company and an Investor, solely, and not between the
Company and the Investors collectively and not between and among
Investors.
[signature
pages follow]
21
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
|||
|
GENEREX
BIOTECHNOLOGY
CORPORATION
|
|||
|
By:
|
/s/
Xxxx X. Xxxxx
|
||
|
Name:
|
Xxxx
X. Xxxxx
|
||
|
Title:
|
Chief
Financial Officer
|
||
|
By:
|
/s/
Xxxx X. Xxxxxxxx
|
||
|
Name:
|
Xxxx
X. Xxxxxxxx
|
||
|
Title:
|
Executive
Vice President
and
General Counsel
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
||
|
CRANSHIRE
CAPITAL, L.P.
|
||
|
By:
|
Downsview
Capital, Inc.
|
|
|
Its:
|
General
Partner
|
|
|
/s/
Xxxxx Xxxxx
|
||
|
By:
|
Xxxxx
Xxxxx
|
|
|
Its:
|
President
|
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
||
|
SMITHFIELD
FIDUCIARY LLC
|
||
|
By:
|
/s/ Xxxx X. Chill
|
|
|
Xxxx
X. Chill, Authorized
Signatory
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
||
|
IROQUOIS
MASTER FUND LTD.
|
||
|
By:
|
/s/
Xxxxxx Xxxxxxxxx
|
|
|
Xxxxxx
Xxxxxxxxx, Authorized
Signatory
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
||
|
IROQUOIS
CAPITAL OPPORTUNITY
|
||
|
FUND
LP
|
||
|
By:
|
/s/
Xxxxxx Xxxxxxxxx
|
|
|
Xxxxxx
Xxxxxxxxx, Authorized
Signatory
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
||
|
PORTSIDE
GROWTH AND OPPORTUNITY
FUND |
||
|
By:
|
/s/ Xxxxxxx X. Xxxxx
|
|
|
Xxxxxxx
X. Xxxxx, Authorized
Signatory
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
||
|
XXXXXXXX
INVESTMENT MASTER FUND
LTD.
|
||
|
By:
|
/s/ Xxxxxxx Xxxxxxxx | |
|
Name:
Xxxxxxx Xxxxxxxx
|
||
|
Title:
Managing Director
|
||
SCHEDULE
OF BUYERS
|
Buyer
|
Address
and Facsimile Number
|
Legal
Representative’s
Address
and Facsimile Number
|
||
|
Cranshire
Capital, L.P.
|
0000
Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxxxxx X. Xxxxx
Facsimile:
(000)
000-0000
|
Xxxxxxxxx
Traurig, LLP
00
X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx
Xxxx
X. Xxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
||
|
Smithfield
Fiduciary LLC
|
c/o
Highbridge Capital Management LLC
0
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
Xxx X. Xxxxxx / Xxxx X. Chill
Facsimile:
(000) 000-0000
|
|||
|
Iroquois
Master Fund Ltd.
|
Iroquois
Master Fund Ltd.
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile:
(000) 000-0000
|
|||
|
Portside
Growth and Opportunity Fund
|
c/o
Ramius LLC
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxx / Xxxx X. Xxxxxxx
Facsimile:
(000) 000-0000
|
|||
|
Xxxxxxxx
Investment Master Fund Ltd.
|
c/x
Xxxxxxxx Capital, LLC
000
X. 00xx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxx Xxxxxxxxx/Xxxxxxx Xxxxxxxx
Facsimile:
000-000-0000
|
|||
|
Iroquois
Capital Opportunity Fund LP
|
Iroquois
Master Fund Ltd.
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile:
(000) 000-0000
|
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
OF REGISTRATION STATEMENT
______________________
______________________
______________________
Attention:
_____________
Re: Generex
Biotechnology Corporation
Ladies
and Gentlemen:
[We
are][I am] counsel to Generex Biotechnology Corporation, a Delaware 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 “Holders”)
pursuant to which the Company issued to the Holders senior secured convertible
notes (the “Notes”)
convertible into the Company’s shares of common stock, $0.001 par value per
share (the “Common
Stock”),
and
warrants exercisable for shares of Common Stock (the “Warrants”).
Pursuant to the Securities Purchase Agreement, the Company also has entered
into
a Registration Rights Agreement with the Holders (the “Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement),
including the shares of Common Stock issuable upon conversion of the Notes
and
exercise of the Warrants, under the Securities Act of 1933, as amended (the
“1933
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form S-3 (File No. 333-_____________) (the “Registration
Statement”)
with
the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names each of the Holders as a
selling stockholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC’s
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER
TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant
to
the Registration Statement.
This
letter shall serve as our standing opinion to you that the shares of Common
Stock underlying the Notes and Warrants are freely transferable by the Holders
pursuant to the Registration Statement. You need not require further letters
from us to effect any future legend-free issuance or reissuance of such shares
of Common Stock to the Holders as contemplated by the Company’s Irrevocable
Transfer Agent Instructions dated _________ __, 200_.
|
Very
truly yours,
|
||
|
[ISSUER’S
COUNSEL]
|
||
|
By:
|
||
|
CC:
[LIST
NAMES OF HOLDERS]
|
||
EXHIBIT
B
SELLING
SHAREHOLDERS
The
shares of common stock being offered by the selling stockholders are those
issuable to the selling stockholders upon conversion of the notes and exercise
of the warrants. For additional information regarding the issuance of the notes
and the warrants, see “Private Placement of Notes 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 for the
ownership of the notes 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 shares
of common stock, the notes and the warrants, as of ________, 2008, assuming
conversion of the notes and exercise of the warrants held by the selling
stockholders on that date, taking account of any limitations on conversion
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 holders
of
the notes and the warrants, this prospectus generally covers the resale of
120%
of the sum of (i) the maximum number of shares of common stock issuable upon
conversion of the related notes and (ii) the maximum number of shares of common
stock issuable upon exercise of the related warrants, determined as if the
outstanding notes and warrants were converted or exercised, as applicable,
in
full (without regard to any limitations on conversion or exercise contained
therein), in each case, as of the trading day immediately preceding the date
this registration statement was initially filed with the SEC. Because the
conversion price of the notes 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 notes and the warrants, a selling stockholder may not convert
the
notes 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 4.90% or 9.90% (as
applicable) of our then outstanding shares of common stock following such
conversion or exercise, as applicable, excluding for purposes of such
determination shares of common stock issuable upon conversion of the notes
and/or exercise of the warrants which have not been converted or exercised.
The
number of shares in the second column reflects these limitations. 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 of
Common Stock Owned
Prior to Offering
|
Maximum Number of
Shares of Common Stock to
be Sold Pursuant to this
Prospectus
|
Number of Shares of
Common Stock of Owned
After Offering
|
|||
|
Cranshire
Capital, L.P.
|
||||||
|
Smithfield
Fiduciary LLC
|
||||||
|
Iroquois
Master Fund Ltd.
|
||||||
|
Portside
Growth and Opportunity Fund
|
||||||
|
Xxxxxxxx
Investment Master Fund Ltd.
|
||||||
|
Iroquois
Capital Opportunity Fund LP
|
PLAN
OF DISTRIBUTION
We
are
registering the shares of common stock issuable upon conversion of the notes
and
exercise of the warrants to permit the resale of these shares of common stock
by
the holders of the notes and warrants from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by the selling
stockholders of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions
or
agent’s commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions,
| · |
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
| · |
in
the over-the-counter market;
|
| · |
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
| · |
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
| · |
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;
|
| · |
short
sales made after the date the Registration Statement is declared
effective
by the SEC, subject to any applicable limitations on short sales
contained
in any agreement between a selling stockholder and the
Company;
|
| · |
sales
pursuant to Rule 144;
|
| · |
broker-dealers
may agree with the selling securityholders to sell a specified number
of
such shares at a stipulated price per
share;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
If
the
selling stockholders effect such transactions by selling shares of common stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or
to
whom they may sell as principal (which discounts, concessions or commissions
as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales
of
the shares of common stock or otherwise, the selling stockholders may enter
into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions they
assume. The selling stockholders may also sell shares of common stock short
and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales.
The
selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.
The
selling stockholders may pledge or grant a security interest in some or all
of
the notes, warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to
this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer and donate the shares of common
stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of common stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of
any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under
the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the shelf registration statement, of
which this prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common
stock
by the selling stockholders and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged
in
the distribution of the shares of common stock to engage in market-making
activities with respect to the shares of common stock. All of the foregoing
may
affect the marketability of the shares of common stock and the ability of any
person or entity to engage in market-making activities with respect to the
shares of common stock.
We
will
pay all expenses of the registration of the shares of common stock pursuant
to
the registration rights agreement, estimated to be
$[ ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or “blue sky” laws; provided,
however,
that a
selling stockholder will pay all underwriting discounts and selling commissions,
if any. We will indemnify the selling stockholders against liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreements, or the selling stockholders will be entitled
to
contribution. We may be indemnified by the selling stockholders against civil
liabilities, including liabilities under the Securities Act, that may arise
from
any written information furnished to us by the selling stockholder specifically
for use in this prospectus, in accordance with the related registration rights
agreements, or we may be entitled to contribution.
Once
sold
under the shelf registration statement, of which this prospectus forms a part,
the shares of common stock will be freely tradable in the hands of persons
other
than our affiliates.
