REGISTRATION RIGHTS AGREEMENT
Exhibit
10.7
THIS
REGISTRATION RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of December 20, 2006, by and among COBALIS
CORPORATION,
a Nevada
corporation (the “Company”),
and
the undersigned Buyers listed on Schedule I attached hereto (each, a
“Buyer”
and
collectively, the “Buyers”).
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities
Purchase Agreement”),
the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers secured
convertible debentures (the “Convertible
Debentures”)
which
shall be convertible into that number of shares of the Company’s common stock,
par value $0.001 per share (the “Common
Stock”),
pursuant to the terms of the Securities Purchase Agreement for an aggregate
purchase price of up to Three Million Eight Hundred Fifty Dollars ($3,850,000).
Capitalized terms not defined herein shall have the meaning ascribed to them
in
the Securities Purchase Agreement.
B. To
induce
the Buyers to execute and deliver the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act
of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “Securities
Act”),
and
applicable state securities laws.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and the Buyers hereby agree as
follows:
1. DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following
meanings:
(a) “Person”
means
a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
(b) “Register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the Securities Act and pursuant
to Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous or delayed basis (“Rule
415”),
and
the declaration or ordering of effectiveness of such Registration Statement(s)
by the United States Securities and Exchange Commission (the “SEC”).
(c) “Registrable
Securities”
means
the shares of Common Stock issuable to the Buyers upon conversion of the
Convertible Debentures pursuant to the Securities Purchase
Agreement,
and the
Warrant Shares
as this
term is defined in the Securities Purchase Agreement.
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(d) “Registration
Statement”
means
a
registration statement under the Securities Act which covers Registrable
Securities.
2. REGISTRATION.
(a) Subject
to the terms and conditions of this Agreement, the Company shall prepare and
file, no later than forty five (45) days from the date hereof (the “Scheduled
Filing Deadline”),
with
the SEC a registration statement on Form S-1 or SB-2 (or, if the Company is
then
eligible, on Form S-3) under the Securities Act (the “Cornell
Registration Statement”)
registering for resale by the Buyers up to 10,583,737 Registrable Securities.
Subject to the terms of this Agreement, the Company shall use its reasonable
best efforts to cause the Cornell Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the applicable Scheduled Effective Deadline
(as defined below), and shall use its reasonable best efforts to keep the
Cornell Registration Statement continuously effective under the Securities
Act
until the earliest of when all Registrable Securities covered by the Cornell
Registration Statement have been sold, or when the Registrable Securities may
be
sold without volume restrictions pursuant to Rule 144(k), as determined by
the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company’s transfer agent and the affected
Holders The Buyers shall furnish comments on the Cornell Registration Statement
to the Company within twenty-four (24) hours of the receipt thereof from the
Company. The Company shall file any additional Registration Statements (each
an
“Additional Registration Statement” and collectively, the “Additional
Registration Statements”) as may be necessary to register all of the Registrable
Securities no earlier than one year from the date in which the Cornell
Registration Statement was declared effective by the SEC. Notwithstanding
any other provision hereof, any reduction in the number of shares of Common
Stock registered for resale under the Registration Statements as a result of
comments received in writing from the SEC with respect to the Registration
Statements shall not constitute a breach or default by the Company under this
Agreement or any other agreement between the Buyer and the Company.
(b) Effectiveness
of the Cornell Registration Statement.
The
Company shall use its reasonable best efforts (i) to have the Cornell
Registration Statement declared effective by the SEC no later than one hundred
thirty five (135) days from the date hereof (the “Scheduled
Effective Deadline”)
and
(ii) to insure that the Cornell Registration Statement remain in effect until
all of the Registrable Securities covered by such Cornell Registration Statement
have been sold, subject to the terms and conditions of this Agreement. No breach
of this section shall be deemed to have occurred if the Company has used its
reasonable best efforts to timely obtain effectiveness of the Cornell
Registration Statement or any Additional Registration Statement and failure
to
timely obtain effectiveness is due to changes in the Commission’s, or its
staff’s, policy or interpretations with respect to the registration of
transactions of the nature contemplated hereunder.
(c) Failure
to File or Obtain Effectiveness of the Cornell Registration
Statement.
In the
event the Cornell Registration Statement is not filed by the Scheduled Filing
Deadline or is not declared effective by the SEC on or before the Scheduled
Effective Date, or if after the Cornell Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to the Cornell Registration
Statement (whether because of a failure to keep the Cornell Registration
Statement effective, failure to disclose such information as is necessary for
sales to be made pursuant to the Cornell Registration Statement, but excluding
failure to register sufficient shares of Common Stock) then as partial relief
for the damages to any holder of Registrable Securities covered by such Cornell
Registration Statement 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 at law or in equity), the Company will pay
as
liquidated damages (the “Liquidated
Damages”)
to the
holder, at the holder’s option, a cash amount within three (3) business days,
after demand therefore, equal to one percent (1%) of the liquidated value of
the
Convertible Debentures outstanding as Liquidated Damages for each thirty (30)
day period after the Scheduled Filing Deadline or the Scheduled Effective Date
as the case may be. Notwithstanding anything herein to the contrary, in no
event
shall Liquidated Damages be paid for a period in excess of fifteen (15) months
from the First Closing. No Liquidated Damages if failure is due to a Buyer’s
failure to provide timely information or the SEC’s finding that the terms of the
transactions are non-compliant with law and requires the Registration Statement
to be withdrawn and renegotiate terms.
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(d) Liquidated
Damages.
The
Company and the Buyer hereto acknowledge and agree that the sums payable under
subsection 2(d) above shall constitute liquidated damages and not penalties
and
are in addition to all other rights of the Buyer, including the right to call
a
default. The parties further acknowledge that (i) the amount of loss or damages
likely to be incurred is incapable or is difficult to precisely estimate, (ii)
the amounts specified in such subsections bear a reasonable relationship to,
and
are not plainly or grossly disproportionate to, the probable loss likely to
be
incurred in connection with any failure by the Company to obtain or maintain
the
effectiveness of the Cornell Registration Statement, (iii) one of the reasons
for the Company and the Buyer reaching an agreement as to such amounts was
the
uncertainty and cost of litigation regarding the question of actual damages,
and
(iv) the Company and the Buyer are sophisticated business parties and have
been
represented by sophisticated and able legal counsel and negotiated this
Agreement at arm’s length.
3. RELATED
OBLIGATIONS.
(a) Upon
filing a Registration Statement, the Company agrees to keep such Registration
Statement effective pursuant to Rule 415 at all times until the date on
which the Buyer shall have sold all the Registrable Securities covered by such
Registration Statement (the “Registration
Period”),
which
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 light of the circumstances in
which
they were made, not misleading.
(b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the prospectus used in connection with such Registration Statement, which
prospectus is to be filed pursuant to Rule 424 promulgated under the Securities
Act, as may be necessary to keep such Registration Statement effective at all
times during the Registration Period, and, during such period, comply with
the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to
be
filed pursuant to this Agreement (including pursuant to this Section 3(b))
by
reason of the Company’s filing a report on Form 10-KSB, Form 10-QSB or Form 8-K
or any analogous report under the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”),
the
Company shall incorporate such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the Exchange Act report is filed which created
the
requirement for the Company to amend or supplement the Registration Statement.
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(c) The
Company shall make available to each Buyer whose Registrable Securities are
included in any Registration Statement, without charge, (i) at least one (1)
copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) ten (10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such
other
number of copies as such Buyer may reasonably request) and (iii) such other
documents as such Buyer may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such
Buyer.
(d) The
Company shall use its reasonable best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of such jurisdictions in the United States as any
Buyer reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be reasonably necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (w) make any change to its articles of incorporation or by-laws,
(x)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service
of
process in any such jurisdiction. The Company shall promptly notify each Buyer
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice
of
the initiation or threat of any proceeding for such purpose.
(e) As
promptly as practicable after becoming aware of such event or development,
the
Company shall notify each Buyer in writing of the happening of any event as
a
result of which the prospectus included in a Registration Statement, as then
in
effect, includes an untrue statement of a material fact or omission to state
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to each Buyer. The Company
shall
also promptly notify each Buyer in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when
a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Buyer by email
or
facsimile on the same day of such effectiveness), (ii) of any request by the
SEC
for amendments or supplements to a Registration Statement or related prospectus
or related information, and (iii) of the Company’s reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
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(f) The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify each Buyer who holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
(g) The
Company shall make available for inspection upon reasonable notice by (i) any
Buyer and (ii) one (1) firm of accountants or other agents retained by the
Buyers (collectively, the “Inspectors”)
all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree,
and
each Buyer hereby agrees, to hold in strict confidence and shall not make any
disclosure (except to a Buyer) or use any Record or other information which
the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the Securities Act, (b) the release
of
such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
(h) The
Company shall hold in confidence and not make any disclosure of information
concerning a Buyer provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning a Buyer is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
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(i) The
Company shall use its reasonable best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be listed
on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) the
inclusion for quotation on the National Association of Securities Dealers,
Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).
(j) The
Company shall cooperate with each Buyer who holds Registrable Securities being
offered and, to the extent applicable, to facilitate the timely preparation
and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case
may
be, as the Buyers may reasonably request and registered in such names as the
Buyers may request.
(k) The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be
necessary to consummate the disposition of such Registrable
Securities.
(l) The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of
Rule 158 under the Securities Act) covering a twelve (12) month period beginning
not later than the first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement.
(m) The
Company shall otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
(n) Within
two (2) business days after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent
for
such Registrable Securities (with copies to the Buyer whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.
(o) The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by each Buyer of Registrable Securities pursuant to
a
Registration Statement.
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4. OBLIGATIONS
OF THE BUYERS.
Each
Buyer agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(f) or the first sentence of
3(e), such Buyer will immediately discontinue disposition of Registrable
Securities pursuant to any Registration Statement(s) covering such Registrable
Securities until such Buyer’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or receipt of notice that no
supplement or amendment is required. Notwithstanding anything to the contrary,
the Company shall cause its transfer agent to deliver unlegended certificates
for shares of Common Stock to a transferee of a Buyer in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which a Buyer has entered into a contract
for sale prior to the Buyer’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e) and for which the Buyer has not yet settled.
5. EXPENSES
OF REGISTRATION.
All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall
be
paid by the Company.
6. INDEMNIFICATION.
With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:
(a) To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Buyer, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls
any
Buyer within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue
Sky Filing”),
or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation there under
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, “Violations”).
The
Company shall reimburse the Buyers and each such controlling person promptly
as
such expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
be
available to the extent such Claim is based on a failure of the Buyer to deliver
or to cause to be delivered the prospectus made available by the Company, if
such prospectus was timely made available by the Company pursuant to Section
3(c); and (z) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld, conditioned, 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
the Registrable Securities by the Buyers pursuant to Section 9
hereof.
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(b) In
connection with a Registration Statement, each Buyer agrees to severally and
not
jointly indemnify, hold harmless and defend, to the same extent and in the
same
manner as is set forth in Section 6(a), the Company, each of its directors,
each
of its officers, employees, representatives, or agents and each Person, if
any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (each an “Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or is based upon any Violation,
in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Buyer expressly for use in connection with such Registration
Statement; and, subject to Section 6(d), such Buyer will reimburse any legal
or
other expenses reasonably incurred by them in connection with investigating
or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Buyer, which consent shall not be unreasonably withheld; provided, further,
however, that the Buyer shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds
to
such Buyer as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Buyers
pursuant to Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
prospectus was corrected and such new prospectus was delivered to each Buyer
prior to such Buyer’s use of the prospectus to which the Claim
relates.
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not
more than one (1) counsel for such Indemnified Person or Indemnified Party
to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for
any
settlement of any action, claim or proceeding effected without its prior written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of
a
release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter
for
which indemnification has been made. The failure to deliver written notice
to
the indemnifying party within a reasonable time of the commencement of any
such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
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(d) The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
(e) The
indemnity agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by
such seller from the sale of such Registrable Securities.
8. REPORTS
UNDER THE EXCHANGE ACT.
With
a
view to making available to the Buyers the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that
may
at any time permit the Buyers to sell securities of the Company to the public
without registration (“Rule
144”)
the
Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) file
with
the SEC all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject
to
such requirements (it being understood that nothing herein shall limit the
Company’s obligations under Section 4(c) of the Securities Purchase Agreement)
and the filing of such reports and other documents as are required by the
applicable provisions of Rule 144; and
(c) make
available to each Buyer so long as such Buyer owns Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the Securities Act and
the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of
the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Buyers
to
sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Buyers who
then
hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
or
waiver effected in accordance with this Section 9 shall be binding upon
each Buyer and the Company. No such amendment shall be effective to the extent
that it applies to fewer than all of the holders of the Registrable Securities.
No consideration shall be offered or paid to any Person to amend or consent
to a
waiver or modification of any provision of any of this Agreement unless the
same
consideration also is offered to all of the parties to this
Agreement.
9
10. MISCELLANEOUS.
(a) A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities or owns the right to
receive the Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two (2) or more Persons with respect
to
the same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
|
If
to the Company, to:
|
Cobalis
Corporation
|
|
|
0000
XxXxxx Xxx, Xxxxx 000
|
|
|
Xxxxxx,
XX 00000
|
|
|
Attention:
Xx. Xxxxxx X. Yaktan
|
|
|
Telephone:
|
|
|
Facsimile:
|
|
|
|
|
With
Copy to:
|
Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx
|
|
|
00000
Xx Xxxxxx Xxxx, Xxxxx 000
|
|
|
Xxx
Xxxxx, XX 00000
|
|
|
Attn:
Xxxxxx X. Xxxxxx, Esq.
|
|
|
Telephone:
000-000-0000
|
|
|
Facsimile:
000-000-0000
|
|
|
|
If
to an
Buyer, to its address and facsimile number on the Schedule of Buyers attached
hereto, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers or to such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of
such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service shall
be
rebuttable evidence of personal service, receipt by facsimile or receipt from
a
nationally recognized overnight delivery service in accordance with clause
(i),
(ii) or (iii) above, respectively.
(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.
10
(d) The
laws
of the State of New Jersey shall govern all issues concerning the relative
rights of the Company and the Buyers as its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New Jersey,
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of New Jersey or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
of the Superior Courts of the State of New Jersey, sitting in Xxxxxx County,
New
Jersey and federal courts for the District of New Jersey sitting Newark, New
Jersey, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way
any
right to serve process in any manner permitted by law. If any provision of
this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(e) This
Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
Agreement and related documents including the Convertible Debenture and the
Security Agreement dated the date hereof (the “Security
Agreement”)
constitute the entire agreement among the parties hereto 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 Irrevocable Transfer Agent Instructions, the
Securities Purchase Agreement and related documents including the Convertible
Debenture, and the Security Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(f) 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.
(h) This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
11
(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 the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
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.
(j) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
12
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their signature page to this Registration
Rights Agreement to be duly executed as of the date first above
written.
|
COMPANY:
|
||
|
COBALIS
CORPORATION
|
||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxx | |
|
Name: Xxxxxx
Xxxxxxx
|
||
|
Title: Chief
Executive Officer
|
||
13
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their signature page to this Registration
Rights Agreement to be duly executed as of the date first above
written.
|
BUYER:
|
||
|
CORNELL
CAPITAL PARTNERS, LP
|
||
| By: Yorkville Advisors, LLC | ||
| Its: General Partner | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxx | |
|
Name: Xxxx Xxxxxx |
||
| Title: Portfolio Manager | ||
14
SCHEDULE
I
SCHEDULE
OF BUYERS
|
Buyer
|
Address/Facsimile
Number
of Buyer
|
Address/Facsimile
Number
of Buyer’s Representative
|
|
|
|
|
|
Cornell
Capital Partners, LP
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
|
|
Xxxxxx
Xxxx, XX 00000
|
Xxxxxx
Xxxx, XX 00000
|
|
|
Facsimile: (000)
000-0000
|
Facsimile: (000)
000-0000
|
|
|
|
Attention:
Xxxxx Xxxxxxxx, Esq.
|
|
|
|
|
15
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Attention:
|
Re:
|
COBALIS
CORPORATION
|
Ladies
and Gentlemen:
We
are
counsel to Cobalis Corporation, a Nevada corporation (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities
Purchase Agreement”)
entered into by and among the Company and the Buyers named therein
(collectively, the “Buyers”)
pursuant to which the Company issued to the Buyers shares of its Common Stock,
par value $0.001 per share (the “Common
Stock”).
Pursuant to the Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Buyers (the “Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the “Securities
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on ________________, the Company filed a Registration Statement
on
Form ________ (File No. 333-_____________) (the “Registration
Statement”)
with
the Securities and Exchange SEC (the “SEC”)
relating to the Registrable Securities which names each of the Buyers as a
selling stockholder there under.
In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and we
have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.
Very
truly yours,
[Law
Firm]
By:
cc: [LIST
NAMES OF BUYERS]
16
