REGISTRATION RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT
(this
"Agreement"),
dated
as of April 3, 2007, by and among Comanche Clean Energy Corporation, a Cayman
Islands corporation (the "Company"),
and
the undersigned Buyers (as defined below).
WHEREAS:
A. In
connection with the Securities Purchase Agreement (Notes and Warrants), dated
as
of March 30, 2007 by and among the Company and each of the parties signatory
thereto (the "Note
Purchase Agreement"),
the
Company has agreed, upon the terms and subject to the conditions set forth
in
the Note Purchase Agreement, to issue and sell to each Buyer (i) senior secured
convertible notes of the Company (the "Notes"),
which
will, among other things, be convertible into Ordinary Shares, par value $.001
per share, of the Company (the "Shares"
and the
Shares issuable upon conversion of the Notes, the "Conversion
Shares")
in
accordance with the terms of the Notes, and (ii) warrants (the "Note
Warrants"),
which
will be exercisable to purchase Shares (the Shares issuable upon exercise of
the
Note Warrants, the "Note
Warrant Shares")
in
accordance with the terms of the Note Warrants.
B.
In
connection with the Securities Purchase Agreement (Shares and Warrants), dated
as of March 30, 2007 by and among the Company and each of the parties signatory
thereto (the “Share
Buyers”,
and
collectively with the Note Buyers, the “Buyers”)
(the
"Share
Purchase Agreement",
and
together with the Note Purchase Agreement, the “Securities
Purchase Agreements”),
the
Company has agreed, upon the terms and subject to the conditions set forth
in
the Share Purchase Agreement, to issue and sell to each Share Buyer (i) Shares
(the "PIPE
Shares"),
and
(ii) warrants (the "PIPE
Warrants",
together with the Note Warrants, the “Warrants”),
which
will be exercisable to purchase Shares (the Shares issuable upon exercise of
the
PIPE Warrants, the "PIPE Warrant
Shares"
and
together with Note Warrant Shares, the “Warrant
Shares”)
in
accordance with the terms of the PIPE Warrants.
C. In
order
to induce the Note Buyers to purchase the Notes and the Note Warrants pursuant
to the Note Purchase Agreement, and the Share Buyers to purchase the PIPE Shares
and the PIPE Warrants pursuant to the Share 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"
or 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 each of the Buyers hereby agree as
follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreements, as applicable. 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 the City of New York are authorized or required by law to remain
closed.
b. "Closing
Date"
shall
have the meaning set forth in the Securities Purchase Agreements.
c. "Effective
Date"
means
the date a Registration Statement has been declared effective by the
SEC.
d. "Effectiveness
Deadline"
means,
subject to Section 2(e) hereof with respect to Subsequent Registration
Statements, the date that is the earliest of (i) 120 days after the Closing
Date
(if the Registration Statement is not reviewed by the SEC), (ii) 150 days after
the Closing Date if the Registration Statement is reviewed by the SEC, or (iii)
the
date
which is within three (3) Business Days after the date on which the SEC informs
the Company (A) that the SEC will not review the Registration Statement or
(B) that
the
Company may request the acceleration of the effectiveness of the Registration
Statement and the Company makes such request; provided that,
if the
Effectiveness Deadline falls on a Saturday,
Sunday or any other day which shall be a legal holiday or a day on which the
SEC
is authorized or required by law or other government actions to close, the
Effectiveness Deadline shall be the following Business Day.
e. "Eligible
Market"
means
the Initial Principal Market, The New York Stock Exchange, Inc., the American
Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market or
The
NASDAQ Capital Market.
f. "Filing
Deadline"
means,
subject to Section 2(e) hereof with respect to Subsequent Registration
Statements, the date that is 30 days after the Closing Date; provided that,
if the
Filing Deadline falls on a Saturday,
Sunday or any other day which shall be a legal holiday or a day on which the
SEC
is authorized or required by law or other government actions to close, the
Filing Deadline shall be the following Business Day.
g. "Investor"
means a
Buyer or any permitted transferee or assignee thereof 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 permitted transferee or assignee assigns its rights under
this
Agreement and who agrees to become bound by the provisions of this Agreement
in
accordance with Section 9.
h. "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.
i. "Principal
Market"
means,
from time to time, the Eligible Market upon which the Shares are admitted or
listed and principally trade.
j. "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 1933 Act and pursuant
to
Rule 415 and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
2
k. "Registrable
Securities"
means
(i) the Warrant Shares, (ii) the Conversion Shares, (iii) the PIPE
Shares, and (iv) any shares of capital stock of the Company issued or issuable
in respect of the Warrant Shares, Conversion Shares and the PIPE Shares as
a
result of any stock split, stock dividend, recapitalization, exchange, merger,
consolidation or other reorganization or similar event or otherwise, without
regard to any limitations on conversions of the Notes or exercises of the
Warrants. Notwithstanding the foregoing, if prior to the filing of a
Registration Statement the shareholders of the Company consummate a share
exchange transaction pursuant to which the PIPE Shares, the Notes and the
Warrants are exchanged for equivalent securities of a British Virgin Islands
corporation with a class of its equity securities registered under the
Securities Exchange Act of 1934 (the “Shell”), then Registrable Securities shall
mean the common equity securities of the Shell issued in such exchange as well
as the common equity securities of the Shell issuable upon conversion of the
promissory notes of the Shell issued in exchange for the Notes and the common
equity securities of the Shell issued upon exercise of the warrants to purchase
common equity securities of the Shell which are issued in exchange for the
Warrants.
l. "Registration
Statement"
means a
registration statement of the Company filed under the 1933 Act covering the
Registrable Securities, including the initial Registration Statement and any
Subsequent Registration Statements.
m. "Required
Holders"
means
the holders of at least a majority of the Registrable Securities);”
n. "Required
Registration Amount"
for the
Registration Statement means that number of Shares equal to 125% of the sum
of
(x) the aggregate of the maximum number of Conversion Shares issued and issuable
pursuant to the Notes at the then applicable Conversion Price as of the Trading
Day immediately preceding the applicable date of determination, (y) the number
of Warrant Shares issued and issuable pursuant to the Warrants as of the Trading
Day immediately preceding the date the Registration Statement is initially
filed
with the SEC, each subject to adjustment as provided in Sections 2(c) and 2(d)
(without regard to any limitations on conversion of the Notes or exercise of
the
Warrants), and (z) the PIPE Shares.
o. "Rule
415"
means
Rule 415 promulgated under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis.
p. “Securities”
means
collectively the Notes, PIPE Shares and the Warrants.
q. "SEC"
means
the United States Securities and Exchange Commission.
r. "Subsequent
Registration Statement"
shall
mean, any registration statement of the Company which covers those Registrable
Securities requested to be included therein pursuant to the provisions of
Section 2(e) of this Agreement and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the prospectus contained therein, all exhibits thereto and all
material incorporated by reference (or deemed to be incorporated by reference)
therein.
3
s. "Trading
Day"
means
any day on which the Share is traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the Shares, then on
the
Eligible Market which is the principal securities exchange or securities market
on which the Shares are then traded; provided that "Trading Day" shall not
include any day on which the Shares are scheduled to trade on such exchange
or
market for less than 4.5 hours or any day that the Shares are suspended from
trading during the final hour of trading on such exchange or market (or if
such
exchange or market does not designate in advance the closing time of trading
on
such exchange or market, then during the hour ending at 4:00:00 p.m., New York
Time).
2. Registration.
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 F-3
covering the resale of all of the Registrable Securities. In the event that
Form
F-3 is unavailable for such a registration, the Company shall (i) use such
other
form as is available for such a registration on another appropriate form
reasonably acceptable to the Required Holders and (ii) undertake to register
the
Registrable Securities on Form F-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 F-3 covering
the Registrable Securities has been declared effective by the SEC.
a. The
Registration Statement prepared pursuant hereto shall register for resale at
least the number of Shares equal to the Required Registration Amount as of
the
Trading Day immediately preceding the date the Registration Statement is
initially filed with the SEC. The Registration Statement shall contain (except
if otherwise directed by the Required Holders) the "Selling
Stockholders"
and
"Plan
of Distribution"
sections in substantially the form attached hereto as Exhibit
B;
provided,
however,
that
each of the "Selling Stockholders" and "Plan of Distribution" sections shall
be
amended as necessary to comply with then applicable securities law and
regulation. The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the Effectiveness Deadline. By 9:30 a.m. on the second Business
Day
following the Effective Date, 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.
b. 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 shall be
allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such transferor. In
no
event shall the Company include in any Registration Statement without the prior
written consent of the Required Holders any securities other than the
Registrable Securities (provided,
however,
that
such limit shall be increased to reflect the effect of any stock split and
decreased to reflect the effect of any reverse stock split).
4
c. [intentionally
omitted.]
d. Mandated
Reduction of Securities Registered.
(a) If,
for
any reason, the SEC requires that the number of Registrable Securities to be
registered for resale pursuant to any Registration Statement be reduced, such
reduction shall be accomplished as follows:
First,
125% of the number of Shares issuable upon the exercise of Note Warrants and
the
PIPE Warrants included in such Registration Statement shall be reduced (such
reduction allocated pro rata among the holders thereof) until the reduction
required by the SEC is effected.
Second,
if the exclusion of the number of Shares pursuant to the paragraph immediately
above in this Section 2(d) is insufficient to meet the reduction required by
the
SEC, then up to the sum of 125% of (i) the Conversion Shares calculated based
on
the Conversion Price (as defined in the Notes) as of the date of such reduction
and (ii) the PIPE Shares included in such Registration Statement shall be
reduced (such reduction allocated pro rata among the holders thereof) until
the
reduction required by the SEC is effected.
(b) If,
for
any reason, the SEC requires that the number of Shares to be registered for
resale pursuant to any Subsequent Registration Statement be reduced, such
reduction shall be allocated pro rata among the Investors whose Shares have
been
included in such Subsequent Registration Statement until the reduction required
by the SEC is effected.
e. Subesequent
Registrations.
In
the
event the SEC does not permit the Company to register all of the Registrable
Securities in the initial Registration Statement, the Company shall use its
best
efforts to file subsequent Registration Statements (each, a “Subsequent
Registration Statement”)
to
register the Registrable Securities that were not registered in the initial
Registration Statement as promptly as possible and in a manner permitted by
the
SEC. For purposes of this Section 2(e), “Filing
Deadline”
means
with respect to each Subsequent Registration Statement filed pursuant hereto,
the
later
of (i) the date when 75% of the Registrable Securities that were included in
the
initial Registration Statement (or any subsequent Registration Statement) have
been sold and (ii) six (6) months following the Effective Date of the initial
Registration Statement or any Subsequent Registration Statement, as applicable,
or such earlier date as permitted by the SEC; provided that,
if the
Filing Deadline falls on a Saturday, Sunday or any other day which shall be
a
legal holiday or a day on which the SEC is authorized or required by law or
other government actions to close, the Filing Deadline shall be the following
Business Day.
For
purposes of this Section 2(e), “Effectiveness
Deadline”
means
with respect to each Subsequent Registration Statement filed pursuant hereto,
the earlier of (A) the ninetieth (90th)
day
following the filing date of such Registration Statement (or in the event such
Registration Statement is reviewed by the SEC, the one hundred twentieth
(120th)
day
following such filing date) or (B) the date which is within three (3) Business
Days after the date on which the SEC informs the Company (i) that the SEC will
not review such Registration Statement or (ii) that
the
Company may request the acceleration of the effectiveness of such Registration
Statement and the Company makes such request; provided that,
if the
Effectiveness Deadline falls on a Saturday, Sunday or any other day which shall
be a legal holiday or a day on which the SEC is authorized or required by law
or
other government actions to close, the Effectiveness Deadline shall be the
following Business Day.
5
f. [intentionally
omitted.]
g. Legal
Counsel.
Subject
to Section 5 hereof, the Holders shall have the right to select one legal
counsel to review and oversee for such Holders any registrations pursuant to
this Section 2 ("Legal
Counsel"),
which
shall be Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP or
such
other counsel as thereafter designated by the Required Holders. The Company
and
Legal Counsel shall reasonably cooperate with each other in performing the
Company's obligations under this Agreement.
h. [intentionally
omitted.]
i. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If
any of
the following occur:
(i)
a
Registration Statement (including the initial Registration Statement and any
Subsequent Registration Statements) covering 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")
or
(B)
not
declared effective by the SEC on or before the Effectiveness Deadline (an
"Effectiveness
Failure")
or
(ii)
on
any day after the Effective Date sales of all of the Registrable Securities
required to be included on such Registration Statement or Subsequent
Registration Statement, as applicable, cannot be made (other than during an
Allowable Grace Period (as defined in Section 3(r)) pursuant to such
Registration Statement or Subsequent Registration Statement (including, without
limitation, because of a failure to (a) keep such Registration Statement or
Subsequent Registration Statement effective, (b) disclose such information
as is
necessary for sales to be made pursuant to such Registration Statement or
Subsequent Registration Statement, as applicable, (c) register a sufficient
number of Shares pursuant to Section 2(c), or (d) maintain the listing with
the
Initial Principal Market or other Eligible Market, as applicable of such Shares
registered pursuant to this Agreement) (a "Maintenance
Failure");
6
then,
the
Company shall pay to each holder of Registrable Securities required under this
Agreement to be, or remain (as applicable), registered under such Registration
Statement, or Subsequent Registration Statement, as applicable (the
“Subject
Securities”),
an
amount in cash,
(A)
equal
to one percent (1.0%) of the aggregate Purchase Price (as such term is defined
in the applicable Securities Purchase Agreement) of such Investor's Subject
Securities that corresponds to the number of such Investor’s Subject Securities
permitted to be registered by the SEC in such Registration Statement pursuant
to
Rule 415 on each of the following dates:
(i)
on
every thirtieth (30th)
day
(prorated for periods totaling less than thirty (30) days) after any Filing
Failure during the period commencing on the date of such Filing Failure until
the ninetieth (90th)
day
after such Filing Failure (or, if earlier, the date on which such Filing Failure
is cured);
(ii)
on
every thirtieth (30th)
day
(prorated for periods totaling less than thirty (30) days) after any
Effectiveness Failure during the period commencing on the date of such
Effectiveness Failure until the ninetieth (90th)
day
after such Effective Failure (or, if earlier, the date on which such
Effectiveness Failure is cured), and
(iii)
the
thirtieth (30th)
day
(prorated for periods totaling less than thirty (30) days) after the occurrence
of any Maintenance Failure during the period commencing on the date of such
Maintenance Failure until the ninetieth (90th)
day
after such Maintenance Failure (or, if earlier, the date on which such
Maintenance Failure is cured), and
(B)
equal
to two percent (2.0%) of the aggregate Purchase Price of such Investor's Subject
Securities that corresponds to the number of such Investor’s Subject Securities
permitted to be registered by the SEC in such Registration Statement pursuant
to
Rule 415 on each of the following dates:
(i)
on
every thirtieth (30th)
day
(prorated for periods totaling less than thirty (30) days) starting with the
ninety-first (91st)
day
after the Filing Deadline until such Filing Failure is cured;
(ii)
on
every thirtieth (30th)
day
(prorated for periods totaling less than thirty (30) days) starting with the
ninety-first (91st)
day
after the Effectiveness Deadline until such Effectiveness Failure is cured;
and
7
(iii)
on
every thirtieth (30th)
day
(prorated for periods totaling less than thirty (30) days) starting with the
ninety-first (91st)
day
after the occurrence of a Maintenance Failure until such Maintenance Failure
is
cured.
The
payments to which a holder shall be entitled pursuant to this Section 2(i)
are
referred to herein as "Registration
Delay Payments."
In the
event the Company fails to make Registration Delay Payments in a timely manner,
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.
Notwithstanding
anything herein or in the Securities Purchase Agreements to the contrary, (i)
no
Registration Delay Payments shall be due and payable in respect of the Warrant
Shares, (ii) ) in no event shall the aggregate amount of Registration Delay
Payments payable to any Investor exceed, in the aggregate, 10% of the aggregate
Purchase Price of all of the Securities purchased by such Investor, (iii) in
no
case shall Registration Delay Payments be payable from and after the date the
Conversion Shares or the PIPE Shares are eligible for sale pursuant to Rule
144(k) under the 1933 Act, and (iv) the Company shall have no obligation to
pay
any such Registration Delay Payments to the Investor during an Effectiveness
Failure or Maintenance Failure for any delay substantially due to information
required from the Investor not being provided or being inaccurate or incomplete.
3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement or Subsequent
Registration Statement with the SEC pursuant to Section 2(a), 2(c) or 2(e),
the
Company will 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 submit to the SEC, within two (2) Business Days after the Company
learns that no review of a particular Registration Statement or Subsequent
Registration Statement, as applicable, will be made by the staff of the SEC
or
that the staff of the SEC has no further comments on a particular Registration
Statement or Subsequent Registration Statement, as the case may be, a request
for acceleration of effectiveness of such Registration Statement or Subsequent
Registration Statement, as applicable to a time and date not later than 48
hours
after the submission of such request. The Company shall keep each Registration
Statement and Subsequent Registration Statement effective pursuant to Rule
415
at all times until the earliest of (i) the date as of which the Investors may
sell all of the Registrable Securities covered by such Registration Statement
without restriction pursuant to Rule 144(k) (or successor thereto)
promulgated under the 1933 Act, or (ii) the date on which the Investors shall
have sold all of the Registrable Securities covered by such Registration
Statement or Subsequent Registration Statement, as applicable (the "Registration
Period").
Each
Registration Statement and each Subsequent 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.
8
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement or
Subsequent Registration Statement, as applicable, and the prospectus used in
connection with such Registration Statement or Subsequent Registration
Statement, as applicable, which prospectus is to be filed pursuant to Rule
424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement or Subsequent Registration Statement, as applicable, effective at
all
times during the applicable Registration Period, and, during such period, comply
with the provisions of the 1933 Act in respect of the disposition of all
Registrable Securities of the Company covered by such Registration Statement
or
Subsequent Registration Statement, as applicable, 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
periodic 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
or Subsequent Registration Statement, as applicable.
c. The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement or Subsequent Registration Statement, as applicable,
at
least five (5) Business Days prior to its filing with the SEC and (ii) all
amendments and supplements to all Registration Statements or Subsequent
Registration Statements, as applicable, (except for periodic reports filed
under
the 0000 Xxx) within a reasonable number of days prior to their filing with
the
SEC, and (B) not file any Registration Statement or Subsequent Registration
Statement or amendment or supplement thereto in a form to which Legal Counsel
reasonably objects. The Company shall not submit a request for acceleration
of
the effectiveness of a Registration Statement or Subsequent Registration
Statement, as applicable, or any amendment or supplement thereto without prior
consent of Legal Counsel, which consent shall not be unreasonably withheld.
The
Company shall furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement or Subsequent
Registration Statement, as applicable, (ii) promptly after the same is prepared
and filed with the SEC, one copy of any Registration Statement or Subsequent
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference,
if
requested by an Investor and not available on the SEC’s Electronic Document
Gathering and Retrieval System (“XXXXX”), and all exhibits and (iii) upon the
effectiveness of any Registration Statement or Subsequent Registration
Statement, as applicable, one copy of the prospectus included in such
Registration Statement or Subsequent Registration Statement and all amendments
and supplements thereto, if requested by an Investor and not available on XXXXX.
The Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations pursuant to this Section 3.
d. The
Company shall furnish to such Investor whose Registrable Securities are included
in any Registration Statement or Subsequent Registration Statement, as
applicable, without charge, the following, if not already made available on
XXXXX: (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement or Subsequent Registration Statement
and
any amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement or
Subsequent Registration Statement, as applicable, ten (10) copies of the
prospectus included in such Registration Statement or Subsequent Registration
Statement and all amendments and supplements thereto (or such other number
of
copies as such Investor may reasonably request) 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.
9
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 or Subsequent
Registration Statement, as applicable, 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 applicable Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the applicable 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 and each Investor who holds Registrable Securities of the receipt
by the Company of any notification in respect of 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 notice of the initiation or threatening of any proceeding
for
such purpose.
f. The
Company shall notify Legal Counsel and each Investor in writing of the happening
of any event, as promptly as practicable, and in any event within twenty-four
(24) hours after becoming aware (provided that if the time of awareness is
not a
Trading Day, such twenty-four (24) hour period shall start at the beginning
of
the next Trading Day) of such event, as a result of which the prospectus
included in a Registration Statement or Subsequent Registration Statement,
as
applicable, 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, nonpublic information), and, subject to Section 3(r),
promptly prepare a supplement or amendment to such Registration Statement or
Subsequent Registration Statement to correct such untrue statement or omission,
and deliver ten (10) copies of such supplement or amendment to each investor
and
Legal Counsel (or such other number of copies as such Investor or Legal Counsel
may reasonably request). The Company shall also promptly notify Legal Counsel
and each Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration Statement
or
Subsequent Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile within one Business Day of such
effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or Subsequent 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 or Subsequent Registration Statement, as applicable,
would be appropriate.
10
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 Subsequent
Registration Statement, as applicable, 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 and
each
Investor who holds Registrable Securities being sold of the issuance of such
order and the resolution thereof or its receipt of notice of the initiation
or
threat of any proceeding for such purpose.
h.
If any
Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request of such
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the 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. Upon
the
written request of any Investor in connection with any Investor's due diligence
requirements, if any, or if the Investor is required under applicable securities
laws to be described in the registration Statement as an underwriter, at the
reasonable request of such Investor, the Company shall make available for
inspection by (i) such Investor, (ii) Legal Counsel and (iii) one firm of
accountants or other agents retained by all such Investors (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 shall
not
make any disclosure (except to an Investor) or use of 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) as determined
by the Company and its legal counsel, 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 or any other agreement of which the Inspector
has knowledge of the terms. Each 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 any Investor) shall be deemed to limit the Investors'
ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.
11
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 Subsequent
Registration Statement, as applicable, (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 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. The
Company shall use its best efforts to cause all Registrable Securities covered
by the Registration Statement to be listed on the OTC Bulletin Board or any
other securities exchange, quotation system or market, if any, on which similar
securities issued by the Company are then listed or traded as and when required
pursuant to the Securities Purchase Agreements. 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 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 and registered in such names as the Investors may request.
m. If
requested by an Investor, the Company shall (i) as soon as practicable
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 in respect of 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)
as
soon as practicable 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) as soon
as
practicable, supplement or make amendments to any Registration Statement or
Subsequent Registration Statement, as applicable, if reasonably requested by
an
Investor holding any Registrable Securities.
12
n. The
Company shall use its best efforts to cause the Registrable Securities covered
by a Registration Statement or Subsequent Registration Statement, as applicable,
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.
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 a Registration Statement
or
Subsequent Registration Statement, as applicable.
p. The
Company shall effect a filing with respect to the public offering contemplated
by the Registration Statement (an “Issuer
Filing”)
with
the National Association of Securities Dealers, Inc. (“NASD”)
Corporate Financing Department pursuant to NASD Rule 2710 (b)(10)(A)(i) within
one Trading Day of the date of filing of the Registration Statement and pay
the
filing fee required by such Issuer Filing. The Company shall use
commercially reasonable best efforts to pursue the Issuer Filing until the
NASD
issues a letter confirming that it does not object to the terms of the offering
contemplated by the Registration Statement. A copy of the Issuer Filing
and all related correspondence with respect thereto shall be provided to Morse,
Zelnick, Rose & Lander, LLP, counsel to Xxxxxx & Xxxxxxx, LLC, 000 Xxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxx,
Esq.
q. Within
two (2) Business Days after a Registration Statement or Subsequent Registration
Statement, as applicable, which covers Registrable Securities is ordered
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 or Subsequent Registration Statement,
as
applicable) confirmation that such Registration Statement or Subsequent
Registration Statement, as applicable, has been declared effective by the SEC
in
the form attached hereto as Exhibit
A.
r. Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, 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
in conformity with the provisions of this Section 3(r) (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 there
shall be no more than three such Grace Periods 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").
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 the Grace Period,
the
Company shall again be bound by the first sentence of Section 3(f) in respect
of
the information giving rise thereto unless such material, non-public information
is no longer applicable. Subject to compliance with applicable securities laws,
notwithstanding anything else contained herein to the contrary, the Company
shall cause its transfer agent to deliver unlegended Shares to a transferee
of
an Investor in accordance with the terms of the applicable Securities Purchase
Agreement, and deliver a copy of the prospectus included as part of the
applicable Registration Statement (unless an exemption from such prospectus
delivery requirement exists), prior to the Investor's receipt of the notice
of a
Grace Period and for which the Investor has not yet settled.
13
s. The
Company shall use its best efforts to maintain the eligibility of its
registration statement(s) on Form F-3 or such other form as is available for
such a registration, as applicable, until the expiration of the applicable
Registration Period.
4. Obligations
of the Investors.
a. At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement or Subsequent Registration Statement, as applicable,
the
Company shall notify each Investor in writing of the information the Company
requires from each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in such Registration Statement or
Subsequent Registration Statement, as applicable, to such Investor pursuant
to
Section 2(e). It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement in respect
of
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 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) or Subsequent
Registration Statement(s), as applicable, covering such Registrable Securities
until such Investor's receipt of copies of the supplemented or amended
prospectus contemplated by Section 3(g) or the first sentence of 3(f) has been
filed with the SEC or receipt of notice that no supplement or amendment is
required. Subject to compliance with applicable securities laws, notwithstanding
anything else to the contrary, the Company shall cause its transfer agent to
deliver unlegended Shares to a transferee of an Investor in accordance with
the
terms of the applicable Securities Purchase Agreement if requested by such
Investor prior to the Investor's receipt of a 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) and as to the sale of which the Investor has not yet
settled.
14
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 the Investors 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 $5,000.
6. Indemnification.
In
the
event any Registrable Securities are included in a Registration Statement
or
Subsequent
Registration
Statement, as applicable,
under
this Agreement:
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, incurred in investigating, preparing or defending
any pending 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 (collectively, "Claims")
to
which an indemnified party is a party or to which any of them may become subject
("Indemnified
Damages")
insofar as such Claims arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration Statement
or
Subsequent
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
Subsequent
Registration
Statement, as applicable,
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 the 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 or
Subsequent
Registration
Statement, as applicable
(the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations").
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for reasonable
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 the Registration Statement or
Subsequent
Registration
Statement or
any
such amendment thereof or supplement thereto and (ii) 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 the Registrable Securities by the Investors pursuant
to
Section 9.
15
b. In
connection with any Registration Statement or
Subsequent
Registration
Statement, as applicable,
in
which an Investor is participating, each 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, any Subsidiary of
the
Company, each of their respective directors, officers, members, partners,
employees, agents, representatives,
as
applicable,
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
or
Subsequent
Registration
Statement, as applicable;
and,
subject to Section 6(c), such Investor will the Indemnified Parties, promptly
as
such expenses are incurred and are due and payable for any reasonable legal
fees
or other reasonable expenses 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 in
respect of 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
the 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
or
Subsequent
Registration
Statement, as applicable.
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 Investors pursuant to Section 9.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided,
however,
that an
Indemnified Person or Indemnified Party, as the case may be, shall have the
right to retain its own counsel with the fees and expenses of not more than
one
counsel for such Indemnified Person or Indemnified Party, as the case may be,
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, as the case may be, and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Person or Indemnified Party, as the case
may
be, and any other party represented by such counsel in such proceeding. In
the
case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in
interest of the Registrable Securities included in the Registration Statement
or
Subsequent
Registration
Statement, as applicable,
to which
the Claim relates. The Indemnified Party or Indemnified Person, as the case
may
be, 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, 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 maybe, reasonably apprised at all times
as to
the status of the defense or any settlement negotiations in respect thereof.
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, in respect of 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 prejudiced in its ability to defend such
action.
16
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.
17
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 in respect
of any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided,
however,
that:
(i) 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 (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 pursuant
to
such Registration Statement
or
Subsequent
Registration
Statement, as applicable.
8. Reports
Under the 1934 Act.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar 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 ("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 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, the 1933 Act and the
1934
Act and (ii) such other information as may be reasonably requested to permit
the
Investors to sell such securities pursuant to Rule 144 without
registration.
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 in respect of 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; (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; and (v) such
transfer shall have been made in accordance with the applicable requirements
of
the applicable Securities Purchase Agreement.
18
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. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment 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 any of
this
Agreement unless the same consideration also is offered to all of the parties
to
this Agreement.
11. Miscellaneous.
a. The
provisions of this Agreement shall apply to the full extent set forth herein
in
respect of (i) the Shares, (ii) any and all shares of voting stock of
the Company into which the Shares are converted, exchanged or substituted in
any
recapitalization or other capital reorganization by the Company and
(iii) any and all equity securities of the Company or any successor or
assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in conversion of, in exchange
for
or in substitution of, Shares and shall be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, recapitalizations and the
like
occurring after the date hereof. The Company shall not enter into an agreement
in respect of a Fundamental Transaction (as defined in the Notes) which does
not
provide that the Successor Entity (as defined in the Notes), if any, shall
assume the obligations set forth herein or enter into a new registration rights
agreement with the Investors on terms substantially the same as those remaining
under this Agreement as a condition of any such transaction.
b. 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 in
respect of the same Registrable Securities, the Company shall act upon the
basis
of instructions, notice or election received from the record owner of such
Registrable Securities.
c. 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 provided same
is on a Business Day and, if not, on the next Business Day; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically
or
electronically generated and kept on file by the sending party) provided same
is
on a Business Day and, if not, on the next Business Day; (iii) one (1) Business
Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same; or (iv) if sent by certified mail,
return receipt requested, when received or three (3) days after deposited in
the
mails, whichever occurs first. The addresses and facsimile numbers for such
communications shall be:
If
to the
Company:
If
to the
Company:
Comanche
Clean Energy Corporation
c/x
Xxxxxx & Xxxxxx Corporate Services Ltd.
XX
Xxx
000 XX
Xxxxxx
House
South
Church Street
Xxxxxx
Town
Grand
Cayman, Cayman Islands
Tel:
000-000-0000
Fax:
000-000-0000
Attention:
Xxxxxx Xxxxxxxxxx
Email:
Xxxxxx.Xxxxxxxxxx@XXXXXXXXXXXXXXX.xxx
19
With
a
copy to:
Comanche
Clean Energy Corporation
c/o
FondElec
Xxx
Xxxx
Xxxxxx
Xxxxxxxx,
Xx. 00000 XXx
Tel:
000-000-0000
Fax:
000-000-0000
Attention:
Xxxxxx Xxxxxxxx
Email:
xxxxxxxxx@xxxxxxxx.xxx
with
a
copy to (for informational purposes):
Guzov
Ofsink LLC
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Telephone: 000-000-0000
Facsimile: 212-688-7273
Attention: Xxxxxx
X.
Xxxxxx, Esq.
If
to an
Investor, to its address and facsimile number set forth in the records of
the
Company or the Transfer Agent, as applicable, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers,
with
a
copy (for informational purposes) to:
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Tel:
000-000-0000
Fax:
000-000-0000
Attention:
Xxxxxxxxxxx X. Xxxxxxx
Email:
XXxxxxxx@xxxxxxxxxxx.xxx
20
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.
d. 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.
e. 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. The Company hereby appoints Guzov Ofsink,
LLC, 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, as its agent for service of process in New York.
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.
21
f. This
Agreement supersedes all other prior oral or written agreements between the
Company, their affiliates and Persons acting on their behalf in respect of
the
matters discussed herein, and this Agreement, the Transaction Documents and
the
instruments referenced herein contain the entire understanding of the parties
in
respect of the matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking in respect of such matters.
No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company, and the Required Holders, and any amendment
to
this Agreement made in conformity with the provisions of this Section 11(f)
shall be binding on all Buyers and holders of Securities as applicable. No
provision hereof may be waived other than by an instrument in writing signed
by
the party against whom enforcement is sought. No such amendment shall be
effective to the extent that it applies to less than all of the holders of
the
applicable Securities then outstanding. 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 the Transaction Documents unless the same consideration
also
is offered to all of the parties to the Transaction Documents, holders of Notes
or holders of the Warrants, as the case may be. The Company has not, directly
or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the foregoing,
the
Company confirms that, except as set forth in this Agreement and the applicable
Transaction Documents, no Buyer has made any commitment or promise or has any
other obligation to provide any financing to the Company or
otherwise.
g. 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.
h. The
headings in this Agreement are for convenience of reference only and shall
not
form a part of, or affect the interpretation of this Agreement.
i. 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;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
j. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as 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.
k. 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, determined as if all of the (i) Notes held by Investors
were converted into, and (ii) Warrants held by Investors then outstanding were
exercised for, Registrable Securities without regard to any limitation on
conversion of the Notes or exercise of the Warrants.
22
l. 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.
m. 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 except to the extent set
forth
in Section 6.
n. The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other Investor.
The Company acknowledges that nothing contained herein or the Securities
Purchase Agreement, and no action taken by any Investor pursuant hereto or
thereto (including, but not limited to, the (i) inclusion of an Investor in
the
Registration Statement and (ii) review by, and consent to, such Registration
Statement by an Investor) shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or
as a
group in respect of such obligations or the transactions contemplated herein
or
therein. The Company acknowledges that each Investor shall be entitled to
independently protect and enforce its rights, including without limitation,
the
rights arising out of this Agreement or the Securities Purchase Agreements,
and
it shall not be necessary for any other Investor to be joined as an additional
party in any proceeding for such purpose. The Company acknowledges that for
reasons of administrative convenience only, this Agreement, the Securities
Purchase Agreements and the other transaction documents have been prepared
by
counsel for the Company and the Company acknowledges that it has elected to
provide all Investors with the same terms and transaction documents for the
convenience of the Company and not because it was required or requested to
do so
by the Investors.
*
* * * *
*
23
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:
|
||
COMANCHE
CLEAN ENERGY CORPORATION
|
||
|
|
|
By: | ||
Name:
Title:
|
[Signature
Pages of Buyers Follow]
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:
|
||
[___________________]
|
||
|
|
|
By: | ||
Name:
Title:
|
SCHEDULE
OF BUYERS
Buyer
|
|
Address,
Telephone Number and E-Mail
|
|
Buyer’s
Representative
|
Sandelman
Partners Multi-Strategy Master Fund, Ltd.
|
000
Xxxx Xxx., 0xx Xx. Xxx Xxxx, XX 00000
212-299-7625
xxxxx@xxxxxxxx.xxx
|
Xxxxxxx,
Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000
Attn:
Xxxxxxxx X.X. Xxxxxx, Esq.
000-000-0000
(p)
|
||
Utilico
Emerging Markets Limited
|
Exchange
House, 8th Fl. Xxxxxxxx Xx. Xxxxxx, XX0X 0XX- Xxxxxx Xxxxxxx
44
1372 271 486
xxxxx@xxxxxxxx-xxxxxxxx.xxx
|
Kramer,
Levin, Naftalis & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attn:
Xxxxxxxxxxx Xxxxxxx, Esq.
000-000-0000
(p)
000-000-0000
(f)
|
||
MHR
Capital Partners Master Account LP
|
00
X. 00xx Xx., 00xx Xx. Xxx Xxxx, XX 00000
212-728-5429
xxxxxxxxxx@xxxxxxx.xxx
|
Stroock
& Stroock & Xxxxx LLP
000
Xxxxxx Xxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxx Xxxxxx, Esq.
(000)
000-0000 (p)
(000)
000-0000 (f)
|
||
MHR
Capital Partners (100) LP
|
00
X. 00xx Xx., 00xx Xx. Xxx Xxxx, XX 00000
212-728-5429
xxxxxxxxxx@xxxxxxx.xxx
|
Stroock
& Stroock & Xxxxx LLP
000
Xxxxxx Xxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxx Xxxxxx, Esq.
(000)
000-0000 (p)
(000)
000-0000 (f)
|
||
Wolverine
Convertible Arbitrage Fund Trading Ltd
|
000
X. Xxxxxxx Xxxx., #000 Xxxxxxx, XX 00000
312-884-3880
xxxxxxx@xxxxx.xxx
|
|||
GPC
LX LLC
|
000
X. Xxxxxxx Xxxx., #000 Xxxxxxx, XX 00000
312-884-3880
xxxxxxx@xxxxx.xxx
|
|||
Alpine
Capital (Cayman) Master, LP
|
000
Xxxxxxx Xxx., 0xx Xx. Xxx Xxxx, XX 00000
212-317-2400
xxxxxx@xxxxxxxxxxxxxxxxxx.xxx
|
|||
Xxxxxxxxx
Equity Partners, LP
|
0000
XxXxxxxx, #0000 Xxxxxx, XX 00000
214-220-3609
xxxx@xxxxx.xxx
|
|||
Whitebox
Hedged High Yield Partners, LP
|
0000
Xxxxxxxxx Xxxx., #000 Xxxxxxxxxxx, XX 00000
000-000-0000
xxxxxx@xxxxxxxxxxxxxxxx.xxx
|
|||
Whitebox
Intermarket Partners, LP
|
0000
Xxxxxxxxx Xxxx., #000 Xxxxxxxxxxx, XX 00000
000-000-0000
xxxxxx@xxxxxxxxxxxxxxxx.xxx
|
Deephaven
Distressed Opportunities Trading Ltd
|
000
Xxxxxxxx Xx., #000 Xxxxxxxxxx, XX 00000
952-249-5419
xxxxxxx@xxxxxxxxxxxxxx.xxx
|
Deephaven
Event Trading Ltd
|
000
Xxxxxxxx Xx., #000 Xxxxxxxxxx, XX 00000
952-249-5419
xxxxxxx@xxxxxxxxxxxxxx.xxx
|
|||
Paragon
Capital, L.P.
|
000
X. 00xx Xx., 00xx Xx. Xxx Xxxx, XX 00000
212-593-3157
xxxx@xxxxxxxxx.xxx
|
|||
Cranshire
Capital, LP
|
0000
Xxxxxx Xx., #000 Xxxxxxxxxx, XX 00000
847-562-9030
xxxxxxxx@xxxxxxxxxxxxxxxx.xxx
|
|||
R&R
Biotech Partners LLC
|
0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000
212-356-0509
xxxxxx@xxxxxxxxxxxxxxxx.xxx
|
|||
Xxxxxxx
Xxxxx & Company
|
Xxx
Xxx Xxxx Xxxxx, 00 Xxxxx Xx., 00xx Xx. Xxx Xxxx, XX 00000
212-902-4423
xxxxxxxxx.xxxxxxxx@xx.xxx
|
|||
Deutsche
Bank AG, London Branch
|
0
Xxxxx Xxxxxxxxxx Xx. Xxxxxx XX0X 0XX Xxxxxx Xxxxxxx
44
2075 450 283
xxxx.xx@xx.xxx
|
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Interwest
Transfer Company, Inc.
0000
Xxxx
Xxxxxx Xxxxxxxx Xxxx, Xxxxx 000
X.X.
Xxx
00000
Xxxx
Xxxx
Xxxx, Xx 00000
Attention:
[
]
Re: Comanche
Clean Energy Corporation
Ladies
and Gentlemen:
We
have
represented Comanche Clean Energy Corporation, a Cayman Islands company (the
"Company")
in
connection with (i) that certain Securities Purchase Agreement (Notes and
Warrants) (the "Note
Purchase Agreement")
entered into by and among the Company and the buyers named therein
(collectively, the "Note Holders")
pursuant to which the Company issued to the Holders secured convertible notes
(the "Notes")
convertible into the Company's Ordinary Shares, $0.001 par value per share
("Shares")
and
warrants exercisable for Shares (the "Note
Warrants"),
and
(ii) that certain Securities Purchase Agreement (Shares and Warrants) (the
"Share
Purchase Agreement")
entered into by and among the Company and the buyers named therein
(collectively, the "Share
Holders")
pursuant to which the Company issued to the Share Holders Shares (the
“PIPE
Shares”)
and
warrants exercisable for Shares (the "PIPE
Warrants",
together with the Note Warrants, collectively, 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 Shares
issuable upon conversion of the Notes, the PIPE Shares and the Shares issuable
upon 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 F-__ (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.
Please
notify us immediately upon the request of any Holder to transfer Shares pursuant
to the Registration Statement. We will then provide you a letter regarding
the
transferability of the Shares under the Registration Statement.
Very
truly yours,
|
||
Guzov
Ofsink, LLC
|
||
|
|
|
By: | ||
|
CC:
[LIST
NAMES OF HOLDERS]
EXHIBIT
B
SELLING
STOCKHOLDERS
The
Shares being offered by the selling stockholders are those previously issued
to
the selling stockholders and those issuable upon conversion of the convertible
notes and upon exercise of the warrants. For additional information regarding
the issuance of those number of Shares and warrants and convertible notes and
warrants, see "Confidential Private Placement Memorandum" above. We are
registering the Shares in order to permit the selling stockholders to offer
the
shares for resale from time to time. Except for the ownership of the Shares,
convertible notes and warrants issued pursuant to the Securities Purchase
Agreements, the selling stockholders who acquired their securities pursuant
to
the Securities Purchase Agreements have not had any material relationship with
us within the past three years. Xxxxxx & Xxxxxxx, LLC acted as our placement
agent in respect of the issuance of the convertible notes and warrants and
the
Shares, and received warrants exercisable for Shares in connection
therewith.
The
table
below lists the selling stockholders and other information regarding the
beneficial ownership of the Shares by each of the selling stockholders. The
second column lists the number of Shares beneficially owned by each selling
stockholder, based on its ownership of the convertible notes and warrants,
as of
________, 2007.1
In
computing the number of shares beneficially owned by a selling stockholder
and
the percentage of ownership of that selling stockholder, the number of Shares
underlying the convertible notes and the warrants held by that selling
stockholder that are convertible or exercisable, as the case may be, within
60
days of [insert date] are included. Those shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any other
selling stockholder. Each selling stockholder's percentage of ownership in
the
following table is based upon [______] Shares outstanding as of [insert date].
We will not receive any of the proceeds from the sale of our Shares by the
selling stockholders. None of these selling stockholders are, or are affiliates
of, a broker-dealer registered under the Exchange Act.
The
third
column lists the number of Shares being offered by this prospectus by each
selling stockholder.
In
accordance with the terms of registration rights agreements among the Company
and the selling stockholders, this prospectus generally covers the resale of
at
least the number of Shares issued in the private placement of Shares and
warrants and 125% of the sum of the number of Shares issued or issuable (x)
upon
conversion of the convertible notes, and (y) upon exercise of the warrants,
determined as if the outstanding notes were converted and warrants were
exercised in full, each as of the trading day immediately preceding the date
the
registration statement is initially filed with the SEC. Because
the conversion price of the convertible notes may be adjusted 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.
1
Note to
Draft: Each Investor’s entry in this column should be footnoted with the
following text: As described below, all conversions of, or exercises under,
the
convertible notes and the warrants are subject to the restriction that such
conversions or exercises do not result in the holder and its affiliates
beneficially owning more than 9.99% of our outstanding Shares. Based on the
[_______] shares of our Shares that were outstanding as of [insert date],
as of
such date, each of these selling stockholders may be deemed to beneficially
own
and may only convert and/or exercise a maximum of [_______] Shares under
its
respective convertible note and warrant.
B-1
Under
the
terms of the convertible notes and the warrants, a selling stockholder may
not
convert the convertible 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 which would exceed 9.99%
of
our then outstanding Shares following such conversion or exercise, excluding
for
purposes of such determination Shares issuable upon conversion of the
convertible notes which have not been converted and upon exercise of the
warrants that have not been exercised. The number of shares in the second column
does not reflect this limitation. The selling stockholders may sell all, some
or
none of their shares in this offering. See "Plan of Distribution."
Name
of Selling Stockholder
|
Number
of Shares Owned Prior to Offering
|
Maximum
Number of Shares to be Sold Pursuant to this
Prospectus
|
Number
of Shares Owned After Offering
|
|||
|
0
|
B-2
PLAN
OF DISTRIBUTION
We
are
registering the number of Shares issued pursuant to the Securities Purchase
Agreement (Common and Warrants) and the number of Shares issuable upon
conversion of the convertible notes and upon exercise of the warrants to permit
the resale of these Shares by the holders of the convertible 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. We will
bear all fees and expenses incident to our obligation to register the
Shares.
The
selling stockholders may sell all or a portion of the Shares 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 are sold through
underwriters or broker-dealers, the selling stockholders will be responsible
for
underwriting discounts or commissions or agent's commissions. The Shares 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; |
· | sales pursuant to Rule 144; |
B-3
· | broker-dealers may agree with the selling stockholders 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 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 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); provided that the commissions payable to, or discounts
received by, any member of the National Securities Dealers Association, Inc.
shall not exceed 8% of the sale of any Shares being registered pursuant to
Rule
415. In connection with sales of the Shares or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers, which
may
in turn engage in short sales of the Shares in the course of hedging in
positions they assume. The selling stockholders may also sell Shares short
and
deliver Shares 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 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 convertible notes, warrants or the Shares 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 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 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-dealers or agents that are involved in
selling the Shares may be deemed to be "underwriters" within the meaning of
the
Securities Act in connection with such sales. In such event, any commissions
received by such broker dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Shares. The maximum
commission or discount to be received by any NASD member or independent
broker/dealer will not be greater than eight percent (8.0%) for the sale of
any
securities registered pursuant to this registration statement. At the time
a
particular offering of the Shares is made, a prospectus supplement, if required,
will be distributed which will set forth the aggregate amount of Shares 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.
B-4
Under
the
securities laws of some states, the Shares may be sold in such states only
through registered or licensed brokers or dealers. In addition, in some states
the 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
registered pursuant to the 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, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the Shares by the selling stockholders and any
other participating person. Regulation M may also restrict the ability of any
person engaged in the distribution of the Shares to engage in market-making
activities with respect to the Shares. All of the foregoing may affect the
marketability of the Shares and the ability of any person or entity to engage
in
market-making activities in respect of the Shares.
We
will
pay all expenses of the registration of the Shares pursuant to the registration
rights agreements, 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 registration statement, of which this prospectus forms a part, the
Shares will be freely tradable in the hands of persons other than our
affiliates.
B-5