REGISTRATION RIGHTS AGREEMENT
EXECUTION
COPY
This
Registration Rights Agreement (this "Agreement")
is made
and entered into as of November 17, 2007, by and among New Paradigm Productions,
Inc., a Nevada corporation which will change its corporate name to China Marine
Food Group Limited (the "Company"),
and
the investors signatory hereto (each an "Investor"
and
collectively, the "Investors").
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof among the Company, Xxxxxxx Xxx, as the make good pledgor and the
Investors (the "Purchase
Agreement").
The
Company and the Investors hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement will have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms have the respective
meanings set forth in this Section
1:
“2008
Delivery Date”
means
the date on which the 2008 Make Good Shares are required to be delivered to
the
Investors by the
Make
Good Pledgor
pursuant
to Section
5.2
of the
Purchase Agreement, but only if delivery thereof is then required by the
applicable provisions of such Section 5.2.
“2009
Delivery Date”
means
the date on which the 2009 Make Good Shares are required to be delivered to
the
Investors by the Make Good Pledgor
pursuant
to Section
5.2
of the
Purchase Agreement, but only if delivery thereof is then required by the
applicable provisions of such Section 5.2.
“Advice”
has
the
meaning set forth in Section
7(d).
“Available
Undersubscription Amount” has
the
meaning set forth in Section
6.
“Allowable
Maximum”
has the
meaning set forth in Section
2(g).
“Agent
Warrant Shares”
means
any shares of Common Stock issuable upon the exercise of warrants issued to
any
placement agent as compensation in connection with the financing that is the
subject of the Purchase Agreement.
“Basic
Amount” has
the
meaning set forth in Section
6.
“Business
Day”
means
any day other than Saturday, Sunday or any other day which is a United States
federal legal holiday or a day in which banking institutions in the State of
New
York or the province of Fujian in the People’s Republic of China are authorized
or required by law or other governmental action to close.
“California
Courts”
means
the state and federal courts sitting in the State of California.
“Common
Stock Equivalents” has
the
meaning set forth in Section
6.
“Consultant”
means
Yorkshire Capital Limited or its designee.
“Consultant
Warrant Shares” means
any
shares of Common Stock issuable upon the exercise of warrants issued to the
Consultant as compensation for past services provided to Nice
Enterprise.
“Convertible
Securities” has
the
meaning set forth in Section
6.
"Effective
Date"
means,
as to a Registration Statement, the date on which such Registration Statement
is
first declared effective by the Commission.
“Effectiveness
Date”
means:
(a) with respect to the
Registration Statement required to be filed under Section
2(a),
the
earlier of (i) the 180th
day
following the Closing Date, and (ii) the fifth Trading Day following the date
on
which the Company is notified by the Commission that such Registration Statement
will not be reviewed or is no longer subject to further review and comments;
(b)
with respect to a Registration Statement required to be filed under Section
2(b),
the
earlier of: (i) the 75th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock; provided,
that,
if the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (b)(i) shall
be the 90th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock, and (ii) the fifth Trading Day following
the date on which the Company is notified by the Commission that the
Registration Statement will not be reviewed or is no longer subject to further
review and comments; (c) with respect to a Registration Statement required
to be
filed under Section
2(c),
the
earlier of: (i) the 90th
day
following the 2008 Delivery Date and (ii) the fifth Trading Day following the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments; and (d) with respect to a Registration Statement required to be filed
under Section
2(d),
the
earlier of: (i) the 90th
day
following the 2009 Delivery Date and (ii) the fifth Trading Day following the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments.
"Effectiveness
Period"
has the
meaning set forth in Section
2(a).
“Event”
has the
meaning set forth in Section
2(h).
“Event
Date”
has the
meaning set forth in Section
2(h).
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
“Excluded
Events”
has the
meaning set forth in Section
2(i).
“Exempt
Issuance”
means
the issuance of:
2
(a)
shares of Common Stock or options to employees, officers or independent
directors of the Company pursuant to any stock or option plan duly approved
by
the Company’s stockholders, provided such issuances are approved by the Board of
Directors of the Company or a majority of the members of a committee of
directors established for such purpose, but including therein the approval
of a
majority of the independent directors on the Board or such
committee;
(b)
securities upon the exercise or exchange of or conversion of any Securities
issued hereunder or to any placement agents in connection with the transactions
contemplated hereby and/or securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date
of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of any such securities; or
(c)
securities issued pursuant to acquisitions or strategic transactions, provided
any such issuance shall only be to a Person that is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company
is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.
"Filing
Date"
means
(a) with respect to the Registration Statement required to be filed under
Section
2(a),
the
30th day following the Closing Date, (b) with respect to a Registration
Statement required to be filed under Section
2(b),
the
30th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock, (c) with respect to the Registration
Statement required to be filed under Section
2(c),
the
45th
day
following the 2008 Delivery Date (provided that if the Company is then eligible
to utilize Form S-3 to register the resale of Common Stock, the Filing Date
under this clause (c) shall be thirty days following the 2008 Delivery
Date)
and (d)
with
respect to the Registration Statement required to be filed under Section
2(d),
the
45th
day
following the 2009 Delivery Date (provided that if the Company is then eligible
to utilize Form S-3 to register the resale of Common Stock, the Filing Date
under this clause (d) shall be thirty days following the 2009 Delivery
Date).
"Holder"
or
"Holders"
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
has the
meaning set forth in Section
5(c).
“Indemnifying
Party”
has the
meaning set forth in Section
5(c).
“Investment
Amount”
has the
meaning set forth in Section
2(h).
“Investors”
means
the investors signatory to this Agreement (and therefore, for purposes of this
Agreement, includes Persons who are not a party to the Purchase
Agreement).
“Losses”
has the
meaning set forth in Section
5(a).
3
“Nice
Enterprise”
means
Nice Enterprise Trading H.K. Co., Ltd., a Hong Kong company.
“Notice
of Acceptance” has
the
meaning set forth in Section
6.
“Offer”
has
the
meaning set forth in Section
6.
“Offer
Notice” has
the
meaning set forth in Section
6.
“Offer
Period” has
the
meaning set forth in Section
6.
“Offered
Securities” has
the
meaning set forth in Section
6.
“Options”
has
the
meaning set forth in Section
6.
"Proceeding"
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Purchase
Agreement”
has the
meaning set forth in the recitals hereto.
“Refused
Securities” has
the
meaning set forth in Section
6.
“Registrable
Securities”
means:
(i) the Shares, (ii) the Warrant Shares, (iii) the Agent Warrant Shares, (iv)
the Consultant Warrant Shares; (v) 2008 Make Good Shares, as applicable, (vi)
the 2009 Make Good Shares, as applicable, and (vii) certain shares
of
Common Stock held by existing investors and holders of the Company who acquired
such shares prior to the consummation of the Exchange
(the
“Pre-Exchange
Shares”)
and
(viii) any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event, or any price adjustment as
a
result of such stock splits, reverse stock splits or similar events with respect
to any of the securities referenced in (i)-(vii) above.
“Registration
Statement”
means
each registration statement required to be filed under Section 2, including
(in
each case) the Prospectus, amendments and supplements to such registration
statements or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference therein.
4
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Selling
Holder Questionnaire”
has the
meaning set forth in Section
2(e).
“Shares”
means
the shares of Common Stock issued or issuable to the Investors pursuant to
the
Purchase Agreement.
“Subsequent
Placement” has
the
meaning set forth in Section
6.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market (other than
the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock
is
traded in the over-the-counter market, as reported by the OTC Bulletin Board,
or
(iii) if the Common Stock is not quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the
Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, FINRA
Global Select Market, FINRA Global Market, FINRA Capital Market, OTC Bulletin
Board on which the Common Stock is listed or quoted for trading on the date
in
question.
“Trigger
Date”
means
the 180th day following the Effective Date of the first Registration Statement
with respect to resale of any of the Registrable Securities.
“Undersubscription
Amount” has
the
meaning set forth in Section
6.
2. Registration.
(a) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of
all
Registrable Securities (other than the 2008 Make Good Shares and the 2009 Make
Good Shares) not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415,
on Form S-1 (or on such other form appropriate for such purpose). Such
Registration Statement shall contain (except if otherwise required pursuant
to
written comments received from the Commission upon a review of such Registration
Statement) the "Plan
of Distribution"
attached hereto as Annex
A.
The
Company shall use its commercially reasonable best efforts to cause such
Registration Statement to be declared effective under the Securities Act as
soon
as possible but, in any event, no later than its Effectiveness Date, and shall
use its commercially reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act until the date which is the
earliest of (i) two years after its Effective Date (and for purposes of a
Registration Statement contemplated in Section
2(c)
and/or
Section
2(d)
hereof,
two years after the Effective Date therefor), (ii) such time as all of the
Registrable Securities covered by such Registration Statement have been publicly
sold by the Holders, or (iii) such time as all of the Registrable Securities
covered by such Registration Statement may be sold by the Holders pursuant
to
Rule 144(k) as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and acceptable to the Company's
transfer agent and the affected Holders (the "Effectiveness
Period").
By
5:00 p.m. (New York City time) on the Trading Day immediately following the
Effective Date of such Registration Statement, the Company shall file with
the
Commission in accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement (whether or not such filing is technically required under such
Rule).
5
(b) Promptly
following any date on which the Company becomes eligible to use a registration
statement on Form S-3 to register Registrable Securities for resale, the Company
shall file a Registration Statement on Form S-3 covering all such Registrable
Securities (or a post-effective amendment on Form S-3 to the then effective
Registration Statement) and shall cause such Registration Statement to be filed
by the Filing Date for such Registration Statement and declared effective under
the Securities Act as soon as possible thereafter, but in any event prior to
the
Effectiveness Date therefor. Such Registration Statement shall contain (except
if otherwise required pursuant to written comments received from the Commission
upon a review of such Registration Statement) the "Plan of Distribution"
attached hereto as Annex
A.
The
Company shall use its commercially reasonable best efforts to keep such
Registration Statement continuously effective under the Securities Act during
the entire Effectiveness Period. By 5:00 p.m. (New York City time) on the
Trading Day immediately following the Effective Date of such Registration
Statement, the Company shall file with the Commission in accordance with Rule
424 under the Securities Act the final prospectus to be used in connection
with
sales pursuant to such Registration Statement (whether or not such filing is
technically required under such Rule).
(c) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of the 2008 Make Good
Shares on Form S-1 or SB-2, or Form S-3 if the Company is then eligible to
utilize such Form (or on such other form appropriate for such purpose) and
shall
cause such Registration Statement to be filed by the Filing Date for such
Registration Statement and declared effective under the Securities Act as soon
as possible thereafter, but in any event prior to the Effectiveness Date
therefor. Such Registration Statement shall contain (except if otherwise
required pursuant to written comments received from the Commission upon a review
of such Registration Statement) the "Plan of Distribution" attached hereto
as
Annex
A.
The
Company shall use its commercially reasonable best efforts to keep such
Registration Statement continuously effective under the Securities Act during
the entire Effectiveness Period which is applicable to it. By 5:00 p.m. (New
York City time) on the Trading Day immediately following the Effective Date
of
such Registration Statement, the Company shall file with the Commission in
accordance with Rule 424 under the Securities Act the final prospectus to be
used in connection with sales pursuant to such Registration Statement (whether
or not such filing is technically required under such Rule).
6
(d) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of the 2009 Make Good
Shares on Form S-1 or SB-2, or Form S-3 if the Company is then eligible to
utilize such Form (or on such other form appropriate for such purpose) and
shall
cause such Registration Statement to be filed by the Filing Date for such
Registration Statement and declared effective under the Securities Act as soon
as possible thereafter, but in any event prior to the Effectiveness Date
therefor. Such Registration Statement shall contain (except if otherwise
required pursuant to written comments received from the Commission upon a review
of such Registration Statement) the "Plan of Distribution" attached hereto
as
Annex
A.
The
Company shall use its commercially reasonable best efforts to keep such
Registration Statement continuously effective under the Securities Act during
the entire Effectiveness Period which is applicable to it. By 5:00 p.m. (New
York City time) on the Trading Day immediately following the Effective Date
of
such Registration Statement, the Company shall file with the Commission in
accordance with Rule 424 under the Securities Act the final prospectus to be
used in connection with sales pursuant to such Registration Statement (whether
or not such filing is technically required under such Rule).
(e) Each
Holder agrees to furnish to the Company a completed Questionnaire which shall,
(i) if such Holder was a purchaser of Shares under the Purchase Agreement,
be in
the form included in such Holder’s original subscription booklet for Shares and
Warrants, and (ii) if such Holder was not a purchaser of Shares under the
Purchase Agreement, be in the form accompanying this Agreement as Annex
B
(each
applicable form of questionnaire being a “Selling
Holder Questionnaire”).
The
Company shall not be required to include the Registrable Securities of a Holder
in a Registration Statement and shall not be required to pay any liquidated
or
other damages under Section
2(h)
to any
Holder who fails to furnish to the Company a fully completed Selling Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject to
the
requirements set forth in Section
3(a)).
(f) If
all of
the Registrable Securities to be included in the Registration Statement filed
pursuant to Section 2(a)
cannot
be so included because the SEC Staff informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415,
be
registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly (i) inform each of the holders
thereof, (ii) use its commercially reasonable best efforts to file amendments
to
the initial Registration Statement as required by the SEC Staff and/or (iii)
withdraw the initial Registration Statement and file a new registration
statement, in either case covering the maximum number of Registrable Securities
permitted to be registered by the SEC Staff, on Form S-3 or such other form
available to register for resale the Registrable Securities as a secondary
offering; provided,
however,
that
prior to filing such amendment or new registration statement, the Company shall
be obligated to use its commercially reasonable best efforts to advocate with
the then prevailing SEC guidance, including without limitation, the Manual
of
Publicly Available Telephone Interpretations D.29. In the event the Company
amends the initial Registration Statement or files a new registration statement,
as the case may be, under clauses (ii) or (iii) above, then the Company shall
prepare and file by the applicable Filing Date for such Registration
Statement(s), such number of additional Registration Statements as may be
necessary in order to ensure that all Registrable Securities are covered by
an
existing and effective Registration Statement. Accordingly, if for example,
an
additional Registration Statement is filed under this Section 2(f)
to
register shares taken off a Registration Statement filed under Section 2(a)
due to
SEC Staff Comments and SEC Staff Comments again require shares to be removed
for
such newly filed Registration Statement under this Section 2(f),
then
the Company will prepare and file additional Registration Statements until
such
time as all such removed shares are covered by effective Registration
Statements. Any Registration Statements to be filed under this Section
2(f) shall
be for an offering to be made on a continuous basis pursuant to Rule 415, on
Form S-3 (or on such other form appropriate for such purpose). The Company
shall
use its commercially reasonable best efforts to keep such Registration Statement
continuously effective under the Securities Act during the entire Effectiveness
Period which is applicable to it. By 5:00 p.m. (New York City time) on the
Trading Day immediately following the Effective Date of such Registration
Statement, the Company shall file with the Commission in accordance with Rule
424 under the Securities Act the final prospectus to be used in connection
with
sales pursuant to such Registration Statement (whether or not such filing is
technically required under such Rule).
7
(g) In
the
event that the Company receives SEC Staff Comments limiting the amount of shares
of Common Stock which may be included in any Registration Statement (such number
of shares of Common Stock which the Company may include in such Registration
Statement in accordance with the SEC Staff Comments, the “Allowable
Maximum”),
the
number of Registrable Securities sought to be included in any such Registration
Statement shall be cutback and removed from such Registration Statement until
the aggregate number of such Registrable Securities to be included in such
Registration Statement equals the Allowable Maximum. Such cutbacks will be
in
the following order:
(i)
first
there shall be excluded any securities of the Company included or to be included
in such Registration Statement, whether pursuant to piggyback or demand
registration rights or otherwise requested to be included, other than the
Shares, Pre-Exchange Shares, Warrant Shares, the Agent Warrant Shares and the
Consultant Warrant Shares; next
(ii)
the
Warrant Shares, Agent Warrant Shares and Consultant Warrant Shares shall be
excluded; and next
(iii)
the
Shares and Pre-Exchange Shares shall be excluded, until the Allowable Maximum
is
not exceeded.
Except
as
specified in the preceding sentence, any required cutbacks within each level
(i), (ii) or (iii) of priority shall be applied to such Holders pro-rata in
accordance with the number of shares of Common Stock held by such Holders and
sought to be included in the Registration Statement.
(h) Unless
pursuant to the provisions of Section
2(f)-(g),
if: (i)
the Registration Statement pursuant to Section
2(a)
is not
filed on or prior to its Filing Date covering the Registrable Securities
required under this Agreement to be included therein, or (ii) the Registration
Statement pursuant to Section
2(a)
is not
declared effective by the Commission on or prior to its Effectiveness Date
or if
by the Trading Day immediately following the Effective Date the Company shall
not have filed a “final”
prospectus for the Registration Statement with the Commission under Rule 424(b)
(if such a prospectus filing is required by such Rule) and notify the Holders
of
the Effectiveness Date, or (iii) except for Excluded Events as provided for
in
Section 2(i),
after
its Effective Date, without regard for the reason thereunder or efforts
therefore, such Registration Statement ceases for any reason to be effective
and
available to the Holders as to the Registrable Securities to which it is
required to cover at any time prior to the expiration of its Effectiveness
Period (any such failure or breach specified in clauses (i) to (iii) above
being
referred to as an “Event,”
and
for
purposes of clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such period is exceeded, being referred
to as “Event
Date”),
then
on each such Event or Event Date, and on each monthly anniversary of each such
Event or Event Date (if the applicable Event shall not have been cured by such
date) until the applicable Event is cured, the Company shall pay (A) to each
Holder who is an Investor an amount in cash, as liquidated damages and not
as a
penalty, equal to 1.00% of the aggregate paid for each Unit pursuant to the
Purchase Agreement (“Investment
Amount”);
provided,
however,
that
the total amount of liquidated damages payable by the Company to all Investors
pursuant to all Events under this Section
2(h) shall
be capped at $1,000,000.
8
(1) In
the
event that any liquidated damages payment due under this Section
2(h)
is not
made in a timely manner, such payment shall bear interest at a rate of 1.5%
per
month until paid in full.
(2) The
Company shall not be liable for liquidated damages under this Agreement as
to
any Registrable Securities which cannot be included in a Registration Statement
because the SEC Staff informs the Company that such Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale
as
a secondary offering on a single registration statement.
(3) The
liquidated damages pursuant to this Section 2(h)
shall be
the exclusive monetary remedy of the Investors in the event that the Company
fails to satisfy its obligation to file or to have an effective Registration
Statement on file with the SEC pursuant to the terms of this
Agreement.
(4) No
liquidated damages pursuant to this Section
2(h)
shall be
incurred with respect to the Registrable Securities to the extent that shares
of
Common Stock included therein may then be sold pursuant to SEC Rule 144 based
upon an opinion of counsel acceptable to the Company and the Holder of such
Common Stock.
(i) Notwithstanding
anything in this Agreement to the contrary, after 120 consecutive Trading Days
of continuous effectiveness of the initial Registration Statement filed and
declared effective pursuant to this Agreement, the Company may, by written
notice to the Holders, suspend sales under a Registration Statement after the
Effective Date thereof and/or require that the Holders immediately cease the
sale of shares of Common Stock pursuant thereto and/or defer the filing of
any
subsequent Registration Statement if the Company is engaged in a material
merger, acquisition or sale and the Board of Directors determines in good faith,
by appropriate resolutions, that, as a result of such activity, (A) it would
be
materially detrimental to the Company (other than as relating solely to the
price of the Common Stock) to maintain a Registration Statement at such time
or
(B) it is in the best interests of the Company to suspend sales under such
registration at such time. Upon receipt of such notice, each Holder shall
immediately discontinue any sales of Registrable Securities pursuant to such
registration until such Holder is advised in writing by the Company that the
current Prospectus or amended Prospectus, as applicable, may be used. In no
event, however, shall this right be exercised to suspend sales beyond the period
during which (in the good faith determination of the Company’s Board of
Directors) the failure to require such suspension would be materially
detrimental to the Company. The Company’s rights under this Section 2(i)
may be
exercised for a period of no more than 20 Trading Days at a time and not more
than once in any twelve-month period, without such suspension being considered
as part of an Event. Immediately after the end of any suspension period under
this Section 2(i),
the
Company shall take all necessary actions (including filing any required
supplemental prospectus) to restore the effectiveness of the applicable
Registration Statement and the ability of the Holders to publicly resell their
Registrable Securities pursuant to such effective Registration Statement. The
events described in this Section 2(i)
are
“Excluded
Events.”
However,
any failure by the Company to restore the effectiveness of the applicable
Registration Statement by the first Trading Day following the end of the maximum
allowable suspension period shall be deemed an Event.
9
3. Registration
Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a) Not
less
than four Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall
furnish to each Holder copies of the “Selling Stockholders” section of such
document, the “Plan of Distribution” and any risk factor contained in such
document that addresses specifically the Selling Stockholders, as proposed
to be
filed, which documents will be subject to the review of such Holder. Any holder
must provide their comments, if any, to the Company at least two Trading Days
prior to the filing of such Registration Statement or any related Prospectus
or
any amendment or supplement thereto. The Company shall not file a Registration
Statement, any Prospectus or any amendments or supplements thereto in which
the
“Selling Stockholder” section thereof differs from the disclosure received from
a Holder in its Selling Holder Questionnaire (as amended or
supplemented).
(b) (i)
Subject to Section 2.1(e), use its commercially reasonable best efforts to
prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect
to
each Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration
Statement that would not result in the disclosure to the Holders of material
and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statement and the disposition of all Registrable
Securities covered by each Registration Statement.
10
(c) Notify
the Holders as promptly as reasonably possible (if requested by the Holders)
(and, in the case of (i)(A) below, not less than three Trading Days prior to
such filing and, in the case of (v) below, not less than three Trading Days
prior to the financial statements in any Registration Statement becoming
ineligible for inclusion therein by reason of the passage of time) and (if
requested by any such Holder) confirm such notice in writing no later than
two
Trading Days thereafter: (i)(A) when a Prospectus or any Prospectus supplement
or post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review"
of
such Registration Statement and whenever the Commission comments in writing
on
such Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders that pertain
to
the Holders as a Selling Stockholder or to the Plan of Distribution, but not
information which the Company believes would constitute material and non-public
information); and (C) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement covering any
or
all of the Registrable Securities or the initiation of any Proceedings for
that
purpose; (iv) of the receipt by the Company of any notification with respect
to
the suspension of the qualification or exemption from qualification of any
of
the Registrable Securities for sale in any jurisdiction, or the initiation
or
threatening of any Proceeding for such purpose; and (v) of the occurrence of
any
event or passage of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any statement made
in
such Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
(d) Use
its
commercially reasonable best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale
in
any jurisdiction, at the earliest practicable moment.
(e) If
requested by a Holder, furnish to such Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto and
all
exhibits to the extent requested by such Holder (including those previously
furnished) promptly after the filing of such documents with the
Commission.
11
(f) Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request. The Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of
the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(g) Prior
to
any public offering of Registrable Securities, use its commercially reasonable
best efforts to register or qualify such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder may request, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable
the
disposition in such jurisdictions of the Registrable Securities covered by
the
Registration Statements; provided,
however,
that
the Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to subject itself to taxation
in
respect of doing business in any jurisdiction in which it is not otherwise
so
subject.
(h) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statements, which certificates shall be free,
to
the extent permitted by the Purchase Agreement, of all restrictive legends,
and
to enable such Registrable Securities to be in such denominations and registered
in such names as any such Holders may request.
(i) In
conjunction with the filing of the Registration Statement, the Company will
cooperate and coordinate with the Placement Agent in connection with the filing
to be made with FINRA, via the COBRA desk filing system, for approval of
underwriting compensation under Section 2710 of the rules and regulations of
FINRA, obtain from FINRA a standard clearance letter, and coordinate with the
Placement Agent on filings it will be required to make upon sales under the
registration statement.
(j) Upon
the
occurrence of any event contemplated by Section
3(c)(v),
as
promptly as reasonably possible, prepare a supplement or amendment, including
a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, no Registration Statement nor any Prospectus
will
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not
misleading.
4. Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with any
Trading Market on which the Common Stock is then listed for trading, and (B)
in
compliance with applicable state securities or Blue Sky laws), (ii) printing
expenses (including, without limitation, expenses of printing certificates
for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the
Company, (v) Securities Act liability insurance, if the Company so desires
such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
12
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, agents, investment advisors,
partners, members and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable
law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys' fees) and expenses (collectively, "Losses"),
as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus
or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus
or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding
such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use
in
the Registration Statement, such Prospectus or such form of Prospectus or in
any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (2) in the case of an occurrence
of
an event of the type specified in Section
3(c)(ii)-(v),
the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and
prior to the receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission
giving rise to such Loss would have been corrected. The Company shall notify
the
Holders promptly of the institution, threat or assertion of any Proceeding
of
which the Company is aware in connection with the transactions contemplated
by
this Agreement.
(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, arising solely out of or based solely
upon: (x) such Holder's failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out
of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent that, (1) such untrue statements or omissions
are
based solely upon information regarding such Holder furnished in writing to
the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (2) in the case of an occurrence of an event of the type specified
in
Section
3(c)(ii)-(v),
the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and
prior to the receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission
giving rise to such Loss would have been corrected. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation.
13
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified
Party"),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the "Indemnifying
Party")
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination
is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying
Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that there is a likelihood of additional defenses available to such
Indemnified Party that are not available to the Company or a conflict of
interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the Indemnifying Party). It shall be understood,
however, that the Indemnifying Party shall not, in connection with any one
such
Proceeding (including separate Proceedings that have been or will be
consolidated before a single judge) be liable for the fees and expenses of
more
than one separate firm of attorneys at any time for all Indemnified Parties.
The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of
the
Indemnified Party, effect any settlement of any pending Proceeding in respect
of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
14
All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section
5(c))
shall
be paid to the Indemnified Party, as incurred, within twenty Business Days
of
written notice thereof to the Indemnifying Party (regardless of whether it
is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses
to
the extent it is finally judicially determined that such Indemnified Party
is
not entitled to indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section
5(a)
or
5(b)
is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section
5(c),
any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been
indemnified for such fees or expenses if the indemnification provided for in
this Section
5(d)
was
available to such party in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section
5(d)
were
determined by pro rata allocation or by any other method of allocation that
does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section
5(d),
no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount
of any damages that such Holder has otherwise been required to pay by reason
of
such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
15
The
indemnity and contribution agreements contained in this Section
5(d)
are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Participation
Rights.
(i)
For
purposes of this Section
6,
the
following definitions shall apply.
a) “Convertible
Securities”
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for shares of Common Stock.
b) “Options”
means
any rights, warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.
c) “Common
Stock Equivalents”
means,
collectively, Options and Convertible Securities.
(ii)
From
the Closing Date until the Trigger Date, the Company will not offer or sell
any
shares of its Common Stock or Common Stock Equivalents or, directly or
indirectly, offer, sell, grant any option to purchase, or otherwise dispose
of
(or announce any offer, sale, grant or any Option to purchase or other
disposition of) any equity securities in a manner that would require
registration under the Securities Act. Any such offer, sale, grant, disposition
or announcement that is not required to be registered under the Securities
Act
is hereinafter referred to as a “Subsequent
Placement.”
(iii)
Until the first anniversary of the Closing Date, the Company will not, directly
or indirectly, effect any Subsequent Placement unless the Company shall have
first complied with this Section
6.
a) The
Company shall deliver to each Investor who purchased Shares pursuant to the
Purchase Agreement and then holds any such Shares an irrevocable written notice
(the “Offer
Notice”)
of any
proposed or intended issuance or sale or exchange (the “Offer”)
of the
securities being offered (the “Offered
Securities”)
in a
Subsequent Placement, which Offer Notice shall: (w) identify and describe the
Offered Securities; (x) describe the price and other terms upon which they
are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged; (y) identify the persons or entities
(if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or exchange with
such Investors the Offered Securities, allocated to the Investors as a group
based on the ratio of (I) the number of Shares purchased and then held by all
Investors as a group to (II) the number of shares of the Company’s Common Stock
then issued and outstanding, and allocated of the among such Investors (a)
based
on such Investor’s pro rata portion of the number of Shares purchased under the
Purchase Agreement and then held by such Investor (the “Basic
Amount”),
and
(b) with respect to each Investor that elects to purchase its Basic Amount,
any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Investors as such Investor shall indicate it will purchase or acquire
should the other Investors subscribe for less than their Basic Amounts (the
“Undersubscription
Amount”),
which
process shall be repeated until the Investors shall have an opportunity to
subscribe for any remaining Undersubscription Amount.
16
b) To
accept
an Offer, in whole or in part, such Investor must deliver a written notice
to
the Company prior to the end of the tenth (10th)
Business Day after such Investor’s receipt of the Offer Notice (the “Offer
Period”),
setting forth the portion of such Investor’s Basic Amount that such Investor
elects to purchase and, if such Investor shall elect to purchase all of its
Basic Amount, the Undersubscription Amount, if any, that such Investor elects
to
purchase (in either case, the “Notice
of Acceptance”);
provided,
however,
that
such Investors may not accept an Offer by electing to purchase less than 10%
of
the Offered Securities on an aggregate basis. If the Basic Amounts subscribed
for by all Investors are less than the total of all of the Basic Amounts, then
each Investor who has set forth an Undersubscription Amount in its Notice of
Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided,
however,
that if
the Basic Amounts subscribed for exceed the difference between the total of
all
the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”),
each
Investor who has subscribed for any Undersubscription Amount shall be entitled
to purchase only that portion of the Available Undersubscription Amount as
the
Basic Amount of such Investor bears to the total Basic Amounts of all Investors
that have subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent it deems reasonably necessary.
c) The
Company shall have forty (40) Business Days from the expiration of the Offer
Period above to offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the
Investors (the “Refused
Securities”),
but
only to the offerees or class of offerees described in the Offer Notice (if
so
described therein) and only upon terms and conditions (including, without
limitation, unit prices than those set forth in the Offer Notice and (ii) to
publicly announce (a) the execution of such Subsequent Placement Agreement,
and
(b) either (x) the consummation of the transactions contemplated by such
Subsequent Placement Agreement or (y) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report
on
Form 8-K with such Subsequent Placement Agreement and any documents contemplated
therein filed as exhibits thereto.
d) In
the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
6(iii)
above),
then each Investor may, at its sole option and in its sole discretion, reduce
the number or amount of the Offered Securities specified in its Notice of
Acceptance to an amount that shall be not less than the number or amount of
the
Offered Securities that such Investor elected to purchase pursuant to
Section
6(ii)
above
multiplied by a fraction, i) the numerator of which shall be the number or
amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Investors
pursuant to Section
6(iii)(b)
above
prior to such reduction) and ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Investor so elects
to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities
have
again been offered to the Investors in accordance with Section
6(iii)(a)
above.
17
e) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Investors shall acquire from the Company, and the Company shall
issue to the Investors, the number or amount of Offered Securities specified
in
the Notices of Acceptance, as reduced pursuant to Section
6(iii)(c)
above if
the Investors have so elected, upon the terms and conditions specified in the
Offer. Notwithstanding anything to the contrary contained in this Agreement,
if
the Company does not consummate the closing of the issuance, sale or exchange
of
all or less than all of the Refused Securities within forty (40) Business Days
of the expiration of the Offer Period, the Company shall issue to the Investors
the number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section
6(iii)(d)
above if
the Investors have so elected, upon the terms and conditions specified in the
Offer. The purchase by the Investors of any Offered Securities is subject in
all
cases to the preparation, execution and delivery by the Company and the
Investors of a purchase agreement relating to such Offered Securities reasonably
satisfactory in form and substance to the Investors and their respective
counsel.
f) Any
Offered Securities not acquired by the Investors or other persons in accordance
with Section
6(iii)(c)
above
may not be issued, sold or exchanged until they are again offered to the
Investors under the procedures specified in this Agreement.
g) Notwithstanding
anything to the contrary in this Section
6
and
unless otherwise agreed to by the Investors, the Company shall either confirm
in
writing to the Investors that the transaction with respect to the Subsequent
Placement has been abandoned or shall publicly disclose its intention to issue
the Offered Securities, in either case in such a manner such that the Investors
will not be in possession of material non-public information, by the fifteenth
(15th)
Business Day following delivery of the Offer Notice. If by the fifteenth
(15th)
Business Day following delivery of the Offer Notice no public disclosure
regarding a transaction with respect to the Offered Securities has been made,
and no notice regarding the abandonment of such transaction has been received
by
the Investors, such transaction shall be deemed to have been abandoned and
the
Investors shall not be deemed to be in possession of any material, non-public
information with respect to the Company. Should the Company decide to pursue
such transaction with respect to the Offered Securities, the Company shall
provide each Investor with another Offer Notice and each Investor will again
have the right of participation set forth in this Section
6(iii).
The
Company shall not be permitted to deliver more than one such Offer Notice to
the
Investors in any 60-day period.
(iv)
The
restrictions contained in subsections (ii) and (iii) of this Section
6
shall
not apply in connection with any Exempt Issuance.
7. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, subject to the limitations on recovery of damages expressed herein,
will be entitled to specific performance of its rights under this Agreement.
The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
18
(b) Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(c) Dispositions.
Each
Holder agrees that it shall sell its Registrable Securities in accordance with
the Plan of Distribution attached hereto as Annex
A.
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section
3(c),
such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder's receipt of the copies
of
the supplemented Prospectus and/or amended Registration Statement or until
it is
advised in writing (the "Advice")
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
(d) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the SEC a registration statement relating
to
an offering for its own account or the account of others under the Securities
Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then the Company shall send to each Holder
not
then eligible to sell all of their Registrable Securities under an existing
effective Registration Statement or under Rule 144 in a three-month period,
written notice of such determination and if, within ten days after receipt
of
such notice, any such Holder shall so request in writing, the Company shall
include in such registration statement all or any part of any Registrable
Securities that the Holder requests to be registered that are not subject to
an
effective Registration Statement. Notwithstanding the foregoing, in the event
that, in connection with any underwritten public offering, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)’ judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Holder has
requested inclusion hereunder as the underwriter shall permit; provided, however,
that
(i) the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the holders of which are not
contractually entitled to inclusion of such securities in such Registration
Statement or are not contractually entitled to pro rata inclusion with the
Registrable Securities and (ii) after giving effect to the immediately preceding
proviso, any such exclusion of Registrable Securities shall be made in
accordance with Section 2(g), treating any underwriter-permitted maximum as
the
equivalent of the Allowable Maximum. If an offering in connection with which
a
Holder is entitled to registration under this Section 7(d)
is an
underwritten offering, then each Holder whose Registrable Securities are
included in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the provisions of
this Agreement, on the same terms and conditions as other shares of Common
Stock
included in such underwritten offering and shall enter into an underwriting
agreement in a form and substance reasonably satisfactory to the Company and
the
underwriter or underwriters. Upon the effectiveness the registration statement
for which piggy-back registration has been provided in this Section 7(d),
any
liquidated damages payments payable to a Holder whose Securities are included
in
such registration statement shall terminate and no longer be
payable.
19
(e) Amendments
and Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each of
the
Investors or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Investors under Sections
2
,
3,
4,
5,
or
6
may be
given by Investors holding at least 60% of the Registrable Securities to which
such waiver or consent relates.
(f) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section
7(f)
prior to
6:30 p.m. (New York City time) on a Business Day, (b) the next Business Day
after the date of transmission, if such notice or communication is delivered
via
facsimile at the facsimile number specified in this Section
7(f)
on a day
that is not a Business Day or later than 6:30 p.m. (New York City time) on
any
Business Day, or (c) upon actual receipt by the party to whom such notice is
required to be given, if sent by any means other than facsimile transmission.
The address for such notices and communications shall be as
follows:
20
If
to the
Company: China
Marine Food Group Limited
c/o
Huabao Mingxiang Foodstuff Co., Ltd.
Da
Bao
Industrial Zone
Shishi
Fujian
People’s
Republic of China
Attn:
Xxxxxxx Xxx
Facsimile:
00-000-00000000
With
a
copy to: Sterne,
Agee & Xxxxx, Inc.
0000
X.
Xxxxx Xxxxxxx, Xxx. 000
Xxxxxxx
Xxxxx, XX 00000
Facsimile:
(000) 000-0000
Attn.:
Xxxxxxx Xxxxxx
If
to a
Investor: To
the
address set forth under such Investor's name on the signature
pages hereto.
If
to any
other Person who is then the registered Holder:
To
the
address of such Holder as it appears in the stock transfer
books of the Company
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
(g) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Except with respect to Section 6,
each
Holder may assign their respective rights hereunder to any Person to whom such
Holder assigns or transfers any Registrable Securities, provided such transferee
agrees in writing to be bound, with respect to the transferred Registrable
Securities, by the provisions hereof that apply to “Holders.”
(h) Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(i) Governing
Law and Jury Trial Waiver.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) will be commenced in the California
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the California Courts 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 Proceeding, any claim that it is not personally subject to the jurisdiction
of any California Court, or that such Proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address
in
effect for notices to it under this Agreement and agrees that such service
shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING
OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
If
either party shall commence a Proceeding to enforce any provisions of this
Agreement, then the prevailing party in such Proceeding shall be reimbursed
by
the other party for its attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such
Proceeding.
21
(j) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(k) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(l) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(m) Independent
Nature of Investors' Obligations and Rights.
The
obligations of each Investor under this Agreement are several and not joint
with
the obligations of each other Investor, and no Investor shall be responsible
in
any way for the performance of the obligations of any other Investor under
this
Agreement. Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, 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 with respect to such obligations or the transactions
contemplated by this Agreement or any other Transaction Document. Each Investor
acknowledges that no other Investor will be acting as agent of such Investor
in
enforcing its rights under this Agreement. Each Investor shall be entitled
to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement, 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 each of the Investors has been provided
with the same Registration Rights Agreement for the purpose of closing a
transaction with multiple Investors and not because it was required or requested
to do so by any Investor.
22
(n) No
Third-Party Beneficiaries .
This
Agreement is intended for the benefit of the parties hereto and the Agent,
and
their respective successors and permitted assigns and is not for the benefit
of,
nor may any provision hereof be enforced by, any other Person, except that
each
Indemnified Party is an intended third-party beneficiary of Section 5
and (in
each case) may enforce the provisions of such section directly against the
parties with obligations thereunder.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES TO FOLLOW]
23
IN
WITNESS WHEREOF,
each
Investor and the Company have caused this Registration Rights Agreement to
be
duly executed by their respective authorized signatories as of the date
indicated on the first page of this Registration Rights Agreement.
| NEW PARADIGM PRODUCTIONS, INC. | ||
| |
|
|
| By: | ||
|
Name: Xxxxxxx Xxx |
||
| Title: Chief Executive Officer | ||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES OF INVESTORS TO FOLLOW]
B-2
IN
WITNESS WHEREOF,
each
Investor and the Company have caused this Registration Rights Agreement to
be
duly executed by their respective authorized signatories as of the date
indicated on the first page of this Registration Rights Agreement .
|
INVESTORS:
Print Name of
Investor(s)
|
||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
B-3
