Exhibit 4.45
Registration Rights Agreement
dated as of
April 24, 2001
by and between
American International Petroleum Corporation,
GCA Strategic Investment Fund Limited
and
LKB Financial, LLC
TABLE OF CONTENTS
1. Introduction...........................................................1
1.1 Securities Purchase Agreement....................................1
1.2 Definition of Securities.........................................1
1.3 Trading Market Representation....................................1
2. Registration under Securities Act, etc.................................1
2.1 Mandatory Registration...........................................1
(a) Registration of Registrable Securities......................1
(b) Registration Statement Form.................................2
(c) Expenses....................................................2
(d) Effective Registration Statement............................2
(e) Plan of Distribution........................................2
2.2 Incidental Registration..........................................3
(a) Right to Include Registrable Securities.....................3
(b) Priority in Incidental Registrations........................3
2.3 Registration Procedures..........................................4
2.4 Underwritten Offerings...........................................7
(a) Incidental Underwritten Offerings...........................7
(b) Holdback Agreements.........................................7
(c) Participation in Underwritten Offerings.....................7
2.5 Preparation; Reasonable Investigation............................8
2.6 Registration Default Fee.........................................8
2.7 Indemnification..................................................8
(a) Indemnification by the Company..............................8
(b) Indemnification by the Sellers..............................9
(c) Notices of Claims, etc......................................9
(d) Other Indemnification......................................10
(e) Indemnification Payments...................................10
(f) Contribution...............................................10
3. Definitions...........................................................11
4. Rule 144..............................................................13
5. Amendments and Waivers................................................13
6. Nominees for Beneficial Owners........................................14
7. Notices...............................................................14
8. Assignment............................................................14
9. Descriptive Headings..................................................14
10. Governing Law.........................................................14
11. Counterparts..........................................................15
12. Entire Agreement......................................................15
13. Severability..........................................................15
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April 24,
2001, between American International Petroleum Corporation, a Nevada corporation
(the "Company"), LKB Financial, LLC, a Georgia limited liability company ("LKB")
and GCA Strategic Investment Fund Limited (the "Fund").
1. Introduction.
1.1 Securities Purchase Agreement. The Company and the Fund have today
executed that certain Securities Purchase Agreement (the "Securities
Purchase Agreement"), pursuant to which the Company has agreed, among other
things, to issue up to an aggregate of Three Million Three Hundred Forty
Thousand Dollars ($3,340,000.00) (U.S.) principal amount of 3% Convertible
Debentures of the Company (the "Debentures") to the Fund or its successors,
assigns or transferees (collectively, the "Holders"). The Debentures are
convertible into an indeterminable number of shares (the "Debenture
Conversion Shares") of the Company's common stock, $.08 per share (the
"Common Stock") pursuant to the terms of the Debentures. In addition,
pursuant to the terms of the Securities Purchase Agreement and the
transactions contemplated thereby, the Company has agreed to issue to the
Fund warrants exercisable for up to an aggregate of 1,500,000 shares of the
Company's Common Stock and to LKB warrants exercisable for 1,000,000 shares
of the Company's Common Stock (collectively, the "Warrant Shares"). The
number of Debenture Conversion Shares and Warrant Shares is subject to
adjustment upon the occurrence of stock splits, recapitalizations and
similar events occurring after the date hereof.
1.2 Definition of Securities. The Debenture Conversion Shares and the
Warrant Shares are herein referred to as the "Securities."
1.3 Trading Representation. The Company represents and warrants that
the Company's Common Stock is currently eligible for trading on OTC
Bulletin Board under the symbol "AIPN." Certain capitalized terms used in
this Agreement are defined in Section 3 hereof; references to sections
shall be to sections of this Agreement.
2. Registration under Securities Act, etc.
2.1 Mandatory Registration.
(a) Registration of Registrable Securities. The Company shall
file within ten (10) days of the date hereof (the "Amendment Filing
Date"), an amendment to its currently effective S-1 Registration
Statement No. 333-55484 (the "Registration Statement Amendment") to
register the resale of the Debenture Conversion Shares and Warrant
Shares. In the event the Company fails to file the Registration
Statement Amendment by the Amendment Filing Date, the Company will pay
liquidated damages to the Fund in the amount of 1% of the principal
amount of the then outstanding Debentures per day until the
Registration Statement Amendment has been filed. If the Registration
Statement Amendment does not include a number of shares to register
the resale of all of the Debenture Conversion Shares and Warrant
Shares, the Company shall prepare and file within seven (7) days
following the Company's Annual Meeting of Shareholders for 2001 (the
"Filing Date"), a registration statement (the "Registration
Statement") to register not less than 30,000,000 shares of the
Company's Common Stock to cover the resale of the Registrable
Securities and the shares of Common Stock issuable upon conversion of
the restructured Bridge Notes (as such term is defined in the
Securities Purchase Agreement). In the event the Company fails to file
the Registration Statement by the Filing Date, the Company will pay to
the Fund liquidated damages in the amount of 1% of the outstanding
principal amount of then outstanding Debentures per day until such
Registration Statement has been filed. The Company shall use its best
efforts to cause the Registration Statement to be declared effective
by the Commission on the earlier of (i) 60 days following the Filing
Date or (ii) ten (10) days following the receipt of a "No Review" or
similar letter from the Commission (the "Required Effectiveness
Date"). Nothing contained herein shall be deemed to limit the number
of Registrable Securities to be registered by the Company hereunder.
As a result, should the Registration Statement not relate to the
maximum number of Registrable Securities acquired by (or potentially
acquirable by) the holders thereof upon conversion of the Debentures,
or exercise of the Common Stock Purchase Warrants described in Section
1 above, the Company shall be required to promptly file a separate
registration statement (utilizing Rule 462 promulgated under the
Exchange Act, where applicable) relating to such Registrable
Securities which then remain unregistered. The provisions of this
Agreement shall relate to any such Registration Statement and any such
separate registration statement as if it were an amendment to the
Registration Statement.
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(b) Registration Statement Form. Registrations under this Section
2.1 shall be on Form S-1 or such other appropriate registration form
of the Commission as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of
disposition specified by the Fund; provided, however, such intended
method of deposition shall not include an underwritten offering of the
Registrable Securities.
(c) Expenses. The Company will pay all Registration Expenses in
connection with any registration required by this Section 2.1.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become
effective within the time period specified herein, provided that a
registration which does not become effective after the Company filed a
registration statement with respect thereto solely by reason of the
refusal to proceed of any holder of Registrable Securities (other than
a refusal to proceed based upon the advice of counsel in the form of a
letter signed by such counsel and provided to the Company relating to
a disclosure matter unrelated to such holder) shall be deemed to have
been effected by the Company unless the holders of the Registrable
Securities shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has become
effective, such registration becomes subject to any stop order,
injunction or other order or extraordinary requirement of the
Commission or other governmental agency or court for any reason or
(iii) if, after it has become effective, such registration ceases to
be effective for more than an aggregate of twenty (20) days.
(e) Plan of Distribution. The Company hereby agrees that the
Registration Statement shall include a plan of distribution section
reasonably acceptable to the Fund.
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2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If at any time after
the date hereof but before the third anniversary of the date hereof,
the Company proposes to register any of its securities under the
Securities Act (other than by a registration in connection with an
acquisition in a manner which would not permit registration of
Registrable Securities for sale to the public, on Form S-8, or any
successor form thereto, on Form S-4, or any successor form thereto and
other than pursuant to Section 2.1), on an underwritten basis (either
best-efforts or firm-commitment), then, the Company will each such
time give prompt written notice to all Holders of its intention to do
so and of such Holders" rights under this Section 2.2. Upon the
written request of any such Holder made within twenty (20) days after
the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder an
and the intended method of disposition thereof), the Company will,
subject to the terms of this Agreement, use its commercially
reasonable best efforts to effect the registration under the
Securities Act of the Registrable Securities, to the extent requisite
to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of such Registrable Securities so to be
registered, by inclusion of such Registrable Securities in the
registration statement which covers the securities which the Company
proposes to register, provided that if, at any time after written
notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with
such registration, the Company shall determine for any reason either
not to register or to delay registration of such securities, the
Company may, at its election, give written notice of such
determination to each Holder and, thereupon, (i) in the case of a
determination not to register, shall be relieved of this obligation to
register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of any holder or holders of Registrable Securities entitled to
do so to request that such registration be effected as a registration
under Section 2.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities, for the same period as the delay in registering such other
securities. No registration effected under this Section 2.2 shall
relieve the Company of its obligation to effect any registration upon
request under Section 2.1, nor shall any such registration hereunder
be deemed to have been effected pursuant to Section 2.1. The Company
will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this
Section 2.2. The right provided the Holders of the Registrable
Securities pursuant to this Section shall be exercisable at their sole
discretion and will in no way limit any of the Company's obligations
to pay the Securities according to their terms.
(b) Priority in Incidental Registrations. If the managing
underwriter of the underwritten offering contemplated by this Section
2.2 shall inform the Company and holders of the Registrable Securities
requesting such registration by letter of its belief that the number
of securities requested to be included in such registration exceeds
the number which can be sold in such offering, then the Company will
include in such registration, to the extent of the number which the
Company is so advised can be sold in such offering, (i) first
securities proposed by the Company to be sold for its own account, and
(iii) second Registrable Securities and securities of other selling
security holders requested to be included in such registration pro
rata on the basis of the number of shares of such securities so
proposed to be sold and so requested to be included; provided,
however, the holders of Registrable Securities shall have priority to
all shares sought to be included by officers and directors of the
Company as well as holders of ten percent (10%) or more of the
Company's Common Stock.
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2.3 Registration Procedures. If and whenever the Company is required
to effect the registration of any Registrable Securities under the
Securities Act as provided in Section 2.1 and, as applicable, 2.2, the
Company shall, as expeditiously as possible:
(i) prepare and file with the Commission the Registration
Statement Amendment, Registration Statement or amendments thereto, to
effect such registration (including such audited financial statements
as may be required by the Securities Act or the rules and regulations
promulgated thereunder) and thereafter use its commercially reasonable
best efforts to cause such registration statement to be declared
effective by the Commission, as soon as practicable, but in any event
no later than the Required Effectiveness Date (with respect to a
registration pursuant to Section 2.1); provided, however, that before
filing such registration statement or any amendments thereto, the
Company will furnish to the counsel selected by the holders of
Registrable Securities which are to be included in such registration,
copies of all such documents proposed to be filed;
(ii) with respect to any registration statement or registration
statement amendment pursuant to Section 2.1, prepare and file with the
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement until the earlier to occur of five (5) years after the date
of this Agreement(subject to the right of the Company to suspend the
effectiveness thereof for not more than 10 consecutive days or an
aggregate of 30 days in such five (5) years period) or such time as
all of the securities which are the subject of such registration
statement cease to be Registrable Securities (such period, in each
case, the "Registration Maintenance Period");
(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller and underwriter, if any, may reasonably
request in order to facilitate the public sale or other disposition of
the Registrable Securities owned by such seller;
(iv) use its commercially reasonable best efforts to register or
qualify all Registrable Securities and other securities covered by
such registration statement under such other securities laws or blue
sky laws as any seller thereof shall reasonably request, to keep such
registrations or qualifications in effect for so long as such
registration statement remains in effect, and take any other action
which may be reasonably necessary to enable such seller to consummate
the disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
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(v) use its commercially reasonable best efforts to cause all
Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller, and the underwriters, if any,
of:
(A) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such
registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting
agreement),reasonably satisfactory in form and substance to such
seller) including that the prospectus and any prospectus
supplement forming a part of the Registration Statement does not
contain an untrue statement of a material fact or omits a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading, and
(B) a "comfort" letter (or, in the case of any Person which
does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed
upon procedures" letter), dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, a letter of like kind dated the
date of the closing under the underwriting agreement), signed by
the independent public accountants who have certified the
Company's financial statement included in such registration
statement, covering substantially the same matters with respect
to such registration statement (and the prospectus included
therein) and, in the case of the accountants" letter, with
respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's
counsel and in accountants" letters delivered to the underwriters
in underwritten public offerings of securities (with, in the case
of an "agreed upon procedures" letter, such modifications or
deletions as may be required under Statement on Auditing
Standards No. 35) and, in the case of the accountants" letter,
such other financial matters, and, in the case of the legal
opinion, such other legal matters, as such seller (or the
underwriters, if any) may reasonably request;
(vii) notify the Sellers" Representative and its counsel promptly
and confirm such advice in writing promptly after the Company has
knowledge thereof:
(A) when the Registration Statement Amendment, the
Registration Statement, the prospectus or any prospectus
supplement related thereto or post-effective amendment to the
Registration Statement has been filed, and, with respect to the
Registration Statement Amendment, the Registration Statement or
any post-effective amendment thereto, when the same has become
effective;
(B) of any request by the Commission for amendments or
supplements to the Registration Statement Amendment, the
Registration Statement or the prospectus or for additional
information;
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
Amendment, or the Registration Statement or the initiation of any
proceedings by any Person for that purpose; and
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for
such purpose;
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(viii) notify each seller of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material facts required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such seller
promptly prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include 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 not misleading in
the light of the circumstances then existing;
(ix) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement Amendment,
or the Registration Statement at the earliest possible moment;
(x) otherwise use its commercially reasonable best efforts to
comply with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(xi) enter into such agreements and take such other actions as
the Sellers' Representative shall reasonably request in writing (at
the expense of the requesting or benefiting sellers) in order to
expedite or facilitate the disposition of such Registrable Securities;
and
(xii) use its commercially reasonable best efforts to list all
Registrable Securities covered by such registration statement on any
securities exchange on which any of the Registrable Securities are
then listed.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.
The Company will not file any registration statement pursuant to Section
2.1, or amendment thereto or any prospectus or any supplement thereto (including
such documents incorporated by reference and proposed to be filed after the
initial filing of the Registration Statement to which the Sellers"
Representative shall reasonably object, provided that the Company may file such
documents in a form required by law or upon the advice of its counsel.
The Company represents and warrants to each holder of Registrable
Securities that it has obtained all necessary waivers, consents and
authorizations necessary to execute this Agreement and consummate the
transactions contemplated hereby other than such waivers, consents and/or
authorizations specifically contemplated by the Securities Purchase Agreement.
The Fund agrees that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in subdivision (viii) of this
Section 2.3, the Fund will forthwith discontinue the Fund's disposition of
Registrable Securities pursuant to the Registration Statement relating to such
Registrable Securities until the Fund's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in the
Fund's possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice.
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2.4 Underwritten Offerings.
(a) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed
by or through one or more underwriters, the Company will, if requested
by any holder of Registrable Securities as provided in Section 2.2 and
subject to the provisions of Section 2.2(a), use its commercially
reasonable best efforts to arrange for such underwriters to include
all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters.
(b) Holdback Agreements. Subject to such other reasonable
requirements as may be imposed by the underwriter as a condition of
inclusion of the Fund's Registrable Securities in the registration
statement, the Fund agrees by acquisition of Registrable Securities,
if so required by the managing underwriter, not to sell, make any
short sale of, loan, grant any option for the purchase of, effect any
public sale or distribution of or otherwise dispose of, except as part
of such underwritten registration, any equity securities of the
Company, during such reasonable period of time requested by the
underwriter; provided however, such period shall not exceed the 120
day period commencing 30 days prior to the commencement of such
underwritten offering and ending 90 days following the completion of
such underwritten offering.
(c) Participation in Underwritten Offerings. No holder of
Registrable Securities may participate in any underwritten offering
under Section 2.2 unless such holder of Registrable Securities (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved, subject to the terms and
conditions hereof, by the holders of a majority of Registrable
Securities to be included in such underwritten offering and (ii)
completes and executes all questionnaires, indemnities, underwriting
agreements and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements.
Notwithstanding the foregoing, no underwriting agreement (or other
agreement in connection with such offering) shall require any holder
of Registrable Securities to make an representations or warranties to
or agreements with the Company or the underwriters other than
representations and warranties contained in a writing furnished by
such holder expressly for use in the related registration statement or
representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
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2.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement and registration
statement amendment under the Securities Act pursuant to this Agreement,
the Company will give the holders of Registrable Securities registered
under such registration statement, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the reasonable opinion of such holders" and such
underwriters" respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 Registration Default Fee. If the Registration Statement
contemplated in Section 2.1 is (x) not declared effective by the Required
Effectiveness Date or (y) such effectiveness is not maintained for the
Registration Maintenance Period, then the Company shall pay to the Fund the
Default Fee specified in Section 10.4 of the Securities Purchase Agreement.
2.7 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities
Act, the Company will, and hereby does agree to indemnify and hold
harmless the holder of any Registrable Securities covered by such
registration statement or registration statement amendment, its
directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and each other
Person, if any, who controls such holder or any such underwriter
within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which such holder or any
such director or officer or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein,
or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and the Company will reimburse such holder and each such director,
officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding,
provided that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability, (or action or
proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such holder or
underwriter stating that it is for use in the preparation thereof and,
provided further that the Company shall not be liable to any Person
who participates as an underwriter in the offering or sale of
Registrable Securities or to any other Person, if any, who controls
such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of such
Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, within the time required
by the Securities Act to the Person asserting the existence of an
untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission
was corrected in such final prospectus or an amendment or supplement
thereto. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such holder or
any such director, officer, underwriter or controlling person and
shall survive the transfer of such securities by such holder.
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(b) Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration
statement or amendment thereto filed pursuant to this Agreement, that
the Company shall have received an undertaking satisfactory to it from
the prospective seller of such Registrable Securities, to indemnify
and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 2.7) the Company, each
director of the Company, each officer of the Company and each other
Person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in
or omission or alleged omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such
seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Any such indemnity shall
remain in full force and effect, regardless of any investigation made
by or on behalf of the Company or any such director, officer or
controlling person and shall survive the transfer of such securities
by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions
of this Section 2.7, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 2.7,
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified, to the extent that the indemnifying party
may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability, or a covenant
not to xxx, in respect to such claim or litigation. No indemnified
party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by
an indemnifying party without the consent of such indemnifying party.
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(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 2.7 (with
appropriate modifications) shall be given by the Company and each
seller of Registrable Securities (but only if and to the extent
required pursuant to the terms of Section 2.7(b)) with respect to any
required registration or other qualification of securities under any
Federal or state law or regulation of any governmental authority,
other than the Securities Act.
(e) Indemnification Payments. The indemnification required by
this Section 2.7 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 expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in the
preceding subdivision of this Section 2.7 is unavailable to an
indemnified party in respect of any expense, loss, claim, damage or
liability referred to therein, 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 expense,
loss, claim, damage or liability (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company
on the one hand and the holder or underwriter, as the case may be, on
the other from the distribution of the Registrable Securities or (ii)
if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and of the holder or
underwriter, as the case may be, on the other in connection with the
statements or omissions which resulted in such expense, loss, damage
or liability, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
holder or underwriter, as the case may be, on the other in connection
with the distribution of the Registrable Securities shall be deemed to
be in the same proportion as the total net proceeds received by the
Company from the initial sale of the Registrable Securities by the
Company to the purchasers bear to the gain, if any, realized by all
selling holders participating in such offering or the underwriting
discounts and commissions received by the underwriter, as the case may
be. The relative fault of the Company on the one hand and of the
holder or underwriter, as the case may be, on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission to state a
material fact relates to information supplied by the Company, by the
holder or by the underwriter and the parties" relative intent,
knowledge, access to information supplied by the Company, by the
holder or by the underwriter and the parties" relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission, provided that the foregoing contribution
agreement shall not inure to the benefit of any indemnified party if
indemnification would be unavailable to such indemnified party by
reason of the provisions contained in the first sentence of
subdivision (a) of this Section 2.7, and in no event shall the
obligation of any indemnifying party to contribute under this
subdivision (f) exceed the amount that such indemnifying party would
have been obligated to pay by way of indemnification if the
indemnification provided for under subdivisions (b) of this Section
2.7 had been available under the circumstances.
The Company and the holders of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this subdivision (f) were
determined by pro rata allocation (even if the holders and any underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in the preceding sentence and subdivision (c) of this
Section 2.7, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
allege untrue statement or 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.
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3. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
"Agreement": As defined in Section 1.
"Commission": The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock": As defined in Section 1.
"Company": As defined in the introductory paragraph of this Agreement.
"Conversion Shares": As defined in Section 1.
"Debentures": As defined in Section 1, such term to include any
securities issued in substitution of or in addition to such Debentures.
"Exchange Act": The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"Person": A corporation, association, partnership, organization,
business, individual, governmental or political subdivision thereof or a
governmental agency.
"Registrable Securities": The Securities and any securities issued or
issuable with respect to such Securities by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. Once issued
such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (b)
they shall have been distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state law
then in force, (d) they shall have ceased to be outstanding, (e) on the
expiration of the applicable Registration Maintenance Period or (f) any and
all legends restricting transfer thereof have been removed in accordance
with the provisions of Rule 144(k) (or any successor provision) under the
Securities Act.
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"Registration Expenses": All expenses incident to the Company's
performance of or compliance with this Agreement, including, without
limitation, all registration, filing and NASD fees, all stock exchange and
OTC Bulletin Board or other NASD or stock exchange listing fees, all fees
and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special
audits or "cold comfort" letters required by or incident to such
performance and compliance, the reasonable fees and disbursements of not
more than one law firm (not to exceed $20,000) retained by the holder or
holders of more than 50% of the Registrable Securities, premiums and other
costs of policies of insurance of the Company against liabilities arising
out of the public offering of the Registrable Securities being registered
and any fees and disbursements of underwriters customarily paid by issuers
or sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any, provided that, in any case where
Registration Expenses are not to be borne by the Company, such expenses
shall not include salaries of Company personnel or general overhead
expenses of the Company, auditing fees, premiums or other expenses relating
to liability insurance required by underwriters of the Company or other
expenses for the preparation of financial statements or other data normally
prepared by the Company in the ordinary course of its business or which the
Company would have incurred in any event.
"Registration Maintenance Period": As defined in Section 2.3.
"Required Effectiveness Date": As defined in Section 2.1.
"Securities Act": The Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Securities Purchase Agreement": As defined in Section 1.
"Sellers" Representative": Global Capital Advisors Ltd. or such Person
designated by Global Capital Advisors Ltd. as of the time of disposition of
the last of the Debentures held by the Fund (or subsequent Sellers"
Representative).
"Warrant Shares": As defined in Section 1.
12
4. Rule 144. The Company shall timely file the reports required to be filed
by it under the Securities Act and the Exchange Act (including but not limited
to the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 adopted by the Commission under the Securities Act)
and the rules and regulations adopted by the Commission thereunder (or, if the
Company is not required to file such reports, will, upon the request of any
holder of Registrable Securities, make publicly available other information) and
will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any holder of Registrable Securities, the Company will deliver to such holder
a written statement as to whether it has complied with the requirements of this
Section 4.
5. Amendments and Waivers. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of the sum of the 51% or more of the shares of (i) Registrable
Securities issued at such time, plus (ii) Registrable Securities issuable upon
exercise or conversion of the Securities then constituting derivative securities
(if such Securities were not fully exchanged or converted in full as of the date
such consent if sought). Each holder of any Registrable Securities at the time
or thereafter outstanding shall be bound by any consent authorized by this
Section 5, whether or not such Registrable Securities shall have been marked to
indicate such consent.
13
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number of percentage of shares of Registrable Securities
held by an holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership or such Registrable Securities.
7. Notices. Except as otherwise provided in this Agreement, all notices,
requests and other communications to any Person provided for hereunder shall be
in writing and shall be given to such Person (a) in the case of a party hereto
other than the Company, addressed to such party in the manner set forth in the
Securities Purchase Agreement or at such other address as such party shall have
furnished to the Company in writing, or (b) in the case of any other holder of
Registrable Securities, at the address that such holder shall have furnished to
the Company in writing, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company, or (c) in
the case of the Company, at the address set forth on the signature page hereto,
to the attention of its President, or at such other address, or to the attention
of such other officer, as the Company shall have furnished to each holder of
Registrable Securities at the time outstanding. Each such notice, request or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means (including, without
limitation, by fax or air courier), when delivered at the address specified
above, provided that any such notice, request or communication shall not be
effective until received.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto. In addition, and whether or
not any express assignment shall have been made, the provisions of this
Agreement which are for the benefit of the parties hereto other than the Company
shall also be for the benefit of and enforceable by any subsequent holder of any
Registrable Securities. Each of the Holders of the Registrable Securities
agrees, by accepting any portion of the Registrable Securities after the date
hereof, to the provisions of this Agreement including, without limitation,
appointment of the Sellers" Representative to act on behalf of such Holder
pursuant to the terms hereof which such actions shall be made in the good faith
discretion of the Sellers" Representative and be binding on all persons for all
purposes.
9. Descriptive Headings. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.
10. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
14
11. Counterparts. This Agreement may be executed by facsimile and may be
signed simultaneously in any number of counterparts, each of which shall be
deemed an original, but all such counterparts shall together constitute one and
the same instrument.
12. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto relating to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
13. Severability. If any provision of this Agreement, or the application of
such provisions to any Person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Address:
---------------------------------
---------------------------------
Fax:
---------------------------
Tel.:
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GCA STRATEGIC INVESTMENT FUND LIMITED
By:
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Director
Address: c/o Prime Management Limited
Mechanics Xxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx XX XX, Xxxxxxx
Fax: 000-000-0000
Tel.: 000-000-0000
LKB FINANCIAL, LLC
By:
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Name:
---------------------------------
Title:
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Registration Rights Agreement
