Contract
Exhibit
10.3
EXECUTION
COPY
REGISTRATION
RIGHTS AGREEMENT (this "Agreement"),
dated
as of March 13, 2008, by and among Wo Xxxx Xx (the "Seller")
and
the undersigned buyers (each, a "Buyer",
and
collectively, the "Buyers").
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the Seller
and
the Buyers of even date herewith (the "Securities
Purchase Agreement"),
the
Seller has agreed, upon the terms and subject to the conditions set forth
in the
Securities Purchase Agreement, to sell to each Buyer shares (the "Common
Shares")
of the
common stock, par value $0.001 per share (the "Common
Stock")
of
China Precision Steel, Inc., a Delaware corporation, with headquarters
located
at 87 Wing Lok Street, 8th
Floor,
Teda Building, Xxxxxx Xxx, Hong Kong, PRC (the "Company").
B. In
accordance with the terms of the Securities Purchase Agreement, the Seller
has
represented that he has certain registration rights in connection with
the
Common Shares to have such shares registered for re-sale under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "1933
Act"),
and
applicable state securities laws.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein
and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
a. "Additional
Effective Date"
means
the date the Additional Registration Statement is declared effective by
the
SEC.
b. "Additional
Effectiveness Deadline"
means
the date which is ninety (90) calendar days after the earlier of the Additional
Filing Date and the Additional Filing Deadline.
c. "Additional
Filing Date"
means
the date on which the Additional Registration Statement is filed with the
SEC.
d. "Additional
Filing Deadline"
means
if Cutback Shares are required to be included in any Additional Registration
Statement, the later of (i) the date sixty (60) days after the date
substantially all of the Registrable Securities registered
under the immediately preceding Registration Statement are sold
and (ii)
the date six (6) months from the Initial Effective Date or the most recent
Additional Effective Date, as applicable.
e. "Additional
Registrable Securities"
means,
(i) any Cutback Shares not previously included on a Registration Statement
and
(ii) any capital stock of the Company issued or issuable with respect to
the
Common Shares or Cutback Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise.
f. "Additional
Registration Statement"
means a
registration statement or registration statements of the Company filed
under the
1933 Act covering any Additional Registrable Securities.
g. "Additional
Required Registration Amount"
means
any Cutback Shares not previously included on a Registration Statement,
all
subject to adjustment as provided in Section 2(f).
h. "Business
Day"
means
any day other than Saturday, Sunday or any other day on which commercial
banks
in the City of New York are authorized or required by law to remain
closed.
i. "Closing
Date"
shall
have the meaning set forth in the Securities Purchase Agreement.
j. "Cutback
Shares"
means
any of the Initial Required Registration Amount (without regard to clause
(II)
in the definition thereof) of Registrable Securities not included in all
Registration Statements previously declared effective hereunder as a result
of a
limitation on the maximum number of shares of Common Stock of the Company
permitted to be registered by the staff of the SEC pursuant to Rule 415.
k. "Effective
Date"
means
the Initial Effective Date and the Additional Effective Date, as
applicable.
l. "Effectiveness
Deadline"
means
the Initial Effectiveness Deadline and the Additional Effectiveness Deadline,
as
applicable.
m. "Filing
Deadline"
means
the Initial Filing Deadline and the Additional Filing Deadline, as
applicable.
n. "Initial
Effective Date"
means
the date that the Initial Registration Statement has been declared effective
by
the SEC.
o. "Initial
Effectiveness Deadline"
means
the
date one-hundred and twenty (120) calendar days after the Closing
Date.
p. "Initial
Filing Deadline"
means
the date which is thirty (30) calendar days after the Closing Date.
q. "Initial
Registrable Securities"
for the
Initial Registration Statement means (i) the Common Shares and (ii) any
capital
stock of the Company issued or issuable, with respect to the Common Shares
as a
result of any stock split, stock dividend, recapitalization, exchange or
similar
event or otherwise.
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r. "Initial
Registration Statement"
means a
registration statement or registration statements of the Company filed
under the
1933 Act covering the Initial Registrable Securities.
s. "Initial
Required Registration Amount"
means
(I)
the
number of Common Shares issued and issuable pursuant to the Securities
Purchase
Agreement or
(II)
such other amount as may be required by the staff of the SEC pursuant to
Rule
415 with any cutback applied pro rata to all Registrable Securities, except
to
the extent prohibited by the SEC.
t. "Investor"
means a
Buyer or any transferee or assignee thereof to whom a Buyer assigns its
rights
under this Agreement and who agrees to become bound by the provisions of
this
Agreement in accordance with Section 9 and any transferee or assignee thereof
to
whom a transferee or assignee assigns its rights under this Agreement and
who
agrees to become bound by the provisions of this Agreement in accordance
with
Section 9.
u. "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or
any
department or agency thereof.
v. "register,"
"registered,"
and
"registration"
refer
to a registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and
the
declaration or ordering of effectiveness of such Registration Statement(s)
by
the SEC.
w. "Registrable
Securities"
means
the Initial Registrable Securities and the Additional Registrable
Securities.
x. "Registration
Statement"
means
the Initial Registration Statement and the Additional Registration Statement,
as
applicable.
y. "Required
Holders"
means
the holders of at least a majority of the Registrable Securities.
z. "Required
Registration Amount"
means
either the Initial Required Registration Amount or the Additional Required
Registration Amount, as applicable.
aa. "Rule
415"
means
Rule 415 promulgated under the 1933 Act or any successor rule providing
for
offering securities on a continuous or delayed basis.
bb. "SEC"
means
the United States Securities and Exchange Commission.
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2. Registration.
a. Initial
Mandatory Registration.
The
Seller shall cause the Company to prepare, and, as soon as practicable,
but in
no event later than the Initial Filing Deadline, file with the SEC the
Initial
Registration Statement on Form S-3 covering the resale of all of the Initial
Registrable Securities. In the event that Form S-3 is unavailable for such
a
registration, the Seller shall cause the Company to use such other form
as is
available for such a registration on another appropriate form reasonably
acceptable to the Required Holders, subject to the provisions of Section
2(e).
The Initial Registration Statement prepared pursuant hereto shall register
for
resale at least the number of shares of Common Stock equal to the Initial
Required Registration Amount determined as of the date the Initial Registration
Statement is initially filed with the SEC. The Initial Registration Statement
shall contain (except if otherwise directed by the Required Holders) the
"Selling
Stockholders"
and
"Plan
of Distribution"
sections in substantially the form attached hereto as Exhibit
B.
The
Seller shall cause the Company to use its best efforts to have the Initial
Registration Statement declared effective by the SEC as soon as practicable,
but
in no event later than the Initial Effectiveness Deadline. By 9:30 a.m.
New York
time on the third Business Day following the Initial Effective Date, the
Seller
shall cause the Company to file with the SEC in accordance with Rule 424
under
the 1933 Act the final prospectus to be used in connection with sales pursuant
to such Initial Registration Statement.
b. Additional
Mandatory Registrations.
The
Seller shall cause the Company to prepare, and, as soon as practicable
but in no
event later than the Additional Filing Deadline, file with the SEC an Additional
Registration Statement on Form S-3 covering the resale of all of the Additional
Registrable Securities not previously registered on an Additional Registration
Statement hereunder. To the extent the staff of the SEC does not permit
the
Additional Required Registration Amount to be registered on an Additional
Registration Statement, the Seller shall cause the Company to file Additional
Registration Statements successively trying to register on each such Additional
Registration Statement the maximum number of remaining Additional Registrable
Securities until the Additional Required Registration Amount has been registered
with the SEC. In the event that Form S-3 is unavailable for such a registration,
the Seller shall cause the Company to use such other form as is available
for
such a registration on another appropriate form reasonably acceptable to
the
Required Holders, subject to the provisions of Section 2(e). Each Additional
Registration Statement prepared pursuant hereto shall register for resale
at
least that number of shares of Common Stock equal to the Additional Required
Registration Amount determined as of the date such Additional Registration
Statement is initially filed with the SEC. Each Additional Registration
Statement shall contain (except if otherwise directed by the Required Holders)
the "Selling
Stockholders"
and
"Plan
of Distribution"
sections in substantially the form attached hereto as Exhibit
B.
The
Seller shall cause the Company to use its best efforts to have each Additional
Registration Statement declared effective by the SEC as soon as practicable,
but
in no event later than the Additional Effectiveness Deadline. By 9:30 a.m.
New
York time on the third Business Day following the Additional Effective
Date,
the
Seller shall cause the Company to file with the SEC in accordance with
Rule 424
under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Additional Registration Statement.
c. Allocation
of Registrable Securities.
The
initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein
shall
be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement
covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that an Investor sells or otherwise
transfers
any of such Investor's Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such transferor.
Any
shares of Common Stock included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable Securities
covered
by such Registration Statement shall be allocated to the remaining Investors,
pro rata based on the number of Registrable Securities then held by such
Investors which are covered by such Registration Statement. In no event
shall
any securities other than Registrable Securities be included on any Registration
Statement without the prior written consent of the Required
Holders.
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d. Legal
Counsel.
Subject
to Section 5 hereof, the Required Holders shall have the right to select
one
legal counsel to review and oversee any registration pursuant to this Section
2
("Legal
Counsel"),
which
shall be Xxxxxxx Xxxx & Xxxxx LLP or such other counsel as thereafter
designated by the Required Holders. The Seller shall cause the Company
to
reasonably cooperate with Legal Counsel in performing the Seller's obligations
under this Agreement.
e. Ineligibility
for Form S-3.
In the
event that Form S-3 is not available for the registration of the resale
of
Registrable Securities hereunder, the Seller shall cause the Company to
(i)
register the resale of the Registrable Securities on another appropriate
form
reasonably acceptable to the Required Holders and (ii) undertake to register
the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Seller shall cause the Company to maintain the effectiveness of
the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.
f. Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) or Section 2(b) is insufficient to cover all of
the
Registrable Securities required to be covered by such Registration Statement
or
an Investor's allocated portion of the Registrable Securities pursuant
to
Section 2(c), the Seller shall cause the Company to amend the applicable
Registration Statement, or file a new Registration Statement (on the short
form
available therefor, if applicable), or both, so as to cover at least the
Required Registration Amount as of the Trading Day immediately preceding
the
date of the filing of such amendment or new Registration Statement, in
each
case, as soon as practicable, but in any event not later than thirty (30)
days
after the necessity therefor arises. The Seller shall cause the Company
to use
its best efforts to cause such amendment and/or new Registration Statement
to
become effective as soon as practicable following the filing thereof. For
purposes of the foregoing provision, the number of shares available under
a
Registration Statement shall be deemed "insufficient to cover all of the
Registrable Securities" if at any time the number of shares of Common Stock
available for resale under the Registration Statement is less than the
product
determined by multiplying (i) the Required Registration Amount as of such
time
by (ii) 0.90.
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g. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If (i)
a Registration Statement covering all of the Registrable Securities required
to
be covered thereby and required to be filed by the Company pursuant to
this
Agreement is (A) not filed with the SEC on or before the respective Filing
Deadline (a "Filing
Failure")
or (B)
not declared effective by the SEC on or before the respective Effectiveness
Deadline (an "Effectiveness
Failure");
(ii)
on any day after the Effective Date sales of all of the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than during an Allowable Grace Period (as defined in Section 3(r)) pursuant
to
such Registration Statement or otherwise (including, without limitation,
because
of a failure to keep such Registration Statement effective, to disclose
such
information as is necessary for sales to be made pursuant to such Registration
Statement, to register a sufficient number of shares of Common Stock or
to
maintain the listing of the Common Stock) (a "Maintenance
Failure");
or
(iii) the Seller shall fail to cause the Company to comply with Section
8 below
(a "Public
Information Failure");
then,
as partial relief for the damages to any holder by reason of any such delay
in
or reduction of its ability to sell the underlying shares of Common Stock
(which
remedy shall not be exclusive of any other remedies available at law or
in
equity), the Seller shall pay to each holder of Registrable Securities
relating
to such Registration Statement an amount in cash equal to one and one-half
a
percent (1.5%) of the aggregate Purchase Price (as such term is defined
in the
Securities Purchase Agreement) of such Investor's Registrable Securities
(whether or not included in such Registration Statement) paid to the Seller
at
the time of such failure, on each of the following dates: (i) the day of
a
Filing Failure; (ii) the day of an Effectiveness Failure; (iii) the initial
day
of a Maintenance Failure; (iv) the initial day of a Public Information
Failure;
(v) on every thirtieth day after the day of a Filing Failure and thereafter
(pro
rated for periods totaling less than thirty days) until such Filing Failure
is
cured; (vi) on every thirtieth day after the day of an Effectiveness Failure
and
thereafter (pro rated for periods totaling less than thirty days) until
such
Effectiveness Failure is cured; (vii) on every thirtieth day after the
initial
day of a Maintenance Failure and thereafter (pro rated for periods totaling
less
than thirty days) until such Maintenance Failure is cured; and (viii) on
every
thirtieth day after the initial day of a Public Information Failure and
thereafter (pro rated for periods totaling less than thirty days) until
such
Public Information Failure is cured. The payments to which a holder shall
be
entitled pursuant to this Section 2(g) are referred to herein as "Registration
Delay Payments."
Registration Delay Payments shall be paid on the earlier of (I) the dates
set
forth above and (II) the third Business Day after the event or failure
giving
rise to the Registration Delay Payments is cured. In the event the Seller
fails
to make Registration Delay Payments in a timely manner, such Registration
Delay
Payments shall bear interest at the rate of one percent (1.0%) per month
(prorated for partial months) until paid in full.
h. Assignment
of Registration Rights.
The
Seller hereby transfers and assigns any and all registration rights in
and to
the Common Shares to the Buyers. The Seller shall use his best efforts
as a
party to any registration rights agreement or understanding and as the
holder of
such shares to enforce such registration rights to the benefit of the Buyers.
Without limiting the foregoing, the Seller shall also take such actions
as are
necessary or appropriate to cause the Company to take the actions set forth
in
this Agreement with respect to registration of the Common Shares; provided,
that
the Seller shall take such actions only his capacity as a party to any
registration rights agreement with respect to the Common Shares and as
a
shareholder of the Company, but not as an officer or director of the Company.
The Buyers acknowledge and agree that the Seller shall not be obligated to take
any action with respect hereto in his capacity as Chief Executive Officer
and/or
director of the Company. The parties further acknowledge and agree that
the
Seller shall be entitled to abstain from any vote of directors of the Company
regarding the matters set forth herein.
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3. Related
Obligations.
At
such
time as the Seller is obligated to cause the Company to file a Registration
Statement with the SEC pursuant to Section 2(a), 2(b), 2(e) or 2(f), the
Seller
shall cause the Company to use its best efforts to effect the registration
of
the Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Seller shall cause the Company to have
the
following obligations:
a. The
Seller shall cause the Company to promptly prepare and file with the SEC
a
Registration Statement with respect to the Registrable Securities and use
its
reasonable best efforts to cause such Registration Statement relating to
the
Registrable Securities to become effective as soon as practicable after
such
filing (but in no event later than the Effectiveness Deadline). The Seller
shall
cause the Company to keep each Registration Statement effective pursuant
to Rule
415 at all times until the earlier of (i) the date as of which the Investors
may
sell all of the Registrable Securities covered by such Registration Statement
without restriction pursuant to Rule 144 and without the requirement to
be in
compliance with Rule 144(c)(1) (or any successor thereto) promulgated under
the
1933 Act or (ii) the date on which the Investors shall have sold all of
the
Registrable Securities covered by such Registration Statement (the "Registration
Period").
The
Seller shall cause the Company to ensure that each Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit
to
state a material fact required to be stated therein, or necessary to make
the
statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading. The term "best efforts"
shall mean, among other things, that the Seller shall cause the Company
to
submit to the SEC, within two (2) Business Days after the later of the
date that
(i) the Company learns that no review of a particular Registration Statement
will be made by the staff of the SEC or that the staff has no further comments
on a particular Registration Statement, as the case may be, and (ii) the
approval of Legal Counsel pursuant to Section 3(c) (which approval is
immediately sought), a request for acceleration of effectiveness of such
Registration Statement to a time and date not later than two (2) Business
Days
after the submission of such request. The Seller shall cause the Company
to
respond in writing to comments made by the SEC in respect of a Registration
Statement as soon as practicable, but in no event later than fifteen (15)
days
after the receipt of comments by or notice from the SEC that an amendment
is
required in order for a Registration Statement to be declared
effective.
b. The
Seller shall cause the Company to prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such
period,
comply with the provisions of the 1933 Act with respect to the disposition
of
all Registrable Securities of the Company covered by such Registration
Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller
or
sellers thereof as set forth in such Registration Statement. In the case
of
amendments and supplements to a Registration Statement which are required
to be
filed pursuant to this Agreement (including pursuant to this Section 3(b))
by
reason of the Company filing a report on Form 10-Q, Form 10-QSB, Form 10-K,
Form
10-KSB or any analogous report under the Securities Exchange Act of 1934,
as
amended (the "1934
Act"),
the
Seller shall cause the Company to have incorporated such report by reference
into such Registration Statement, if applicable, or shall file such amendments
or supplements with the SEC on the same day on which the 1934 Act report
is
filed which created the requirement for the Company to amend or supplement
such
Registration Statement.
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c. The
Seller shall cause the Company to (A) permit Legal Counsel to review and
comment
upon (i) a Registration Statement at least five (5) Business Days prior
to its
filing with the SEC and (ii) all amendments and supplements to all Registration
Statements (except for Annual Reports on Form 10-K or Form 10-KSB, Quarterly
Reports on Form 10-Q or Form 10-QSB, Current Reports on Form 8-K, and any
similar or successor reports) within a reasonable number of days prior
to their
filing with the SEC, and (B) not file any Registration Statement or amendment
or
supplement thereto in a form to which Legal Counsel reasonably objects.
The
Seller shall cause the Company to not submit a request for acceleration
of the
effectiveness of a Registration Statement or any amendment or supplement
thereto
without the prior approval of Legal Counsel, which consent shall not be
unreasonably withheld. The Seller shall cause the Company to furnish to
Legal
Counsel, without charge, (i) copies of any correspondence from the SEC
or the
staff of the SEC to the Company or its representatives relating to any
Registration Statement, (ii) promptly after the same is prepared and filed
with
the SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated
therein
by reference, if requested by an Investor, and all exhibits and (iii) upon
the
effectiveness of any Registration Statement, one copy of the prospectus
included
in such Registration Statement and all amendments and supplements thereto.
The
Seller shall cause the Company to reasonably cooperate with Legal Counsel
in
performing obligations the Seller is required to cause the Company to perform
pursuant to this Section 3.
d. The
Seller shall cause the Company to furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge,
(i)
promptly after the same is prepared and filed with the SEC, at least one
copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference,
if
requested by an Investor, all exhibits and each preliminary prospectus,
(ii)
upon the effectiveness of any Registration Statement, ten (10) copies of
the
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents, including copies of
any
preliminary or final prospectus, as such Investor may reasonably request
from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
e. The
Seller shall cause the Company to use its reasonable best efforts to (i)
register and qualify, unless an exemption from registration and qualification
applies, the resale by Investors of the Registrable Securities covered
by a
Registration Statement under such other securities or "blue sky" laws of
all
applicable jurisdictions in the United States, (ii) prepare and file in
those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary
to
maintain the effectiveness thereof during the Registration Period, (iii)
take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and
(iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however,
that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would
not
otherwise be required to qualify but for this Section 3(e), (y) subject
itself
to general taxation in any such jurisdiction, or (z) file a general consent
to
service of process in any such jurisdiction. The Seller shall cause the
Company
to promptly notify Legal Counsel and each Investor who holds Registrable
Securities of the receipt by the Company of any notification with respect
to the
suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or "blue sky" laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation
or
threatening of any proceeding for such purpose.
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f. The
Seller shall cause the Company to notify Legal Counsel and each Investor
in
writing of the happening of any event, as promptly as practicable after
becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement
of a
material fact or omission to state a material fact required to be stated
therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided that in no event shall
such
notice contain any material, nonpublic information), and, subject to Section
3(r), promptly prepare a supplement or amendment to such Registration Statement
to correct such untrue statement or omission and deliver ten (10) copies
of such
supplement or amendment to Legal Counsel and each Investor (or such other
number
of copies as Legal Counsel or such Investor may reasonably request). The
Seller
shall cause the Company to also promptly notify Legal Counsel and each
Investor
in writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by
facsimile
or e-mail on the same day of such effectiveness and by overnight mail),
(ii) of
any request by the SEC for amendments or supplements to a Registration
Statement
or related prospectus or related information, and (iii) of the Company's
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate.
g. The
Seller shall cause the Company to use its reasonable best efforts to prevent
the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of
the
Registrable Securities for sale in any jurisdiction and, if such an order
or
suspension is issued, to obtain the withdrawal of such order or suspension
at
the earliest possible moment and to notify Legal Counsel and each Investor
who
holds Registrable Securities being sold of the issuance of such order and
the
resolution thereof or its receipt of actual notice of the initiation or
threat
of any proceeding for such purpose.
h. If
any
Investor is required under applicable securities laws to be described in
the
Registration Statement as an underwriter or
an
Investor believes that it could reasonably be deemed to be an underwriter
of
Registrable Securities,
at the
reasonable request of such Investor, the Seller shall cause the Company
to
furnish to such Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an Investor
may
reasonably request (i) a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is customarily given
by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Investors, and (ii) an opinion, dated
as of
such date, of counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors.
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i. If
any
Investor is required under applicable securities laws to be described in
the
Registration Statement as an underwriter or an Investor believes that it
could
reasonably be deemed to be an underwriter of Registrable Securities, the
Seller
shall cause the Company to make available for inspection by (i) such Investor,
(ii) Legal Counsel and (iii) one firm of accountants or other agents retained
by
the Investors (collectively, the "Inspectors"),
all
pertinent financial and other records, and pertinent corporate documents
and
properties of the Company (collectively, the "Records"),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree
to
hold in strict confidence and shall not make any disclosure (except to
an
Investor) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors
are
so notified, unless (a) the disclosure of such Records is necessary to
avoid or
correct a misstatement or omission in any Registration Statement or is
otherwise
required under the 1933 Act, (b) the release of such Records is ordered
pursuant
to a final, non-appealable subpoena or order from a court or government
body of
competent jurisdiction, or (c) the information in such Records has been
made
generally available to the public other than by disclosure in violation
of this
Agreement. Each Investor agrees that it shall, upon learning that disclosure
of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company
and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement
between
the Company and any Investor) shall be deemed to limit the Investors' ability
to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
j. The
Seller shall and shall cause the Company to hold in confidence and not
make any
disclosure of information concerning an Investor provided to the Company
unless
(i) disclosure of such information is necessary to comply with federal
or state
securities laws, (ii) the disclosure of such information is necessary to
avoid
or correct a misstatement or omission in any Registration Statement, (iii)
the
release of such information is ordered pursuant to a subpoena or other
final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Seller agrees that he shall cause the Company to, upon learning
that disclosure of such information concerning an Investor is sought in
or by a
court or governmental body of competent jurisdiction or through other means,
give prompt written notice to such Investor and allow such Investor, at
the
Investor's expense, to undertake appropriate action to prevent disclosure
of, or
to obtain a protective order for, such information.
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10
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k. The
Seller shall cause the Company to use its best efforts either to (i) cause
all
of the Registrable Securities covered by a Registration Statement to be
listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange
or
(ii) secure the inclusion for quotation of all of the Registrable Securities
on
The NASDAQ Global Select Market or (iii) if, despite the Company's best
efforts,
the Company is unsuccessful in satisfying the preceding clauses (i) and
(ii), to
secure the inclusion for quotation on The NASDAQ Global Market, the New
York
Stock Exchange, The NASDAQ Capital Market or the American Stock Exchange
for
such Registrable Securities and, without limiting the generality of the
foregoing, to use its best efforts to arrange for at least two market makers
to
register with the Financial
Industry Regulatory Authority, Inc.
("FINRA")
as
such with respect to such Registrable Securities. The Seller shall, or
shall
cause the Company to, pay all fees and expenses in connection with satisfying
its obligation under this Section 3(k).
l. The
Seller shall cause the Company to cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant
to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Investors may reasonably request
and
registered in such names as the Investors may request.
m. If
requested by an Investor, the Seller shall cause the Company to as soon
as
practicable (i) incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being
paid
therefor and any other terms of the offering of the Registrable Securities
to be
sold in such offering; (ii) make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters
to be
incorporated in such prospectus supplement or post-effective amendment;
and
(iii) supplement or make amendments to any Registration Statement if reasonably
requested by an Investor holding any Registrable Securities.
n. The
Seller shall cause the Company to use its reasonable best efforts to cause
the
Registrable Securities covered by a Registration Statement to be registered
with
or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable
Securities.
o. The
Seller shall cause the Company to make generally available to its security
holders as soon as practical, but not later than ninety (90) days after
the
close of the period covered thereby, an earnings statement (in form complying
with, and in the manner provided by, the provisions of Rule 158 under the
0000
Xxx) covering a twelve-month period beginning not later than the first
day of
the Company's fiscal quarter next following the applicable Effective Date
of a
Registration Statement.
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11
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p. The
Seller shall cause the Company to otherwise use its best efforts to comply
with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.
q. Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Seller shall cause the
Company
to deliver, and shall cause legal counsel for the Company to deliver, to
the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective
by the
SEC in the form attached hereto as Exhibit
A.
r. Notwithstanding
anything to the contrary herein, at any time after the Effective Date,
the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the
best
interest of the Company and, in the opinion of counsel to the Company,
otherwise
required (a "Grace
Period");
provided, that the Seller shall (i) notify the Investors in writing of
the
existence of material, non-public information giving rise to a Grace Period
(provided that in each notice the Seller shall not, and shall cause the
Company
not to, disclose the content of such material, non-public information to
the
Investors) and the date on which the Grace Period will begin, and
(ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed five (5)
consecutive days and during any three hundred sixty five (365) day period
such
Grace Periods shall not exceed an aggregate of twenty (20) days and the
first
day of any Grace Period must be at least five (5) Trading Days after the
last
day of any prior Grace Period (each, an "Allowable
Grace Period").
For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Investors receive the notice referred
to
in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to
in such
notice. The provisions of Section 3(g) hereof shall not be applicable during
the
period of any Allowable Grace Period. Upon expiration of the Grace Period,
the
Seller shall again be bound by the first sentence of Section 3(f) with
respect
to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary,
the Seller shall cause the Company to cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with
any sale
of Registrable Securities with respect to which an Investor has entered
into a
contract for sale, prior to the Investor's receipt of the notice of a Grace
Period and for which the Investor has not yet settled.
s. The
Seller shall cause the Company not to, and shall cause the Company's
Subsidiaries and affiliates not to, identify any Buyer as an underwriter
in any
public disclosure or filing with the SEC or any Principal Market (as
defined in the Securities Purchase Agreement) or
Eligible Market and any Buyer being deemed an underwriter by the SEC shall
not
relieve the Seller of any obligations it has under this Agreement or any
other
Transaction Document (as
defined in the Securities Purchase Agreement); provided,
however,
that
the foregoing shall not prohibit the Company from including the disclosure
found
in the "Plan of Distribution" section attached hereto as Exhibit
B
in the
Registration Statement.
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12
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4. Obligations
of the Investors.
a. At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Seller shall cause the Company to notify each
Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Seller to cause the Company to complete
the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to
the
Company such information regarding itself, the Registrable Securities held
by it
and the intended method of disposition of the Registrable Securities held
by it,
as shall be reasonably required to effect and maintain the effectiveness
of the
registration of such Registrable Securities and shall execute such documents
in
connection with such registration as the Company may reasonably request.
b. Each
Investor, by such Investor's acceptance of the Registrable Securities,
agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder,
unless
such Investor has notified the Company in writing of such Investor's election
to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
c. Each
Investor agrees that, upon receipt of any notice from the Company or Seller
of
the happening of any event of the kind described in Section 3(g) or the
first
sentence of 3(f), such Investor will immediately discontinue disposition
of
Registrable Securities pursuant to any Registration Statement(s) covering
such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the
first
sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Seller shall cause
the
Company to cause its transfer agent to deliver unlegended shares of Common
Stock
to a transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities
with
respect to which an Investor has entered into a contract for sale prior
to the
Investor's receipt of a notice from the Company of the happening of any
event of
the kind described in Section 3(g) or the first sentence of 3(f) and for
which
the Investor has not yet settled.
d. Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom
in
connection with sales of Registrable
Securities pursuant to the Registration Statement.
5. Expenses
of Registration.
All
reasonable expenses, other than underwriting discounts and commissions,
incurred
in connection with registrations, filings or qualifications pursuant to
Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements
of
counsel for the Company shall be paid by the Seller, if not paid by the
Company.
The Seller shall also reimburse the Investors for the fees and disbursements
of
Legal Counsel in connection with registration, filing or qualification
pursuant
to Sections 2 and 3 of this Agreement which amount shall be limited to
$7,500
for
each
such registration, filing or qualification.
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13
-
6. Indemnification.
In
the
event any Registrable Securities are included in a Registration Statement
under
this Agreement:
a. To
the
fullest extent permitted by law, the Seller will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any,
who
controls any Investor within the meaning of the 1933 Act or the 1934 Act
(each,
an "Indemnified
Person"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement
or
expenses, joint or several, (collectively, "Claims")
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by
or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified
Damages"),
to
which any of them may become subject insofar as such Claims (or actions
or
proceedings, whether commenced or threatened, in respect thereof) arise
out of
or are based upon: (i) any untrue statement or alleged untrue statement
of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction
in
which Registrable Securities are offered ("Blue
Sky Filing"),
or
the omission or alleged omission to state a material fact required to be
stated
therein or necessary to make the statements therein not misleading, (ii)
any
untrue statement or alleged untrue statement of a material fact contained
in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the
SEC) or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in light of the circumstances under which
the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of
this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations").
Subject to Section 6(c), the Seller shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any
legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to
the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified
Person
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant
to
Section 3(d); and (ii) shall not apply to amounts paid in settlement of
any
Claim if such settlement is effected without the prior written consent
of the
Seller, which consent shall not be unreasonably withheld or delayed. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer
of
the Registrable Securities by the Investors pursuant to Section 9.
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14
-
b. In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as
is set
forth in Section 6(a), the Seller and the Company, each of its directors,
each
of its officers who signs the Registration Statement and each Person, if
any,
who controls the Company within the meaning of the 1933 Act or the 1934
Act
(each, an "Indemnified
Party"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim or
Indemnified Damages arise out of or are based upon any Violation, in each
case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company
by such
Investor expressly for use in connection with such Registration Statement;
and,
subject to Section 6(c), such Investor shall reimburse the Indemnified
Party,
promptly as such expenses are incurred and are due and payable, for any
legal or
other expenses reasonably incurred by an Indemnified Party in connection
with
investigating or defending any such Claim; provided, however, that the
indemnity
agreement contained in this Section 6(b) and the agreement with respect
to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written
consent of such Investor, which consent shall not be unreasonably withheld
or
delayed; provided, further, however, that the Investor shall be liable
under
this Section 6(b) for only that amount of a Claim or Indemnified Damages
as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made
by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this
Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified
Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party
shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to
assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party,
as the
case may be; provided, however, that an Indemnified Person or Indemnified
Party
shall have the right to retain its own counsel with the fees and expenses
of not
more than one counsel for all such Indemnified Person or Indemnified Party
to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel
of the
Indemnified Person or Indemnified Party and the indemnifying party would
be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented
by such
counsel in such proceeding. In the case of an Indemnified Person, legal
counsel
referred to in the immediately preceding sentence shall be selected by
the
Investors holding at least a majority in
interest of the Registrable Securities included in the Registration Statement
to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate reasonably with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying
party and
shall furnish to the indemnifying party all information reasonably available
to
the Indemnified Party or Indemnified Person which relates to such action
or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall
be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party
shall
not unreasonably withhold, delay or condition its consent. No indemnifying
party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or
other
compromise which does not include as an unconditional term thereof the
giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person
of a
release from all liability in respect to such Claim or litigation, and
such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder,
the
indemnifying party shall be subrogated to all rights of the Indemnified
Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure
to
deliver written notice to the indemnifying party within a reasonable time
of the
commencement of any such action shall not relieve such indemnifying party
of any
liability to the Indemnified Person or Indemnified Party under this Section
6,
except to the extent that the indemnifying party is prejudiced in its ability
to
defend such action.
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15
-
d. The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as
and
when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person
against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. Contribution.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with
respect
to any amounts for which it would otherwise be liable under Section 6 to
the
fullest extent permitted by law; provided, however, that: (i) no Person
involved
in the sale of Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx)
in
connection with such sale shall be entitled to contribution from any Person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the amount of net proceeds received by such
seller
from the sale of such Registrable Securities pursuant to such Registration
Statement.
8. Reports
Under the 1934 Act.
Until
the
later of (i) the date twelve (12) months after the date the last of the
Common
Shares are issued to the Investors pursuant to the Securities Purchase
Agreement
and (ii) the date on which the Investors may sell all of the Registrable
Securities without restriction pursuant to Rule 144 and without the requirement
to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated
under the 1933 Act without the Company's compliance with subsections (a)
through
(c) below, with a view to making available to the Investors the benefits
of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation
of
the SEC that may at any time permit the Investors to sell securities of
the
Company to the public without registration ("Rule
144"),
the
Seller shall cause the Company to:
a. make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
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16
-
b. file
with
the SEC in a timely manner all reports and other documents required of
the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and
c. furnish
to each Investor so long as such Investor owns Registrable Securities,
promptly
upon request, (i) a written statement by the Company, if true, that it
has
complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii)
such
other information as may be reasonably requested to permit the Investors
to sell
such securities pursuant to Rule 144 without registration.
9. Assignment
of Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished
to the
Seller within a reasonable time after such assignment; (ii) the Seller
is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee
is
restricted under the 1933 Act or applicable state securities laws; (iv)
at or
before the time the Seller receives the written notice contemplated by
clause
(ii) of this sentence the transferee or assignee agrees in writing with
the
Seller to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements
of
the Securities Purchase Agreement.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively
or
prospectively), only with the written consent of the Seller and the Required
Holders. Any amendment or waiver effected in accordance with this Section
10
shall be binding upon each Investor and the Seller. No such amendment shall
be
effective to the extent that it applies to less than all of the holders
of the
Registrable Securities. No consideration shall be offered or paid to any
Person
to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration also is offered to all of the parties
to
this Agreement.
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17
-
11. Miscellaneous.
a. A
Person
is deemed to be a holder of Registrable Securities whenever such Person
owns or
is deemed to own of record such Registrable Securities. If the Company
receives
conflicting instructions, notices or elections from two or more Persons
with
respect to the same Registrable Securities, the Seller shall cause the
Company
to act upon the basis of instructions, notice or election received from
such
record owner of such Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be
deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii)
upon
receipt, when sent by facsimile (provided confirmation of transmission
is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Seller:
Wo
Xxxx
Xx
x/x
Xxxxx
Precision Steel, Inc.
0xx
Xxxxx,
Xxxx Xxxxxxxx
00
Xxxx
Xxx Xxxxxx
Xxxxxx
Xxx
Hong
Kong, The People's Republic of China
Telephone:
x000-0000-0000
Facsimile:
x000-00000000
with
a
copy to (for information purposes only) to:
Guzov
Ofsink, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxx, Esq.
If
to the
Transfer Agent:
Corporate
Stock Transfer
0000
Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx
Xxxx
If
to
Legal Counsel:
Xxxxxxx
Xxxx
& Xxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxx, Esq.
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18
-
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of
Buyers
attached hereto, with copies to such Buyer's representatives as set forth
on the
Schedule of Buyers, or to such other address and/or facsimile number and/or
to
the attention of such other Person as the recipient party has specified
by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given
by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the
first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate
as a
waiver thereof.
d. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that
would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and
hereby irrevocably waives, and agrees not to assert in any suit, action
or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding
by
mailing a copy thereof to such party at the address for such notices to
it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed
to limit in any way any right to serve process in any manner permitted
by law.
The Seller hereby appoints Guzov Ofsink, LLC, with offices at 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its agent for service
of
process. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR
IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
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e. If
any
provision of this Agreement is prohibited by law or otherwise determined
to be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect
the
validity of the remaining provisions of this Agreement so long as this
Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question
does not
substantially impair the respective expectations or reciprocal obligations
of
the parties or the practical realization of the benefits that would otherwise
be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a
valid
provision(s), the effect of which comes as close as possible to that of
the
prohibited, invalid or unenforceable provision(s).
f. This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement) and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto with respect to the subject
matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein.
This
Agreement, the other Transaction Documents and the instruments referenced
herein
and therein supersede all prior agreements and understandings among the
parties
hereto with respect to the subject matter hereof and thereof.
g. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit
of
and be binding upon the permitted successors and assigns of each of the
parties
hereto.
h. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
i. This
Agreement may be executed in identical counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other
party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
j. Each
party shall do and perform, or cause to be done and performed, all such
further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of
this
Agreement and the consummation of the transactions contemplated
hereby.
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20
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k. All
consents and other determinations required to be made by the Investors
pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
l. The
language used in this Agreement will be deemed to be the language chosen
by the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
m. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may
any
provision hereof be enforced by, any other Person.
n. The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other Investor.
Nothing contained herein, and no action taken by any Investor pursuant
hereto,
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 herein.
*
* * * *
*
[Signature
Page Follows]
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IN
WITNESS WHEREOF,
each
Buyer and the Seller have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first
written
above.
|
Seller:
|
|
|
Wo
Xxxx Xx
|
|
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1
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IN
WITNESS WHEREOF,
each
Buyer and the Seller have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first
written
above.
|
BUYERS:
|
||
| XXXXXX BAY FUND, LP | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
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IN
WITNESS WHEREOF,
each
Buyer and the Seller have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first
written
above.
|
BUYERS:
|
||
|
XXXXXX
BAY OVERSEAS FUND, LTD
|
||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
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SCHEDULE
OF BUYERS
|
Buyer
|
Buyer
Address
and
Facsimile Number
|
Buyer's
Representative's Address
and
Facsimile Number
|
|
Xxxxxx
Bay Fund, LP
|
000
Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxx
Facsimile:
000-000-0000
Telephone:
000-000-0000
Residence:
United States
E-mail:
xxxxxxxxxxx@xxxxxxxxxxxxxxxx.xxx
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Xxxxxx
Bay Overseas Fund, Ltd.
|
000
Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxx
Facsimile:
000-000-0000
Telephone:
000-000-0000
E-mail:
xxxxxxxxxxx@xxxxxxxxxxxxxxxx.xxx
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
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EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Corporate
Stock Transfer
0000
Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx Xxxx
Ladies
and Gentlemen:
[We
are][I am] counsel to China Precision Steel, Inc., a Delaware corporation
(the
"Company"),
and
have represented the Company in connection with that certain Securities
Purchase
Agreement (the "Securities
Purchase Agreement")
entered into by and among the Wo Xxxx Xx (the "Seller")
and
the buyers named therein (collectively, the "Holders")
pursuant to which the Seller issued to the Holders shares (the "Common
Shares")
the
Company's common stock, par value $0.001 per share (the "Common
Stock").
Pursuant to the Securities Purchase Agreement, the Company has entered
into a
Registration Rights Agreement with the Holders (the "Registration
Rights Agreement")
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement),
under
the Securities Act of 1933, as amended (the "1933
Act").
In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration
Statement
on Form S-3 (File No. 333-_____________) (the "Registration
Statement")
with
the Securities and Exchange Commission (the "SEC")
relating to the Registrable Securities which names each of the Holders
as a
selling stockholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the
SEC's
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at
[ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and
[we][I] have no knowledge, after telephonic inquiry of a member of the
SEC's
staff, that any stop order suspending its effectiveness has been issued
or that
any proceedings for that purpose are pending before, or threatened by,
the SEC
and the Registrable Securities are available for resale under the 1933
Act
pursuant to the Registration Statement.
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This
letter shall serve as our standing instruction to you that the shares of
Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Holders.
Very
truly yours,
[ISSUER'S
COUNSEL]
By:_____________________
CC: [LIST
NAMES OF HOLDERS]
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2
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EXHIBIT
B
SELLING
STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those
previously issued to the Selling Stockholders. For additional information
regarding the issuances of common stock, see "Private Placement of Common
Shares" above. We are registering the shares of common stock in order to
permit
the selling stockholders to offer the shares for resale from time to time.
Except for the ownership of the shares of common stock issued pursuant
to the
Securities Purchase Agreement, the selling stockholders have not had any
material relationship with us within the past three years.
The
table
below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of common stock by each of the selling
stockholders. The second column lists the number of shares of common stock
beneficially owned by each selling shareholder, based on its ownership
of the
shares of common stock, as of ________, 2007.
The
third
column lists the shares of common stock being offered by this prospectus
by the
selling stockholders.
In
accordance with the terms of a registration rights agreement with the selling
stockholders, this prospectus generally covers the resale of at least 100%
of
the the number of shares of common stock issued pursuant to the Securities
Purchase Agreement. The fourth column assumes the sale of all of the shares
offered by the selling stockholders pursuant to this prospectus.
The
selling stockholders may sell all, some or none of their shares in this
offering. See "Plan of Distribution."
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|
Name
of Selling Stockholder
|
Number
of Shares of Common Stock Owned Prior to
Offering
|
Maximum
Number of Shares of Common Stock to be Sold Pursuant to this
Prospectus
|
Number
of Shares of Common Stock Owned After
Offering
|
|
Xxxxxx
Bay Fund LP (1)
|
0
|
||
|
Xxxxxx
Bay Overseas Fund LTD (2)
|
(1)
Xxxxxx Xxxxxx, Xxxx Xxxx and Xxxx Xxxxxx share voting and investment power
over
these securities. Each of Xxxxxx Xxxxxx, Xxxx Xxxx and Xxxx Xxxxxx disclaim
beneficial ownership over the securities held by Xxxxxx Bay Fund LP. The
selling
stockholder acquired the securities offered for its own account in the
ordinary
course of business, and at the time it acquired the securities, it had
no
agreements, plans or understandings, directly or indirectly to distribute
the
securities.
(2)
Xxxxxx Xxxxxx, Xxxx Xxxx and Xxxx Xxxxxx share voting and investment power
over
these securities. Each of Xxxxxx Xxxxxx, Xxxx Xxxx and Xxxx Xxxxxx disclaim
beneficial ownership over the securities held by Xxxxxx Bay Overseas Fund
LTD.
The selling stockholder acquired the securities offered for its own account
in
the ordinary course of business, and at the time it acquired the securities,
it
had no agreements, plans or understandings, directly or indirectly to distribute
the securities.
1
PLAN
OF DISTRIBUTION
We
are
registering the shares of common stock previously issued to the selling
stockholders to permit the resale of these shares of common stock by the
holders
of the shares from time to time after the date of this prospectus. We will
not
receive any of the proceeds from the sale by the selling stockholders of
the
shares of common stock. We will bear all fees and expenses incident to
our
obligation to register the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common
stock
beneficially owned by them and offered hereby from time to time directly
or
through one or more underwriters, broker-dealers or agents. If the shares
of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions
or
agent's commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of
the
sale, at varying prices determined at the time of sale, or at negotiated
prices.
These sales may be effected in transactions, which may involve crosses
or block
transactions,
| · |
on
any national securities exchange or quotation service on which
the
securities may be listed or quoted at the time of
sale;
|
| · |
in
the over-the-counter market;
|
| · |
in
transactions otherwise than on these exchanges or systems or in
the
over-the-counter market;
|
| · |
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
short
sales;
|
| · |
sales
pursuant to Rule 144;
|
| · |
broker-dealers
may agree with the selling securityholders to sell a specified
number of
such shares at a stipulated price per
share;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
If
the
selling stockholders effect such transactions by selling shares of common
stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions
from
purchasers of the shares of common stock for whom they may act as agent
or to
whom they may sell as principal (which discounts, concessions or commissions
as
to particular underwriters, broker-dealers or agents may be in excess of
those
customary in the types of transactions involved). In connection with sales
of
the shares of common stock or otherwise, the selling stockholders may enter
into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions
they
assume. The selling stockholders may also sell shares of common stock short
and
deliver shares of common stock covered by this prospectus to close out
short
positions and to return borrowed shares in connection with such short sales.
The
selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.
The
selling stockholders may pledge or grant a security interest in some or
all of
the shares of common stock owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer
and sell
the shares of common stock from time to time pursuant to this prospectus
or any
amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act of 1933, as amended, amending, if necessary, the
list of
selling stockholders to include the pledgee, transferee or other successors
in
interest as selling stockholders under this prospectus. The selling stockholders
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in
interest
will be the selling beneficial owners for purposes of this
prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of common stock may be deemed to be "underwriters" within the
meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering
of the
shares of common stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of common
stock
being offered and the terms of the offering, including the name or names
of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under
the
securities laws of some states, the shares of common stock may be sold
in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of common stock may not be sold unless such shares
have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
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2
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There
can
be no assurance that any selling stockholder will sell any or all of the
shares
of common stock registered pursuant to the registration statement, of which
this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act
of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing
of
purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also
restrict
the ability of any person engaged in the distribution of the shares of
common
stock to engage in market-making activities with respect to the shares
of common
stock. All of the foregoing may affect the marketability of the shares
of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We
will
pay all expenses of the registration of the shares of common stock pursuant
to
the registration rights agreement, estimated to be
$[ ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance
with
state securities or "blue sky" laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions,
if any.
We will indemnify the selling stockholders against liabilities, including
some
liabilities under the Securities Act, in accordance with the registration
rights
agreements, or the selling stockholders will be entitled to contribution.
We may
be indemnified by the selling stockholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling stockholder specifically for
use in
this prospectus, in accordance with the related registration rights agreement,
or we may be entitled to contribution.
Once
sold
under the registration statement, of which this prospectus forms a part,
the
shares of common stock will be freely tradable in the hands of persons
other
than our affiliates.
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