REGISTRATION RIGHTS AGREEMENT
EXECUTION
VERSION
REGISTRATION
RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of February 15, 2008, by and among China Automotive Systems, Inc., a Delaware
corporation, with headquarters located at Xx. 0 Xxxxxxxx Xxxx, Yu Qiao
Development Zone, Shashi District, Xxxx Xxxx City, Hubei Province, People’s
Republic of China (the “Company”),
and
the undersigned buyers (each, a “Buyer”,
and
collectively, the “Buyers”).
WHEREAS:
A. In
connection with the Securities Purchase Agreement, dated as of February 1,
2008,
by and among the parties hereto (the “Securities
Purchase Agreement”),
the
Company has agreed, upon the terms and subject to the conditions set forth
in
the Securities Purchase Agreement, to issue and sell to each Buyer senior
convertible notes, (the “Notes”)
and
warrants (the “Warrants”)
which
will, among other things, both be convertible into shares of the Company’s
common stock, par value $0.0001 per share (the “Common
Stock,”
as
converted, collectively, the “Conversion
Shares”).
B. In
accordance with the terms of the Securities Purchase Agreement and subject
to
issuance of the Notes and the Warrants pursuant to the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “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:
“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.
“Closing
Date”
shall
have the meaning set forth in the Securities Purchase Agreement.
“Effective
Date”
means
the date that the Registration Statement has been declared effective by the
SEC.
“Effectiveness
Deadline”
means
the date that is 120 days after the Filing Deadline.
“Filing
Date”
means
the date on which the Registration Statement is filed with the SEC.
“Filing
Deadline”
means
sixty (60) calendar
days after the Closing Date.
“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.
“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.
“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.
“Registrable
Securities”
for
the
Registration Statement means (i) the Notes, (ii) the Warrants,
(iii) the Conversion Shares issued or issuable upon conversion of the
Notes, (iv) the Conversion Shares issued or issuable upon exercise of the
Warrants, and (v) any capital stock of the Company issued or issuable, with
respect to the Notes, the Warrants or the Conversion Shares as a result of
any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitations on conversion and/or exercise
of
the Notes or Warrants.
“Registration
Statement”
means
a
resale registration statement or registration statements of the Company filed
under the 1933 Act covering the Registrable Securities.
“Required
Registration Amount”
means
120%
of the
sum of the number of Conversion Shares issued and issuable pursuant to the
Notes
and the Warrants as of the Trading Day (as defined in the Securities Purchase
Agreement) immediately preceding the applicable date of
determination.
“Rule
415”
means
Rule 415 promulgated under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis.
“SEC”
means
the United States Securities and Exchange Commission.
2. Registration.
(a) Mandatory
Registration.
The
Company shall prepare, and, as soon as practicable, but in no event later than
the Filing Deadline, file with the SEC the Registration Statement on Form S-3
covering the resale of all of the Registrable Securities. In the event that
Form
S-3 is unavailable for such a registration, the Company shall 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(d).
The
Registration Statement prepared pursuant hereto shall register for resale the
Notes, the Warrants and at least the number of shares of Common Stock equal
to
the Required Registration Amount determined as of the date the Registration
Statement is initially filed with the SEC. The Registration Statement shall
contain (except if otherwise directed by the Required Holders) the “Selling
Securityholders”
and
“Plan
of Distribution”
sections in substantially the form attached hereto as Exhibit
A.
The
Company shall use its commercially reasonable best efforts to have the
Registration Statement declared effective by the SEC as soon as practicable,
but
in no event later than the Effectiveness Deadline. By the Business Day following
the Effective Date, the Company shall file with the SEC in accordance with
Rule
424 under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Registration Statement.
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(b) Allocation
of Registrable Securities.
The
initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein shall
be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor’s Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such transferor. 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
the Company include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the
Investors.
(c) Legal
Counsel.
Subject
to Section
5
hereof,
the Investors shall have the right to select one legal counsel to review and
oversee any registration pursuant to this Section 2
(“Investor Legal
Counsel”),
which
shall be Xxxxxxx Procter LLP or such other counsel as thereafter designated
by
the Investors. The Company and Investor Legal Counsel shall reasonably cooperate
with each other in performing the Company’s obligations under this
Agreement.
(d) 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 Company shall (i) register the resale
of
the Registrable Securities on another appropriate form reasonably acceptable
to
the Investors and (ii) undertake to register the Registrable Securities on
Form
S-3 as soon as such form is available, provided
that the
Company shall maintain the effectiveness of the Registration Statement then
in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.
(e) Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section
2(a)
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(b),
the
Company shall 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 30 days after the necessity therefor arises and the Investors
give the Company notice thereof. The Company shall use its commercially
reasonable 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. The calculation set forth in the foregoing sentence shall be
made
without regard to any limitations on the conversion and/or exercise of the
Notes
and the Warrants and such calculation shall assume that the Notes and the
Warrants are then convertible into or exercisable for shares of Common Stock
at
the then prevailing Conversion Rate (as defined in the Notes) or Warrant
Exercise Price (as defined in the Warrants).
3
(f) 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”)
or
(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”)
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 Company shall pay to each holder of Registrable Securities relating
to such Registration Statement an amount in cash equal to one percent (1.0%)
of
the portion of the Purchase Price (as such term is defined in the Securities
Purchase Agreement) allocable to the Note and Warrants and associated with
such
Investor’s Registrable Securities not included in and still unsold under such
Registration Statement, 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) 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; (v) 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; and (vi) 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. The payments to which a holder shall be entitled pursuant to this
Section
2(f)
are
referred to herein as “Registration
Delay Payments.”
Registration Delay Payments shall be paid on the earlier of (A) the dates set
forth above and (B) the third Business Day after the event or failure giving
rise to the Registration Delay Payments is cured. In the event the Company
fails
to make Registration Delay Payments in a timely manner, such Registration Delay
Payments shall bear interest at the rate of 1.5% per month (prorated for partial
months) until paid in full.
4
3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement with the
SEC
pursuant to Section
2(a),
2(d),
or
2(e),
the
Company will use its commercially reasonable best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have
the
following obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use its commercially 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 Company shall 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(k) (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
Company shall 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 “commercially reasonable best efforts” shall mean, among
other things, that the Company shall 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 Investor 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 Company shall respond in writing
to comments made by the SEC in respect of a Registration Statement as soon
as
practicable 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
Company shall 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-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934
Act”),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
5
(c) The
Company shall (i) permit Investor Legal Counsel to review and comment upon
(A) a
Registration Statement at least five Business Days prior to its filing with
the
SEC and (B) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, 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 (ii) not file any
Registration Statement or amendment or supplement thereto in a form to which
Investor Legal Counsel reasonably objects. The Company shall not submit a
request for acceleration of the effectiveness of a Registration Statement or
any
amendment or supplement thereto without the prior approval of Investor Legal
Counsel, which consent shall not be unreasonably withheld. The Company shall
furnish to Investor 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 Company shall reasonably cooperate
with
Investor Legal Counsel in performing the Company’s obligations pursuant to this
Section
3.
(d) The
Company shall 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
Company shall use its commercially 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 reasonably
requested 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 (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section
3(e),
(B)
subject itself to general taxation in any such jurisdiction, or (C) file a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify Investor 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.
6
(f) The
Company shall notify Investor 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 Investor Legal Counsel and each Investor (or such
other number of copies as Investor Legal Counsel or such Investor may reasonably
request). The Company shall also promptly notify Investor 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 Investor 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
Company shall use its commercially 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 Investor 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 Company shall furnish to such Investor,
on the date of the effectiveness of the Registration Statement and thereafter
from time to time on such dates as an Investor may reasonably request (i) a
letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Investors, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement,
in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors.
7
(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 Company
shall make available for inspection by (i) such Investor, (ii) Investor 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
particular information in such Record 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
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(k) The
Company shall use its commercially reasonable 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 commercially
reasonable best efforts, the Company is unsuccessful in satisfying the preceding
clauses (i) and (ii), to secure the inclusion for quotation on 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 commercially reasonable best efforts to arrange for at
least two market makers to register with the Financial Industry Regulatory
Authority (“FINRA”)
as
such with respect to such Registrable Securities. The Company shall pay all
fees
and expenses in connection with satisfying its obligation under this
Section
3(k).
For
avoidance of doubt, this Section
3(k)
shall
not apply to the Notes and Warrants themselves.
8
(l) The
Company shall cooperate with the Investors who hold Registrable Securities
being
offered and, to the extent applicable and consistent with securities laws,
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 Company shall 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
Company shall use its commercially 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;
provided,
however,
that
this Section
3(n)
shall
not apply to the Notes and Warrants themselves unless the Investors who propose
to participate in such disposition pay the entire cost (including without
limitation the Company’s reasonable attorneys fees) thereof, shared pro rata as
among such Investors who propose to participate in such
disposition.
(o) The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering
a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the applicable Effective Date of a Registration
Statement.
(p) The
Company shall otherwise use its commercially reasonable best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
9
(q) Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
B.
(r) Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a “Grace
Period”);
provided, that the Company shall promptly (i) notify the Investors in writing
of
the existence of material, non-public information giving rise to a Grace Period
(provided
that in
each notice the Company will not disclose the content of such material,
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which
the Grace Period ends; and, provided further, that no Grace Period shall exceed
20 consecutive days and during any three hundred sixty five (365) day period
such Grace Periods shall not exceed an aggregate of 40 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 Company 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 Company shall 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, if such sale would otherwise have
justified the delivery of unlegended shares.
(s) Neither
the Company nor any Subsidiary or affiliate thereof shall 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 Company 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
A
in the
Registration Statement.
4. Obligations
of the Investors.
(a) At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of
the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor’s Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations
of
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.
10
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section
3(g)
or the
first sentence of 3(f),
such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) 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 Section
3(f)
or
receipt of notice that no supplement or amendment is required. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with securities laws and 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 Section
3(f)
and for
which the Investor has not yet settled.
(d) Each
Investor covenants and agrees that it (i) will not sell any Registrable
Securities except pursuant to the Registration Statement or an available
exemption from 1933 Act registration, (ii) 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, and (iii) will not use any
oral or written prospectus other than the official prospectus in connection
with
any such sales.
5. Expenses
of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to
Sections
2
and
3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company. The Company shall also reimburse
the
Investors for the fees and disbursements of Investor Legal Counsel up to a
cumulative $20,000 cap in connection with registration, filing or qualification
pursuant to Sections
2
and
3
of this
Agreement.
11
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 Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several, (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 by the Company 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
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
Company 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):
(A) shall not apply to a Claim by an Indemnified Person arising out of or
based upon (i) 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)
or (ii)
failure to deliver the official prospectus as required or use of an unofficial
oral or written prospectus; and (B) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed. Such indemnity shall remain in full force and effect regardless of
any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to
Section
9.
12
(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
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 (i) any Violation, in each
case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement or (ii) failure to deliver the official prospectus as required or
use
of an unofficial oral or written prospectus; 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
selected by the indemnifying party and reasonably acceptable to 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 Persons or Indemnified Parties 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 or the Indemnified
Person or require the Indemnified Party or Indemnified Person to do anything
or
to not do anything. 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.
13
(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.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the public
without registration (“Rule
144”),
the
Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
14
(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 Registrable Securities of such Investor constituting or
overlying at least 100,000 shares of Common Stock if: (i) the Investor agrees
in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment; (ii) the Company is, within a reasonable time after such transfer
or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities 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 Company receives the
written notice contemplated by clause (ii) of this sentence the transferee
or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance
with
the applicable requirements of the 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 Company and the holders
of
a majority of the Common Stock constituting or underlying Registrable
Securities. Any amendment or waiver effected in accordance with this
Section
10
shall be
binding upon each Investor and the Company. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend
or
consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this
Agreement.
15
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 Company shall 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 an internationally recognized
courier service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
China
Automotive Systems, Inc.
Xx.
0
Xxxxxxxx Xxxx
Xx
Xxxx
Development Zone
Shashi
District, Xxxx Xxxx City
Hubei
Province, People’s Republic of China
Facsimile:
(00)
00-0000-0000
Attention:
Xxxxxx
Xxxx
With
a
copy (for informational purposes only) to:
Xxxxxx
Xxxxxx LLP
0000
Xx
Xxxxx Xxxxxxx Xxxxx
Xxxxxxx
Xxxxx
Xxx
Xxxxx, XX 00000
Facsimile: (000)
000-0000
Attention: Xxxxxx
X.
Xxxxxxx
If
to the
Transfer Agent:
Securities
Transfer Corporation
0000
Xxxxxx Xxxxxxx #000
Xxxxxx,
XX 00000
Facsimile:
(000)
000-0000
Attention:
Xxxxxx
Xxxxxxx
16
If
to
Investor Legal Counsel:
Xxxxxxx Procter LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxx
Xxxxx X. Xxxxxxxxxx
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies (for informational purposes only) 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 an
internationally recognized courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an internationally
recognized courier 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.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
17
(e) 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, other than
pursuant to the agreements set forth on Schedule
I
attached
hereto.
(f) 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.
(g) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(h) This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
(i) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents as 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.
(j) 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.
(k) 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.
(l) 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
PAGES FOLLOW]
18
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
COMPANY:
|
|
CHINA
AUTOMOTIVE SYSTEMS, INC.
|
|
By:
/s/
Xxxxxx Xxxx
Name:
Xxxxxx Xxxx
Title:
Chairman
|
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
|
|
XXXXXX
BROTHERS COMMERCIAL CORPORATION ASIA LIMITED
|
|
By:
/s/
Xxxxxx
X. Xxxx
Name: Xxxxxx
X. Xxxx
Title:
Senior Vice President
|
|
YA
GLOBAL INVESTMENTS, L.P.
By: /s/
Yorkville Advisors, LLC
Investment Manager
By:
/s/
Xxxx Xxxxxx
Name:
Xxxx Xxxxxx
Title:
President and Portfolio Manager
|
SCHEDULE
OF BUYERS
Buyer
|
Buyer
Address
and
Facsimile Number
|
Buyer’s
Representative’s Address
and
Facsimile Number
|
||
Xxxxxx
Brothers Commercial Corporation Asia Limited
|
|
24F,
Two International Finance Xxxxxx
0,
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx
x000-0000-0000
Attn:
Xxxxxx Xxxx
|
|
Xxxxxxx
Xxxxxxx XXX
Xxxxxxxx
Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxx
and
Xxxxx X. Xxxxxxxxxx
|
YA
Global Investments, L.P.
|
|
000
Xxxxxx Xxxxxx
Xxxxx
0000
Xxxxxx
Xxxx, XX 00000
(201)
985-8266
|
|
Xxxxx
Xxxxxxxx, Esq.
000
Xxxxxx Xxxxxx
Xxxxx
0000
Xxxxxx
Xxxx, XX 00000
(201)
985-8266
|
1
EXHIBIT
A
SELLING
SECURITYHOLDERS
The
shares of common stock being offered by the selling securityholders are issuable
upon conversion of the convertible notes and warrants. For additional
information regarding the issuance of those convertible notes and warrants,
see
“Private Placement of Convertible Notes and Warrants” above. We are registering
the convertible notes, warrants and shares of common stock in order to permit
the selling securityholders to offer the convertible notes, warrants and shares
for resale from time to time. Except for the ownership of the convertible notes
and warrants issued pursuant to the Securities Purchase Agreement and in the
case of YA Global Investments, L.P. (formerly known as Cornell Capital Partners,
LP, “Cornell”)
pursuant to the terms of that certain Standby Equity Distribution Agreement
dated March 20, 2006 and the issuance of Common Stock and Warrants to Cornell
for $5,000,000 pursuant to a Securities Purchase Agreement also dated on March
20, 2006, the selling securityholders have not had any material relationship
with us within the past three years.
The
table
below lists the selling securityholders and other information regarding the
beneficial ownership of the convertible notes, warrants and shares of common
stock by each of the selling securityholders. The second column lists the number
of shares of common stock beneficially owned by each selling securityholder,
based on its ownership of the convertible notes and warrants, as of ________,
2008, assuming conversion of all convertible notes and exercise of all warrants
held by the selling securityholders on that date, without regard to any
limitations on conversions or exercises.
The
fourth column lists the maximum aggregate principal amount of convertible notes
to be sold pursuant to the prospectus.
The
fifth
column lists the maximum quantity of warrants, with size expressed by the number
of shares underlying the warrants, to be sold pursuant to the
prospectus.
The
sixth
column lists the shares of common stock being offered by this prospectus by
the
selling securityholders.
In
accordance with the terms of a registration rights agreement with the selling
securityholders, this prospectus generally covers the resale of the Notes and
Warrants and 120% of the number of shares of common stock issuable upon
conversion of the convertible notes and exercise of the warrants as of the
Trading Day immediately preceding the date the registration statement is
initially filed with the SEC. Because the conversion price of the convertible
notes and the exercise price of the warrants may be adjusted, the number of
shares that will actually be issued may be more or less than the number of
shares being offered by this prospectus. The sixth and seventh columns assume
the sale of all of the shares offered by the selling securityholders pursuant
to
this prospectus.
Under
the
terms of the convertible notes and warrants, a selling securityholder may not
convert the convertible notes and (during certain time periods) exercise the
warrants to the extent such conversion would cause such selling securityholder,
together with its affiliates, to beneficially own a number of shares of common
stock which would exceed 4.99% of our then outstanding shares of common stock
following such conversion/exercise, excluding for purposes of such determination
shares of common stock issuable upon conversion/exercise of the convertible
notes and warrants which have not been converted/exercised. The number of shares
in the second column does not reflect this limitation. The selling
securityholders may sell all, some or none of their convertible notes, warrants
and shares in this offering. See “Plan of Distribution.”
1
Name
of Selling Securityholder
|
Number
of Shares of Common Stock Beneficially Owned Prior to
Offering
|
|
Percentage
of Class
|
|
Maximum
Aggregate Principal Amount of Convertible Notes to be Sold Pursuant
to the
Prospectus
|
|
Maximum
Number of Warrants to be Sold Pursuant to the
Prospectus
|
|
Maximum
Number of Shares of Common Stock to be Sold Pursuant to the
Prospectus
|
|
Number
of Shares of Common Stock Beneficially Owned After
Offering
|
|
Percentage
of Class
|
|||||||||
Xxxxxx
Brothers Commercial Corporation Asia Limited
|
||||||||||||||||||||||
YA
Global Investments, L.P.
|
(1) [NTD:
Add description of the ultimate entities and individuals who have voting and
investment discretion re: Xxxxxx Brothers Commercial Corporation Asia’s
investments and YA Global Investments.]
2
PLAN
OF DISTRIBUTION
We
are
registering the convertible notes, warrants and shares of common stock issuable
upon conversion of the convertible notes and warrants to permit the resale
of
these convertible notes and warrants and the resale of these shares of common
stock by the holders of the convertible notes and warrants from time to time
after the date of this prospectus. We will not receive any of the proceeds
from
the sale by the selling securityholders of the convertible notes, warrants
and
shares of common stock. We will bear all fees and expenses incident to our
obligation to register the convertible notes, warrants and shares of common
stock.
The
selling securityholders may sell all or a portion of the convertible notes,
warrants and 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 convertible notes, warrants and shares of
common stock are sold through underwriters or broker-dealers, the selling
securityholders will be responsible for underwriting discounts or commissions
or
agent’s commissions. The convertible notes, warrants and 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;
|
3
· |
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 securityholders effect such transactions by selling convertible notes,
warrants and 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
securityholders or commissions from purchasers of the convertible notes,
warrants and 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 convertible notes, warrants and shares of common stock or otherwise, the
selling securityholders may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the convertible notes, warrants
and
shares of common stock in the course of hedging in positions they assume. The
selling securityholders may also sell convertible notes, warrants and shares
of
common stock short and deliver convertible notes, warrants and 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 securityholders
may also loan or pledge convertible notes, warrants and shares of common stock
to broker-dealers that in turn may sell such convertible notes, warrants and
shares.
The
selling securityholders may pledge or grant a security interest in some or
all
of the convertible notes, warrants, or 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 convertible notes, warrants and shares
of
common stock from time to time pursuant to this prospectus or any supplement
or
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 securityholders to include the pledgee, transferee or other successors
in interest as selling securityholders under this prospectus. The selling
securityholders also may transfer and donate the convertible notes, warrants
and
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 securityholders 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 convertible notes, warrants and shares of common stock is made,
a prospectus supplement, if required, will be distributed to set forth the
aggregate principal amount of the convertible notes, the aggregate amount of
warrants and 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 securityholders and any discounts, commissions or concessions
allowed or reallowed or paid to broker-dealers.
4
Under
the
securities laws of some states, the convertible notes, warrants and shares
of
common stock may be sold in such states only through registered or licensed
brokers or dealers. In addition, in some states the convertible notes, warrants
and 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.
There
can
be no assurance that any selling securityholder will sell any or all of the
convertible notes, warrants and shares of common stock registered pursuant
to
the registration statement, of which this prospectus forms a part.
The
selling securityholders 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 convertible notes, warrants and shares of
common stock by the selling securityholders and any other participating person.
Regulation M may also restrict the ability of any person engaged in the
distribution of the convertible notes, warrants and shares of common stock
to
engage in market-making activities with respect to the convertible notes,
warrants and shares of common stock. All of the foregoing may affect the
marketability of the convertible notes, warrants and shares of common stock
and
the ability of any person or entity to engage in market-making activities with
respect to the convertible notes, warrants and shares of common
stock.
We
will
pay all expenses of the registration of the convertible notes, warrants and
shares of common stock pursuant to the registration rights agreement, estimated
to be $[ ] in total, including, without limitation, Securities sand Exchange
Commission filing fees and expenses of compliance with state securities or
“blue
sky” laws; provided,
however,
that a
selling securityholder will pay all underwriting discounts and selling
commissions, if any. We will indemnify the selling securityholders against
liabilities, including some liabilities under the Securities Act, in accordance
with the registration rights agreements, or the selling securityholders will
be
entitled to contribution. We may be indemnified by the selling securityholders
against civil liabilities, including liabilities under the Securities Act,
that
may arise from any written information furnished to us by the selling
securityholder 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
convertible notes, warrants and shares of common stock will be freely tradable
in the hands of persons other than our affiliates.
5
EXHIBIT
B
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
_______________________
_______________________
_______________________
Attention:
[Transfer Agent]
Re: China
Automotive Systems, Inc.
Ladies
and Gentlemen:
[We
are][I am] counsel to China Automotive Systems, 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 Company and the buyers named therein
(collectively, the “Holders”)
pursuant to which the Company issued to the Holders senior convertible notes
(the “Notes”)
and
warrants (the “Warrants”)
which
are convertible into/exercisable for the Company’s common stock, par value
$0.0001 per share (the “Common
Stock”).
Pursuant to the Securities Purchase Agreement, the Company also has entered
into
a Registration Rights Agreement with the Holders (the “Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement),
including the shares of Common Stock issuable upon conversion of the Notes
and
the Warrants, under the Securities Act of 1933, as amended (the “1933
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on __________, 2008, 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 securityholder 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.
1
This
letter shall serve as our standing instruction to you that the convertible
notes, warrants and 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
convertible notes, warrants and shares of Common Stock to the Holders as
contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
February 15, 2008.
Very truly yours, | ||
[ISSUER’S COUNSEL] | ||
|
|
|
By: | ||
|
||
CC: [LIST
NAMES OF HOLDERS]
2
SCHEDULE
I
Non-Disclosure
Agreement between the Company and Xxxxxx Brothers Commercial Corporation Asia
Limited dated November 14, 2007.
Mutual
Nondisclosure Agreement dated December 27, 2007 between the Company and
Yorkville Advisors, LLC.
1