REGISTRATION RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT
(this "Agreement"),
dated as of December 12, 2007, by and among Maple Mountain Explorations Inc.,
a
Nevada corporation, with headquarters located at #507, 0000 Xxxx Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxx, XX 00000 (the "Company"), and the investors
listed on the Schedule of Buyers attached hereto (each, a "Buyer" and collectively,
the
"Buyers").
WHEREAS:
A.
In connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to each
Buyer
(i) shares (the "Common
Shares") of the Company's common stock, par value $0.001 per share (the
"Common Stock"), and
(ii) warrants (the "Warrants") which will be
exercisable to purchase shares of Common Stock (as exercised, the "Warrant Shares") in accordance
with the terms of the Warrants.
B.
In accordance with the terms of 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:
(a)
"Additional Effectiveness
Date" means the date the Additional Registration Statement is declared
effective by the SEC.
(b)
"Additional Effectiveness
Deadline" means the earlier of (I) the date which is (i) in the event
that the Additional Registration Statement is not subject to a full review
by
the SEC, thirty (30) calendar days after the earlier of the Additional Filing
Date and the Additional Filing Deadline or (ii) in the event that the Additional
Registration Statement is subject to a full review by the SEC, sixty (60)
calendar days after the earlier of the Additional Filing Date and the Additional
Filing Deadline and (II) the date which is five (5) Business Days after the
Company learns that no review of the Additional Registration Statement will
be
made by the staff of the SEC or that the staff of the SEC has no further
comments on the Additional Registration Statement.
1
(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 the
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 Effectiveness Date or the last Additional
Effectiveness 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 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 (I) (i) any Cutback Shares not previously
included on a Registration Statement or (II) such other amount as may be
required by the staff of the SEC pursuant to Rule 415.
(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 or the Additional Required
Registration Amount (without regard to clause (II) in the definitions 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 Effectiveness
Date" means the date that the Registration Statement has been declared
effective by the SEC.
2
(o)
"Initial Effectiveness
Deadline" means the earlier of (I) the date which is (i) in the event
that the Initial Registration Statement is not subject to a full review by
the
SEC, ninety (90) calendar days after the Closing Date or (ii) in the event
that
the Registration Statement is subject to a full review by the SEC, one-hundred
and fifty (150) calendar days after the Closing Date and (II) the date which
is
five (5) Business Days after the Company learns that no review of the
Registration Statement will be made by the staff of the SEC or that the staff
of
the SEC has no further comments on the Registration Statement.
(p)
"Initial Filing
Deadline" means sixty (60) calendar days after the Closing Date.
(q)
"Initial Registrable
Securities" means (i) the Common Shares, (ii) the Warrant Shares issued
or issuable upon exercise of the Warrants, and (iii) any capital stock of the
Company issued or issuable, with respect to the Common Shares, the Warrant
Shares and the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to
any
limitations on exercise of the Warrants.
(r)
"Initial Required Registration
Amount" (I) the sum of (i) the number of Common Shares issued and (ii)
100% of the number of Warrant Shares issued and issuable pursuant to the
Warrants as of the trading day immediately preceding the applicable date of
determination, all subject to adjustment as provided in Section 2(f), or (II)
such other amount as may be required by the staff of the SEC pursuant to Rule
415 with any cutback applied on a pro rata basis and, unless otherwise requested
by an Investor, the Warrant Shares included on such Registration Statement
shall
be decreased first, except to the extent prohibited by the SEC.
(s)
"Initial Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering the Initial Registrable
Securities.
(t)
"Investor" means a
Buyer, 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 (as defined below) in compliance with the 1933 Act and pursuant
to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
(w)
"Registrable Securities"
means the Initial Registrable Securities and the Additional Registrable
Securities, as the case may be.
3
(x)
"Registration Statement"
means a registration statement or registration statements of the Company filed
under the 1933 Act covering the Registrable Securities.
(y)
"Required Holders" means
the holders of at least two-thirds 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 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.
2.
Registration.
(a)
Initial Mandatory
Registration. The Company shall 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 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 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, subject to adjustment
as
provided in Section 2(f). The Initial Registration Statement shall
contain the "Selling Stockholders" section and "Plan of Distribution" attached
hereto as Annex
I. The Company shall 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 Business Day following the Initial Effective Date,
the
Company shall file with the SEC in accordance with Rule 424 under the 1933
Act
the final prospectus to be used in connection with sales pursuant to such
Registration Statement.
(b)
Additional Mandatory
Registrations. The Company shall 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 Company shall 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 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(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 as of date the 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 Annex
I. The Company shall 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 Business Day following
the Additional 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.
4
(c)
Allocation of
Registrable Securities. The initial number of Registrable
Securities included in any Registration Statement and each increase or decrease
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 or decrease 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 Required Holders.
(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 Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company'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 Company
shall (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 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.
(f)
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 fifteen (15)
days
after the necessity therefore arises. The Company shall 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 such Registration Statement is less than the number
of Registrable Securities. The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on the exercise of
the
Warrants and such calculation shall assume that the Warrants are then
exercisable into shares of Common Stock.
5
(g)
Effect of Failure
to
File and Obtain and Maintain Effectiveness of Registration
Statement. If (i) a Registration Statement covering all the
Required Registration Amount 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 respective Effective Date sales of all the
Registrable Securities 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), (A) 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 aggregate Purchase Price (as such term is defined in the
Securities Purchase Agreement) of such Investor's Registrable Securities
included in such Registration Statement on each of the following dates: (i)
the
day of a Filing Failure and on every thirtieth day (pro rated for periods
totaling less than thirty (30) days) thereafter until such Filing Failure is
cured; (ii) the day of an Effectiveness Failure and on every thirtieth day
(pro
rated for periods totaling less than thirty (30) days) thereafter until such
Effectiveness Failure is cured; and (iii) the initial day of a Maintenance
Failure and on every thirtieth day (pro rated for periods totaling less than
thirty (30) days) thereafter until such Maintenance 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 Company fails to make Registration Delay
Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one and one-half percent (1.5%) per month (prorated
for
partial months) until paid in full. Notwithstanding anything herein
or in the Securities Purchase Agreement to the contrary, in no event shall
the
aggregate amount of Registration Delay Payments exceed, in the aggregate,
eighteen percent (18%) of the aggregate Purchase Price of the Common
Shares.
6
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(b), 2(e) or 2(f), the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:
(a)
The Company shall submit to the SEC, within three (3) Business Days after the
Company learns that no review of a particular Registration Statement will be
made by the staff of the SEC or that the staff of the SEC has no further
comments on a particular Registration Statement, as the case may be, a request
for acceleration of effectiveness of such Registration Statement to a time
and
date not later than 48 hours after the submission of such request. The Company
shall keep each Registration Statement effective pursuant to Rule 415 at all
times until 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 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.
(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-K, Form 10-Q or Form 8-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.
(c)
The Company shall (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, 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 (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld. The Company shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the staff
of
the SEC to the Company or its representatives relating to any Registration
Statement, (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 not otherwise available on the XXXXX
system, 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 Legal Counsel in performing the Company's obligations pursuant
to
this Section 3.
7
(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 and not otherwise available on the XXXXX system, 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 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 Company shall 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.
8
(f)
The Company shall 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 Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile 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. By 9:30 a.m. New York City
time on the date following the date any post-effective amendment has become
effective, 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.
(g)
The Company shall use its best efforts to prevent the issuance of any stop
order
or other suspension of effectiveness of a Registration Statement, or 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, at the reasonable request of
such
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time
on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to
underwriters in an underwritten public offering, addressed to the Investors,
and
(ii) an opinion, dated as of such date, of counsel representing the Company
for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.
(i)
If any Investor is required under applicable securities laws to be described
in
the Registration Statement as an underwriter, the Company shall make available
for inspection by (i) such Investor, (ii) Legal Counsel and (iii) one firm
of
accountants or other agents retained by 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.
9
(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 best efforts either to (i) cause all 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 designation and
quotation of all the Registrable Securities covered by a Registration Statement
on The NASDAQ Capital Market 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 ("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).
(l)
The Company shall cooperate with the Investors who hold Registrable Securities
being offered and, to the extent applicable, facilitate the timely preparation
and delivery of certificates (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.
10
(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 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 Company shall make generally available to its security holders as soon
as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering
a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the Effective Date of a Registration
Statement.
(p)
The Company shall 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 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 A.
(r)
Notwithstanding anything to the contrary herein, at any time after the Effective
Date, the Company may delay the disclosure of material, non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in
the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a "Grace
Period"); provided, that the Company shall promptly (i) notify the
Investors in writing of the existence of material, non-public information giving
rise to a Grace Period in conformity with the provisions of this Section 3(r)
(provided that in each notice the Company will not disclose the content of
such
material, non-public information to the Investors) and the date on which the
Grace Period will begin, and (ii) notify the Investors in writing of the date
on
which the Grace Period ends; and, provided further, that no Grace Period shall
exceed 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 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, and to the
extent permitted by law, 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, and delivered a copy of the prospectus included as part
of
the applicable Registration Statement, prior to the Investor's receipt of the
notice of a Grace Period and for which the Investor has not yet settled.
11
(s)
Neither the Company nor any Subsidiary or affiliate thereof shall identify
any
Investor 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 Investor 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
B 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 any 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 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.
12
(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 copies of the
supplemented or amended prospectus as 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 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
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 Company. The Company
shall also reimburse the Investors for the reasonable and documented 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 $10,000 in the
aggregate.
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,
partners, members, 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 the 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): (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
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.
13
(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 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 will reimburse 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 an 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. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
14
(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 such Indemnified Person or Indemnified Party
to
be paid by the indemnifying party, if, in the reasonable opinion of the
Indemnified Person or the Indemnified Party, as the case may be, 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 fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person 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.
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 net amount of 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;
(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.
16
9.
Assignment of
Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished
to
the Company within a reasonable time after such assignment; (ii) the Company
is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities 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 and 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 Required
Holders. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company. No
such amendment shall be effective to the extent that it applies to less than
all
of the holders of the Registrable Securities. No consideration shall
be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.
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 the 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:
17
If
to the
Company:
#507,
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx Xxxx, President
Copy
to:
Sichenzia
Xxxx Xxxxxxxx & Xxxxxxx LLP
00
Xxxxxxxx
Xxx
Xxxx,
XX 00000
Telephone:
000-000-0000
Facsimile:
212-930-9725
Attention:
Xxxxx X. Xxxxxxxxx
|
|
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 Xxxxx, Esq.
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.
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.
18
(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.
(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)
All consents and other determinations required to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by the Required Holders, determined as if all of the Warrants held
by
Investors then outstanding have been exercised for Registrable Securities
without regard to any limitations on exercise of the Warrants.
19
(k)
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.
(l)
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.
(m)
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).
(n)
The obligations of each Buyer hereunder are several and not joint with the
obligations of any other Buyer, and no provision of this Agreement is intended
to confer any obligations on any Buyer vis-à-vis any other
Buyer. Nothing contained herein, and no action taken by any Buyer
pursuant hereto, shall be deemed to constitute the Buyers as a partnership,
an
association, a joint venture or any other kind of entity, or create a
presumption that the Buyers are in any way acting in concert or as a group
with
respect to such obligations or the transactions contemplated herein.
*
* * * *
*
20
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.
| MAPLE MOUNTAIN EXPLORATIONS INC. | |||
|
|
By:
|
/s/ | |
21
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written above.
| BUYERS: | |||
|
|
By:
|
/s/ | |
22
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written above.
| BUYERS: | |||
|
|
By:
|
/s/ | |
23
SCHEDUL
OF BUYERS
|
Buyer
|
Buyer
Address
and
Facsimile Number
|
Buyer's
Representative's Address
and
Facsimile Number
|
|
Investcorp
Interlachen
Multi-Strategy
Master Fund
Enable
Opportunity Partners LP
Enable
Growth Partners LP
Xxxxxx
X. Maciolski
Aton
Balanced Fund Ltd.
Aton
Ventures Fund Ltd.
Asset
Protection Fund Ltd.
Xxxxx
Xxxx
CJL
Family Trust
Xxx
Xxxxxx
Xxxxxxx
Xxxxx
HSBC
Private Bank Monaco
Castlerigg
Master Investments Ltd.
Centrum
Bank AG VADUZ
XX
Xxxxxxxx, Zurich
Xxx.
Xxxxxxxxx Jr + CIE
Xxxxxxx
X Xxxxxx
Xxx
Xxxx and Xxxxx Xxxx Living Trust
Xxxxxx
X. Xxxxxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxx
Xxxx Xxxxx
Habib
Bank AG Zurich
Xxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxx
Xxxx
Pie
Investments
W.L.C.P
Corp
Xxxxxxxx
Xxxxxxxx
Xxxxxxx
X. Xxxxxx
Xxxxx
and Xxxxxx Xxxx
Xxxxxx
Bank Zeurich
Xxxxxx
Long
Titan
Investments Corp.
Xxxxxx
Xxxxxxxx
Xxxxxxx
Xxxxxxxx
Xxxxx
Xxxxxxx
Xxxx
Xxxxxxx
Xxxxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxx
Xxxxxx
Xxxxxxxx
Xxxx
Xxxxxxxx
Xxx
Xxxxxx
Miles
Xxxx
Xxx
Xxxxxxx
Xxxxx
Xxxxxx
Xxxx
Xxxxxx
|
||
24
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Xxxxxxxx
Stock Transfer, Inc.
0000
X
00xx
Xxxxx
Xxxxxxxxxx,
XX, 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Re:
Pegasi
Energy Resources Corporation
Ladies
and Gentlemen:
[We
are][I am] counsel to Pegasi Energy Resources Corporation, a Nevada corporation
(the "Company"), and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of November [ ], 2007 (the "SecuritiesPurchase
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 shares of the Company's Common Stock,
par value $0.001 per share (the "Common Stock") and warrants
exercisable for shares of Common Stock (the "Warrants"). Pursuant
to the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the "Registration Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon exercise of the Warrants under the Securities Act of 1933, as amended
(the
"1933
Act"). In connection with the Company's obligations under the
Registration Rights Agreement, on ____________ ___, 2007, 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
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.
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 as contemplated by the Company's Irrevocable Transfer Agent Instructions
dated November [__], 2007.
| Very truly yours, | |||
| [ISSUER'S COUNSEL] | |||
|
|
By:
|
/s/ | |
CC:
[LIST NAMES OF
HOLDERS]
25
ANNEX
I
SELLING
STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those
previously issued to the Selling Stockholders and those issuable to the Selling
Stockholders upon exercise of the warrants. For additional
information regarding the issuances of common stock and the warrants, see
"Private Placement of Common Shares and Warrants" 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 and the warrants, 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 and the warrants, as of ________, 2007, assuming
exercise of the warrants held by the selling stockholders on that date, without
regard to any limitations on exercise.
The
third
column lists the shares of common stock being offered by this prospectus by
the
selling stockholders.
In
accordance with the terms of registration rights agreements with the holders
of
the shares of common stock and the warrants, this prospectus generally covers
the resale of at least the sum of (i) the number of shares of common stock
issued and (ii) 100% of the shares of common stock issued and issuable upon
exercise of the related warrants, determined as if the outstanding warrants
were
exercised, as applicable, in full, as of the trading day immediately preceding
the date this registration statement was initially filed with the
SEC. The fourth column assumes the sale of all of the shares offered
by the selling stockholders pursuant to this prospectus.
Under
the
terms of the warrants, a selling stockholder may not exercise the warrants,
to
the extent such exercise would cause such selling stockholder, 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
exercise, excluding for purposes of such determination shares of common stock
issuable upon exercise of the warrants which have not been
exercised. The number of shares in the second column does not reflect
this limitation. The selling stockholders may sell all, some or none
of their shares in this offering. See "Plan of Distribution."
26
|
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
|
|
Investcorp
Interlachen
Multi-Strategy
Master Fund
Enable
Opportunity Partners LP
Enable
Growth Partners LP
Xxxxxx
X. Maciolski
Aton
Balanced Fund Ltd.
Aton
Ventures Fund Ltd.
Asset
Protection Fund Ltd.
Xxxxx
Xxxx
CJL
Family Trust
Xxx
Xxxxxx
Xxxxxxx
Xxxxx
HSBC
Private Bank Monaco
Castlerigg
Master Investments Ltd.
Centrum
Bank AG VADUZ
XX
Xxxxxxxx, Zurich
Xxx.
Xxxxxxxxx Jr + CIE
Xxxxxxx
X Xxxxxx
Xxx
Xxxx and Xxxxx Xxxx Living Trust
Xxxxxx
X. Xxxxxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxx
Xxxx Xxxxx
Habib
Bank AG Zurich
Xxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxx
Xxxx
Pie
Investments
W.L.C.P
Corp
Xxxxxxxx
Xxxxxxxx
Xxxxxxx
X. Xxxxxx
Xxxxx
and Xxxxxx Xxxx
Xxxxxx
Bank Zeurich
Xxxxxx
Long
Titan
Investments Corp.
Xxxxxx
Xxxxxxxx
Xxxxxxx
Xxxxxxxx
Xxxxx
Xxxxxxx
Xxxx
Xxxxxxx
Xxxxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxx
Xxxxxx
Xxxxxxxx
Xxxx
Xxxxxxxx
Xxx
Xxxxxx
Miles
Xxxx
Xxx
Xxxxxxx
Xxxxx
Xxxxxx
Xxxx
Xxxxxx
|
0
|
||
27
PLAN
OF DISTRIBUTION
We
are
registering the shares of common stock previously issued and the shares of
common stock issuable upon exercise of the warrants to permit the resale of
these shares of common stock by the holders of the common stock and warrants
from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares 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.
|
28
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 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 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.
29
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the shelf 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 agreements, or we may be entitled to
contribution.
Once
sold
under the shelf 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.
30
