EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), dated as of
December 31, 2002, is entered into by and between US-Sino Gateway, Inc. (the
"COMPANY") and Solana Capital Partners, Inc. (the "INVESTOR") with reference to
the following facts.
RECITALS
WHEREAS, the Investor has purchased 15,539 shares of the Company's
Common Stock (the "COMMON STOCK"); and
WHEREAS, the Company has agreed (i) to grant to the Investor certain
rights regarding registration of the Common Stock and (ii) to grant to the
Investor certain protective rights, all as set forth in this Agreement.
NOW, THEREFORE, the Company and the Investor agree as follows:
AGREEMENT
1. DEFINITIONS. A glossary of the definitions of the capitalized terms
used in this Agreement is set forth in APPENDIX A which is attached hereto and
incorporated herein by this reference.
2. DEMAND REGISTRATION.
2.1 The Company shall prepare, as soon as practicable, and
file, a Registration Statement on the appropriate Commission form covering the
Common Stock and shall use its reasonably diligent efforts to effect the
registration of the Common Stock under the Act.
2.2 If a registration pursuant to this paragraph 2 involves an
underwritten offering of the securities being registered on a firm commitment
basis, by or through one or more underwriters of recognized national or regional
standing under underwriting terms appropriate for such a transaction; and (ii)
the managing underwriter of such underwritten offering shall inform the Company
and the Investor by letter of its belief that the Common Stock (or a number of
shares of the Common Stock) requested to be included for the account of the
Investor in such registration exceeds the number which can be sold in (or during
the time of) such offering, or that the inclusion would in the underwriter's
judgment adversely affect the marketing of the securities to be sold by the
Company and the Investor, then the number of shares of Common Stock to be
included in the offering (except for shares to be issued by the Company in an
offering initiated by the Company) shall be reduced to the required level with
the participation in such offering to be pro rata among the Investor and other
investors based upon the number of shares of securities the Investor and each
other investor requested to be included in such registration.
2.3 In an underwritten offering, the Common Stock proposed to
be registered under any Registration Statement will be offered for sale at the
same public offering price as the securities offered for sale by the Company or
any other selling shareholder covered thereby.
2.4 The Investor shall be entitled to have its Common Stock
included in an unlimited number of registrations pursuant to this paragraph 2.
3. REGISTRATIONS ON FORM S-3.
If all of the Investor's Common Stock is not registered
pursuant to paragraph 2, then, at such time as the Company shall have qualified
for the use of Form S-3 promulgated under the Act, the Investor shall have the
right to request in writing an unlimited number of registrations on Form S-3, or
such successor form, of the Common Stock, which request or requests shall (i)
specify the number of shares of Common Stock intended to be sold or disposed of
and (ii) state the intended method of disposition of such Common Stock and, upon
receipt of such request, the Company shall use reasonably diligent efforts to
effect the registration under the Act of the Common Stock so requested to be
registered.
4. INFORMATION RIGHTS. So long as the Investor (and its affiliates)
continue to hold not less than 10,000 shares of Common Stock, the Company shall
deliver to the Investor annual and quarterly financial statements. So long as an
Investor (and its affiliates) holds not less than 10,000 shares of Common Stock,
the Company will furnish the Investor with a copy of its annual operating plan
for the fiscal year; provided, however, that the obligation of the Company to
furnish quarterly financial statements and an annual operating plan as set forth
herein will terminate upon a public offering or when the Company becomes subject
to the filing requirements of the Securities Exchange Act of 1934.
5. UNDERWRITING. With respect to any registration under this Agreement
involving an underwriting, the right of the Investor to registration hereunder
shall be conditioned upon its participation in such underwriting, and the
inclusion of its Common Stock in the underwriting to the extent provided herein.
The Investor shall (together with the Company and any other security holder
distributing securities through such underwriting) enter into an underwriting
agreement with the representative of the underwriter or underwriters selected
for underwriting by the Company, containing customary (x) terms of offer and
sale of the securities, payment provisions, underwriting discounts and
commissions; and (y) representations, warranties, covenants and indemnities.
Notwithstanding any other provision hereof, if the representative of the
underwriter determines that marketing factors require a "lock-up period," the
Investor agrees not to transfer any of its Common Stock (other than pursuant to
the Registration Statement for such offering) during the ten (10) day period
prior to the effective date of the Registration Statement and for such
additional period as may be required by the underwriters, up to ninety (90) days
after the effectiveness of the Registration Statement. If the Investor
disapproves of the terms of any such underwriting, it will be forced to withdraw
therefrom by written notice to the Company and the underwriter. Any of the
Common Stock excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
6. EXPENSES OF REGISTRATION. All Registration Expenses and Selling
Expenses, including those incurred by the Investor, shall be borne by the
Investor.
7. REGISTRATION PROCEDURES. In the case of each registration effected
by the Company pursuant to this Agreement, the Company will keep the Investor
advised in writing as to the initiation of each registration and as to the
completion thereof. At its expense, the Company will:
(a) Keep such registration effective until the EARLIER of (i)
the date the distribution described in the Registration Statement relating
thereto shall have been completed; or (ii) 1 year from the effective date of
such Registration Statement;
(b) Furnish to the Investor, at least 5 business days prior to
the filing of the requisite Registration Statement, copies of drafts of such
Registration Statement as proposed to be filed, and thereafter such number of
copies of such Registration Statement, each amendment and supplement thereto
(excluding all exhibits thereto), the prospectus included in such Registration
Statement (including each preliminary prospectus), and such other documents in
such quantities as the Investor may reasonably request from time to time in
order to facilitate the disposition of the Common Stock included in such
Registration Statement;
(c) Notify the Investor promptly after it shall receive notice
thereof of the date and time when such Registration Statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such Registration Statement has been filed;
(d) Notify the Investor promptly of any request by the
Commission or any state securities commission or agency for the amending or
supplementing of such Registration Statement or prospectus or for additional
information;
(e) Advise the Investor promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the Commission
or any state securities commission or agency suspending the effectiveness of
such Registration Statement or the initiation or threatening of any proceeding
for that purpose and promptly use its reasonable efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such stop order should be
issued;
(f) Use its reasonable efforts to ensure the obtaining of all
necessary approvals from the NASD;
(g) Use reasonable efforts to register or qualify the Common
Stock included in the Registration Statement under such other securities or blue
sky laws of such jurisdictions as the Investor (or the managing underwriter, in
the case of underwritten offerings) may reasonably request, and to do any and
all other acts and things as may be reasonably necessary or advisable to enable
the Investor (or the managing underwriter, in the case of firm underwritten
offerings) to consummate the disposition in such jurisdictions of the Common
Stock to be sold; PROVIDED, HOWEVER, that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph 7 or (ii) subject itself
to taxation in any such jurisdiction;
(h) Use all reasonable efforts to cause the Common Stock
included in the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company, including, without limitation, all
necessary approval from insurance regulatory bodies, to enable the Investor to
consummate the disposition of the Common Stock, provided that the Company shall
not be required to incur any expenses to satisfy regulatory requirements
applicable to a particular purchaser of such Common Stock;
(i) Enter into customary agreements (including, without
limitation, an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Common Stock included in the Registration Statement; and
(j) Make available for inspection by the Investor, any
managing underwriter participating in any disposition pursuant to such
registration, and any attorney, accountant or other agent retained by the
Investor or any managing underwriter (collectively, the "AGENTS"), all financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "RECORDS") as shall be necessary to enable it to exercise its
due diligence responsibility, and cause the officers, directors and employees of
the Company to supply all information reasonably requested by any such Agent in
connection with such registration; PROVIDED, HOWEVER, that (i) Records and
information obtained herein shall be used by such persons only to fulfill their
due diligence responsibility; and (ii) Records or information which the Company
determines in good faith to be confidential shall not be disclosed by the Agents
unless (x) the Company determines that the disclosure of such Records or
information is necessary to avoid or correct a material misstatement or omission
in the Registration Statement; (y) the release of such Records or information is
ordered pursuant to a subpoena or other order from a court or governmental
authority of competent jurisdiction; or (z) the Agent executes a confidentiality
agreement reasonably satisfactory to the Company. The Investor further agrees
that it will, upon learning that disclosure of such Records or information is
sought in a court or governmental authority, give notice to the Company and to
the extent time permits prior to the time disclosure is required, allow the
Company to undertake appropriate action to prevent disclosure of the Records or
information deemed confidential.
8. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission that may permit the sale of
restricted securities to the public without registration, the Company agrees to:
(a) Make and keep public information available as those terms
are understood and defined in Rule 144 under the Act, at all times from and
after ninety (90) days following the effective date of the first registration
under the Act filed by the Company for an offering of its securities to the
general public;
(b) Use its reasonable efforts to file with the Commission in
a timely manner all reports and other documents required of the Company under
the Act and the Exchange Act at any time after it has become subject to such
reporting requirements; and
(c) So long as the Investor owns any Common Stock, furnish
upon request a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 at any time from and after ninety (90) days
following the effective date of the first Registration Statement filed by the
Company for an offering of its securities to the general public (at any time
after it has become subject to such reporting requirement), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as the Investor may reasonably request in availing itself of
any rule or regulation of the Commission allowing the Investor to sell any such
securities without registration.
9. INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify
the Investor, and its officers, directors, partners, members, managers, agents,
representatives and affiliates, each "underwriter" (as defined in the Act), if
any, and each person "controlling" the Investor or the underwriter within the
meaning of the Act and the rules and regulations thereunder, with respect to
each registration which has been effected pursuant to this Agreement, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related Registration Statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
any violation by the Company of the Act, any state securities law or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse the Investor, each of its
officers, directors, partners, members, managers, agents, representatives and
their affiliates, each such underwriter and each person controlling the Investor
or any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the Investor or any underwriter to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
the Investor or the underwriter and stated to be specifically for use therein;
and PROVIDED, FURTHER that no person shall have the right to be indemnified
hereunder for its own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) To the extent permitted by law, the Investor will, if
Common Stock owned by the Investor is included in the securities as to which
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, agents and representatives and each
underwriter, if any, and each person controlling the Company or such
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such Registration
Statement, prospectus, offering circular or other document made by the Investor,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements by the Investor therein
not misleading, and will reimburse the Company and such directors, officers,
agents, representatives, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such Registration Statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by the Investor and
stated to be specifically for use therein; PROVIDED, HOWEVER, that the indemnity
agreement contained in this paragraph 9 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Investor, which consent may
not be unreasonably withheld, and provided further that the obligations of the
Investor hereunder shall be limited to an amount equal to the proceeds to the
Investor of securities sold in the registration.
(c) Each party entitled to Indemnification under this
paragraph (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense, and PROVIDED FURTHER
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this paragraph
9 unless the Indemnifying Party is materially prejudiced thereby. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the release of the Indemnified Party from all liability in respect
of such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as the Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this paragraph 9 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations, PROVIDED, HOWEVER, that the obligations of the Investor shall be
limited to an amount equal to the proceeds to the Investor from the sale of the
Common Stock in the registration. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act), shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution by the Company required by the
managing underwriter and contained in the underwriting agreement entered into in
connection with any underwritten public offering contemplated by this Agreement
are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall be controlling.
(f) The indemnification obligations of the Company and the
Investor under this paragraph 9 shall survive the termination of this Agreement
or the completion of any offering of the Common Stock in a Registration
Statement under this Agreement or otherwise.
(g) The indemnification required by this paragraph 9 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liabilities are incurred.
10. ASSIGNMENT. The rights under this Agreement may be assigned by the
Investor in the event of a sale by the Investor to a new shareholder, provided
such new shareholder enters into an agreement to be bound by the terms of this
Agreement.
11. MISCELLANEOUS.
(a) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
(b) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(c) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(d) HEADINGS. The section headings contained in this agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of California.
(f) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Company and the Investor. No waiver by any Party or any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior of subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No waiver shall be deemed effective unless such waiver is in writing
and signed by the party whose rights are being waived.
(g) SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(h) CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provision of the Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.
(i) SPECIFIC PERFORMANCE. Each of the parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each party agrees that
the other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
US-SINO GATEWAY, INC.
A CALIFORNIA CORPORATION
By: ________________________________
Title: _______________________________
SOLANA CAPITAL PARTNERS, INC.
By: ________________________________
Title: _______________________________
APPENDIX A
"ACT" shall mean the Securities Act of 1933, as amended.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"PERSON" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
The terms "REGISTER", "REGISTERED", and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Act (and any post-effective amendments filed or required to
be filed) and the declaration or ordering of effectiveness of such Registration
Statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in connection with a registration under paragraph 2 or 3 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall
be paid in any event by the Company).
"REGISTRATION STATEMENT" shall mean a Registration Statement filed by
the Company with the Commission for a public offering and sale of the Company's
securities (other than a Registration Statement on Form X-0, Xxxx X-0, or
successor forms, or any Registration Statement covering only securities proposed
to be issued in exchange for securities or assets of another corporation).
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of the securities.
