REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This Registration Rights Agreement (the “Agreement”) is made and entered into as of this 23rd
day of April, 2007, by and among Golden Phoenix Minerals, Inc., a Minnesota corporation (the
“Company”), and each “Investor” set forth on the signature pages hereto.
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means, with respect to any person, any other person which directly or
indirectly controls, is controlled by, or is under common control with, such person.
“Common Stock” means the Company’s common stock, no par value, and any securities into
which such shares may hereinafter be reclassified.
“Investors” means the Investors identified in the Purchase Agreement and any Affiliate
or permitted transferee of any Investor who is a subsequent holder of any Warrants or Registrable
Securities.
“Prospectus” means the prospectus included in any Registration Statement, as amended
or supplemented by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective amendments and all material
incorporated or deemed incorporated by reference in such prospectus.
“Purchase Agreement” means that certain Share and Warrant Purchase Agreement dated the
date hereof, by and among the Company and the Investors named therein.
“Register,” “registered” and “registration” refer to a registration
made by preparing and filing a Registration Statement in compliance with the 1933 Act (as defined
below), and the declaration or ordering of effectiveness of such Registration Statement or
document.
“Registrable Securities” or “Registrable Security” shall mean (i) the Shares,
(ii) the Warrant Shares and (iii) any other securities issued or issuable with respect to or in
exchange for Registrable Securities; provided, that, a security shall cease to be a Registrable
Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933 Act, or (B)
such security becoming eligible for sale by the Investors pursuant to Rule 144(k).
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“Registration Statement” shall mean any registration statement of the Company filed
under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated or deemed incorporated by
reference in such Registration Statement.
“Required Investors” means the Investors holding a majority of the Registrable
Securities.
“Rule 415” means Rule 415 promulgated by the SEC pursuant to the 1933 Act, as such
Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter
adopted by the SEC having substantially the same purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the SEC pursuant to the 1933 Act, as such
Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter
adopted by the SEC having substantially the same purpose and effect as such Rule.
“SEC” means the U.S. Securities and Exchange Commission.
“Shares” means the shares of Common Stock issued pursuant to the Purchase Agreement.
Trading Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin
Board, or (b) if the Common Stock is then traded on a registered national stock exchange, a day on
which the Common Stock is traded on such registered national stock exchange, or (c) if the Common
Stock is not traded on the OTC Bulletin Board or a registered national stock exchange, a day on
which the Common Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a), (b) or (c) hereof, then Trading Day shall mean any day
except Saturday, Sunday and any day which is a federal legal holiday in the United States or any
day on which banking institutions in the State of New York are authorized or required by law or
other governmental action to close.
“Warrants” means, the warrants to purchase shares of Common Stock issued to the
Investors pursuant to the Purchase Agreement, the form of which is attached to the Purchase
Agreement as Exhibit A.
“Warrant Shares” means the shares of Common Stock issuable upon the exercise of the
Warrants.
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
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“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
2. Registration.
(a) Registration Statements.
(i) Promptly following the closing of the purchase and sale of the securities contemplated by
the Purchase Agreement (the “Closing Date”) but no later than thirty (30) days after the Closing
Date (the “Filing Deadline”), the Company shall prepare and file with the SEC a Registration
Statement on Form SB-2 (or, if Form SB-2 is not then available to the Company, on such form of
registration statement as is then available to effect a registration for resale of the Registrable
Securities), covering the resale of all the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. Such Registration Statement shall include the plan of
distribution attached hereto as Exhibit A. Such Registration Statement also shall cover,
to the extent permitted under the 1933 Act and the rules promulgated thereunder (including Rule
416), such indeterminate number of additional shares of Common Stock resulting from stock splits,
stock dividends or similar transactions with respect to the Registrable Securities. The Company
shall use its best efforts to obtain from each person who now has piggyback registration rights a
waiver of those rights with respect to the Registration Statement. The Registration Statement (and
each amendment or supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Investors’ counsel prior to its filing or
other submission. If a Registration Statement covering the Registrable Securities is not filed
with the SEC on or prior to the Filing Deadline, the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to 0.5% of the aggregate
amount invested by such Investor for each 30-day period or pro rata for any portion thereof
following the Filing Deadline for which no Registration Statement is filed with respect to the
Registrable Securities up to a maximum of 5.0% of the aggregate amount invested by such Investor.
Such payments shall be made to each Investor in cash.
(ii) Additional Registrable Securities. Upon any change in the Warrant Price (as
defined in the Warrant) such that additional shares of Common Stock become issuable upon the
exercise of the Warrants, the Company shall prepare and file with the SEC one or more Registration
Statements on Form SB-2 or amend the Registration Statement filed pursuant to clause (i) above, if
such Registration Statement has not previously been declared effective (or, if Form SB-2 is not
then available to the Company, on such form of registration statement as is then available to
effect a registration for resale of such additional shares of Common Stock (the “Additional
Shares”)) covering the resale of the Additional Shares, but only to the extent the Additional
Shares are not at the time covered by an effective Registration Statement. Such Registration
Statement also shall cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock
resulting from stock splits, stock dividends or similar transactions with respect to the Additional
Shares. The Company shall use its best efforts to obtain from each person who now has piggyback
registration rights a waiver of those rights with respect to such Registration Statement. The
Registration Statement (and each amendment or
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supplement thereto, and each request for acceleration of effectiveness thereof) shall be
provided in accordance with Section 3(c) to the Investors’ counsel prior to its filing or other
submission. If a Registration Statement covering the Additional Shares is required to be filed
under this Section 2(a)(ii) and is not filed with the SEC within thirty (30) days of the written
demand of any Investor, the Company will make pro rata payments to each Investor, as liquidated
damages and not as a penalty, in an amount equal to 0.5% of the aggregate amount invested by such
Investor for each 30-day period or pro rata for any portion thereof following the date by which
such Registration Statement should have been filed for which no Registration Statement is filed
with respect to the Additional Shares up to a maximum of 5.0% of the aggregate amount invested by
such Investor. Such payments shall be made to each Investor in cash.
(iii) S-3 Qualification. Promptly following the date (the “Qualification Date”) upon
which the Company becomes eligible to use a registration statement on Form S-3 to register the
Registrable Securities or Additional Shares, as applicable, for resale, but in no event more than
thirty (30) days after the Qualification Date (the “Qualification Deadline”), the Company shall
file a registration statement on Form S-3 covering the Registrable Securities or Additional Shares,
as applicable (or a post-effective amendment on Form S-3 to the registration statement on Form
SB-2) (a “Shelf Registration Statement”) and shall use reasonable best efforts to cause such Shelf
Registration Statement to be declared effective as promptly as practicable thereafter.
(b) Expenses. The Company will pay all expenses associated with each registration.
The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i)
all registration and filing fees (including, without limitation, fees and expenses of the Company’s
counsel and auditors) (A) with respect to filings made with the SEC, (B) with respect to filings
required to be made with any trading market on which the Common Stock listed for trading, and (C)
in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company
in writing (including, without limitation, fees and disbursements of counsel for the Company in
connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if not
previously paid by the Company in connection with an Issuer Filing, with respect to any filing that
may be required to be made by any broker through which an Investor intends to make sales of
Registrable Securities with the NASD pursuant to NASD Rule 2710, so long as the broker is receiving
no more than a customary brokerage commission in connection with such sale, (ii) printing expenses
(including, without limitation, expenses of printing certificates for Registrable Securities),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) 1933 Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other persons retained by the Company in connection with the consummation of
the transactions contemplated by this Agreement. In addition, the Company shall be responsible for
all of its internal expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of any annual audit and
the fees and expenses incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be responsible for any
broker or similar commissions of any Investor or, except to the extent provided for in the
Transaction Documents, any legal fees or other costs of the Investors.
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(c) Effectiveness.
(i) The Company shall use reasonable best efforts to have the Registration Statement declared
effective as soon as practicable. The Company shall notify the Investors by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24) hours, after any Registration
Statement is declared effective and shall simultaneously provide the Investors with copies of any
related Prospectus to be used in connection with the sale or other disposition of the securities
covered thereby.
(ii) If (A)(x) a Registration Statement covering the Registrable Securities is not declared
effective by the SEC prior to the earlier of (i) 10 Trading Days after the SEC shall have informed
the Company that no review of the Registration Statement will be made or (ii) the 90th
day after the Closing Date (the 135th day if the Registration Statement is reviewed by
the SEC), (y) a Registration Statement covering Additional Shares is not declared effective by the
SEC within 60 days following the time such Registration Statement was filed pursuant to Section
2(a)(ii) (105 days if the Registration Statement is reviewed by the SEC) or (z) a Shelf
Registration Statement is not declared effective by the SEC within 90 days after the Qualification
Deadline (135 days if the Registration Statement is reviewed by the SEC), , (B) the Company fails
to file with the SEC a request for acceleration of a Registration Statement in accordance with Rule
461 promulgated under the 1933 Act, within eight Trading Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement
will not be “reviewed” or not be subject to further review, (C) prior to the date that the
Registration Statement is declared effective, the Company fails to file a pre-effective amendment
and otherwise respond in writing to comments made by the SEC in respect of such Registration
Statement within 20 Trading Days after the receipt of comments by or notice from the SEC that such
amendment is required in order for such Registration Statement to be declared effective, or (D)
after a Registration Statement has been declared effective by the SEC, sales cannot be made
pursuant to such Registration Statement for any reason (including without limitation by reason of a
stop order, or the Company’s failure to update the Registration Statement), but excluding the
inability of any Investor to sell the Registrable Securities covered thereby due to market
conditions and except as excused pursuant to subparagraph (iii) below, then the Company will make
pro rata payments to each Investor, as liquidated damages and not as a penalty, in an amount equal
to 1.5% of the aggregate amount invested by such Investor for each 30-day period or pro rata for
any portion thereof following the date by which such Registration Statement should have been
effective (the “Blackout Period”) up to a maximum amount equal to 5.0% of the aggregate amount
invested by such Investors. Such payments shall be made to each Investor in cash.
(iii) For not more than twenty (20) consecutive days or for a total of not more than
forty-five (45) days in any twelve (12) month period, the Company may delay the disclosure of
material non-public information concerning the Company, by suspending the use of any Prospectus
included in any registration contemplated by this Section containing such information, the
disclosure of which at the time is not, in the good faith opinion of the Company, in the best
interests of the Company (an “Allowed Delay”); provided, that the Company shall promptly (a) notify
the Investors in writing of the existence of (but in no event, without the prior
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written consent of an Investor, shall the Company disclose to such Investor any of the facts or
circumstances regarding) material non-public information giving rise to an Allowed Delay, (b)
advise the Investors in writing to cease all sales under the Registration Statement until the end
of the Allowed Delay and (c) use reasonable best efforts to terminate an Allowed Delay as promptly
as practicable.
3. Company Obligations. The Company will use reasonable best efforts to effect the
registration of the Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, as expeditiously as possible:
(a) Use reasonable best efforts to (i) cause such Registration Statement to become effective
and to remain continuously effective for a period that will terminate upon the earlier of the date
on which all Registrable Securities covered by such Registration Statement as amended from time to
time, have been sold, and the date on which all Registrable Securities covered by such
Registration Statement may be sold pursuant to Rule 144(k) (the “Effectiveness Period”) and advise
the Investors in writing when the Effectiveness Period has expired, (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from the SEC with respect
to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible
to the Investors true and complete copies of all correspondence from and to the SEC relating to a
Registration Statement (provided that the Company may excise any information contained therein
which would constitute material non-public information as to any Investor which has not executed a
confidentiality agreement with the Company); and (iv) comply in all material respects with the
provisions of the 1933 Act and the 1934 Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in accordance (subject
to the terms of this Agreement) with the intended methods of disposition by the Investors thereof
set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(b) Prepare and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the Registration Statement
continuously effective for the period specified in Section 3(a) and to comply with the provisions
of the 1933 Act and the 1934 Act with respect to the distribution of all of the Registrable
Securities covered thereby.
(c) Provide copies to and permit counsel designated by the Investors to review each
Registration Statement and all amendments and supplements thereto no fewer than five (5) Trading
Days prior to their filing with the SEC. The Company shall not file a Registration Statement or
any such Prospectus or any amendments or supplements thereto to which the Required Investors shall
reasonably object in good faith, provided that the Company is notified of such objection in writing
no later than five Trading Days after the Investors have been so furnished copies of a Registration
Statement or one Trading Day after the Investors have been so furnished copies of any related
Prospectus or amendments or supplements thereto.
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(d) Furnish to the Investors’ legal counsel (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company (but not later than two (2)
Trading Days after the filing date, receipt date or sending date, as the case may be) one (1) copy
of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus
and each amendment or supplement thereto, and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the
SEC, in each case relating to such Registration Statement (other than any portion of any thereof
which contains information for which the Company has sought confidential treatment), and (ii) such
number of copies of a Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as each Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Investor that are covered by
the related Registration Statement.
(e) Use reasonable best efforts to (i) prevent the issuance of any stop order or other
suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such
order at the earliest possible moment.
(f) Prior to any public offering of Registrable Securities, use reasonable best efforts to
register or qualify or cooperate with the Investors and their counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions requested by the Investors and do any and all
other commercially reasonable acts or things necessary or advisable to enable the distribution in
such jurisdictions of the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto
to (i) qualify to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction
where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general
consent to service of process in any such jurisdiction.
(g) Use reasonable best efforts to cause all Registrable Securities covered by a Registration
Statement to be listed on each securities exchange, interdealer quotation system or other market on
which similar securities issued by the Company are then listed.
(h) Notify the Investors of Registrable Securities to be sold (which notice shall, pursuant to
clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in
the case of (i)(A) below, not less than one Trading Day prior to such filing) and (if requested by
any such Person) confirm such notice in writing no later than one Trading Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the SEC notifies the Company whether there will be a
“review” of such Registration Statement and whenever the SEC comments in writing on such
Registration Statement; and (C) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the SEC or any other federal
or state governmental authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order
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suspending the effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose; (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to a Registration Statement, Prospectus or other documents so that, in
the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; and (vi) of the occurrence or existence of any pending corporate
development with respect to the Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of the Company to allow continued
availability of a Registration Statement or Prospectus, provided that any and all of such
information shall remain confidential to each Investor until such information otherwise becomes
public, unless disclosure by an Investor is required by law; provided, further,
that notwithstanding each Investor’s agreement to keep such information confidential, each such
Investor makes no acknowledgement that any such information is material, non-public information.
(i) Otherwise use reasonable best efforts to comply with all applicable rules and regulations
of the SEC under the 1933 Act and the 1934 Act, take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities hereunder; and make
available to its security holders, as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement covering a period of at least twelve
(12) months, beginning after the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158
promulgated thereunder (for the purpose of this subsection 3(i), “Availability Date” means the 45th
day following the end of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal
quarter).
(j) With a view to making available to the Investors the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any time permit the
Investors to sell shares of Common Stock to the public without registration, the Company covenants
and agrees to: (i) make and keep public information available, as those terms are understood and
defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable
Securities may be resold pursuant to Rule 144(k) or any other rule of similar effect or (B) such
date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a
timely manner all reports and other documents required of the Company under the 1934 Act; and (iii)
furnish to each Investor upon request, as long as such Investor owns any Registrable Securities,
(A) a written statement by the Company that it has complied with the reporting requirements of the
1934 Act, (B) a copy of the Company’s most recent Annual Report
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on Form 10-KSB or Quarterly Report on Form 10-QSB, and (C) such other information as may be
reasonably requested in order to avail such Investor of any rule or regulation of the SEC that
permits the selling of any such Registrable Securities without registration.
(k) If requested by an Investor, cooperate with such Investor to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such Investor may
request.
(l) Upon the occurrence of any event contemplated by Section 3(h), as promptly as reasonably
possible under the circumstances taking into account the Company’s good faith assessment of any
adverse consequences to the Company and its shareholders of the premature disclosure of such event,
prepare a supplement or amendment, including a post-effective amendment, to a Registration
Statement or a supplement to the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required document so that, as thereafter
delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading.
If the Company notifies the Investors in accordance with clauses (iii) through (vi) of Section 3(h)
above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been
made, then the Investors shall suspend use of such Prospectus. The Company will use its reasonable
best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.
The Company shall be entitled to exercise its right under this Section 3(l) to suspend the
availability of a Registration Statement and Prospectus, subject to the payment of partial
liquidated damages otherwise required pursuant to Section 2(c), for a period not to exceed 45
calendar days (which need not be consecutive days) in any 12 month period.
(m) Comply with all applicable rules and regulations of the SEC.
(n) The Company shall effect a filing with respect to the public offering contemplated by each
Registration Statement (an “Issuer Filing”) with the National Association of Securities
Dealers, Inc. (“NASD”) Corporate Financing Department pursuant to NASD Rule 2710(b) within
one Trading Day of the date that the Registration Statement is first filed with the SEC and pay the
filing fee required by such Issuer Filing. The Company shall use reasonable best efforts to pursue
the Issuer Filing until the NASD issues a letter confirming that it does not object to the terms of
the offering contemplated by the Registration Statement as described in the plan of distribution
attached hereto as Annex A.
4. Due Diligence Review; Information. The Company shall make available, during normal
business hours, for inspection and review by the Investors, advisors to and representatives of the
Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to
the Company), all financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate
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documents and properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Company’s officers, directors and employees, within a reasonable time period,
to supply all such information reasonably requested by the Investors or any such representative,
advisor or underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or submitted by any of
them), prior to and from time to time after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Investors and such representatives, advisors and
underwriters and their respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration Statement.
The Company shall not disclose material nonpublic information to the Investors, or to advisors
to or representatives of the Investors, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides the Investors,
such advisors and representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any Investor wishing to obtain such information enters into an
appropriate confidentiality agreement with the Company with respect thereto.
5. Obligations of the Investors.
(a) Each Investor shall furnish in writing 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 registration of such
Registrable Securities and shall execute such documents in connection with such information as the
Company may reasonably request. At least five (5) Trading Days prior to the first anticipated
filing date of any Registration Statement, the Company shall notify each Investor of the
information the Company requires from such Investor if such Investor elects to have any of the
Registrable Securities included in the Registration Statement. An Investor shall provide such
information to the Company at least two (2) Trading Days prior to the first anticipated filing date
of such Registration Statement if such Investor elects to have any of the Registrable Securities
included in the Registration Statement.
(b) Each Investor, by its 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
a Registration Statement hereunder, unless such Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company of either (i) the
commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an event
pursuant to Section 3(h) hereof, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such Registrable Securities,
until the Investor’s receipt of the copies of the supplemented or amended prospectus filed with the
SEC and until any related post-effective amendment is declared effective and, if so directed by the
Company, the Investor shall deliver to the Company
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(at the expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Investor’s possession of the Prospectus covering the Registrable
Securities current at the time of receipt of such notice.
6. Indemnification.
(a) Indemnification by the Company. The Company will, notwithstanding any termination
of this Agreement, indemnify and hold harmless each Investor, the officers, directors, members,
managers, partners, agents, brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin call of Common Stock),
investment advisors and employees (and any other persons with a functionally equivalent role of a
person holding such titles, notwithstanding a lack of such title or any other title) of each of
them, each person who controls any such Investor (within the meaning of Section 15 of the 1933 act
or Section 20 of the 0000 Xxx) and the officers, directors, members, shareholders, partners, agents
and employees (and any other persons with a functionally equivalent role of a person holding such
titles, notwithstanding a lack of such title or any other title) of each such controlling person,
to the fullest extent permitted by applicable law, against any losses, claims, damages or
liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof; (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written information furnished
by the Company filed in any state or other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such application, document or
information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation
promulgated under the 1933 Act applicable to the Company or its agents and relating to action or
inaction required of the Company in connection with such registration; or (v) any failure to
register or qualify the Registrable Securities included in any such Registration in any state where
the Company or its agents has affirmatively undertaken or agreed in writing that the Company will
undertake such registration or qualification on an Investor’s behalf and will reimburse such
Investor, and each such officer, director or member and each such controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished by such Investor or
any such controlling person in writing specifically for use in such Registration Statement or
Prospectus.
(b) Indemnification by the Investors. Each Investor agrees, severally but not
jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees, and each person who controls the Company (within the meaning of the
0000 Xxx) against any losses, claims, damages, liabilities and expense (including
11
reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of
a material fact required to be stated in the Registration Statement or Prospectus or preliminary
prospectus or amendment or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Investor to the Company specifically for
inclusion in such Registration Statement or Prospectus or amendment or supplement thereto. In no
event shall the liability of an Investor be greater in amount than the dollar amount of the
proceeds (net of all expense paid by such Investor in connection with any claim relating to this
Section 6 and the amount of any damages such Investor has otherwise been required to pay by reason
of such untrue statement or omission) received by such Investor upon the sale of the Registrable
Securities included in the Registration Statement giving rise to such indemnification obligation,
net of reasonable and customary sales commissions incurred in connection with the sale of the
Registrable Securities.
(c) Conduct of Indemnification Proceedings. Any person entitled to indemnification
hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party; provided that any
person entitled to indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses,
or (b) the indemnifying party shall have failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists between such person
and the indemnifying party with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); 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 hereunder, except to the extent that such failure to give notice shall materially
adversely affect the indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any
time for all such indemnified parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in the preceding
paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable considerations. No
person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act
shall
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be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no
event shall the contribution obligation of a holder of Registrable Securities be greater in amount
than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with
any claim relating to this Section 6 and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable Securities giving rise to such
contribution obligation, net of reasonable and customary sales commissions incurred in connection
with the sale of the Registrable Securities.
The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
7. Miscellaneous.
(a) Piggy-Back Registrations. If at any time during the Effectiveness Period there is
not an effective Registration Statement covering all of the Registrable Securities and the Company
shall determine to prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the 0000 Xxx) or their then
equivalents relating to equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with the Company’s share option
or other employee benefit plans, then the Company shall send to each Investor a written notice of
such determination and, if within fifteen days after the date of such notice, any such Investor
shall so request in writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such Investor requests to be registered; provided,
however, that the Company shall not be required to register any Registrable Securities
pursuant to this Section 7(a) that are eligible for resale pursuant to Rule 144(k) promulgated
under the Securities Act or that are the subject of a then effective Registration Statement.
(b) Amendments and Waivers. This Agreement may be amended only by a writing signed by
the Company and the Required Investors. The Company may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act, of the Required Investors.
(c) Notices. All notices and other communications provided for or permitted hereunder
shall be made as set forth in Section 9.4 of the Purchase Agreement.
(d) Assignments and Transfers by Investors. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Investors and their respective successors and assigns.
An Investor may transfer or assign, in whole or from time to time in part, to one or more persons
its rights hereunder in connection with the transfer of Registrable Securities by such Investor to
such person, provided that such Investor complies with all laws applicable thereto and provides
written notice of assignment to the Company promptly after such assignment is effected.
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(e) Assignments and Transfers by the Company. This Agreement may not be assigned by
the Company (whether by operation of law or otherwise) without the prior written consent of the
Required Investors, provided, however, that the Company may assign its rights and delegate its
duties hereunder to any surviving or successor corporation in connection with a merger or
consolidation of the Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company’s assets to another corporation, without the prior written
consent of the Required Investors, after notice duly given by the Company to each Investor.
(f) Benefits of the Agreement. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.
(g) Counterparts; Faxes. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument. This Agreement may also be executed via facsimile, which shall be deemed an
original.
(h) Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.
(i) Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which renders any
provisions hereof prohibited or unenforceable in any respect.
(j) Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be required to carry
out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein
contained.
(k) Entire Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties with respect to
such subject matter.
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(l) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the State of
California without regard to the choice of law principles thereof. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts of the State of California located
in Sacramento County and the United States District Court for the Eastern District of California
for the purpose of any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Agreement (other than by telex or
facsimile which shall be deemed improper service). Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of
venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of
any such suit, action or proceeding brought in such courts and irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought in an inconvenient
forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.
(m) Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor hereunder are several and not joint with the obligations of any other Investor hereunder,
and no Investor shall be responsible in any way for the performance of the obligations of any other
Investor hereunder. Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each Investor shall be
entitled to protect and enforce its rights, including without limitation the rights arising out of
this Agreement, and it shall not be necessary for any other Investor to be joined as an additional
party in any proceeding for such purpose.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized
officers to execute this Agreement as of the date first above written.
| The Company: | GOLDEN PHOENIX MINERALS, INC. | |||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Xxxxx X. Xxxxxxxx | ||||
| Chief Executive Officer | ||||
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| The Investors: | SPROTT ASSET MANAGEMENT | |||
| By: | /s/ Xxxxxxx XxXxxxxxx | |||
| Name: | Xxxxxxx XxXxxxxxx | |||
| Title: | CCO | |||
17
Exhibit A
Plan of Distribution
The selling stockholders, which as used herein includes donees, pledgees, transferees or other
successors-in-interest selling shares of common stock or interests in shares of common stock
received after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock or interests in shares of common stock on any
stock exchange, market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market prices at the time
of sale, at prices related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of
shares or interests therein:
- 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 effected after the date the registration statement of which this Prospectus is a
part is declared effective by the SEC;
- through the writing or settlement of options or other hedging transactions, whether through
an options exchange or otherwise;
- broker-dealers may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per share; and
- a combination of any such methods of sale.
The selling stockholders may, from time to time, pledge or grant a security interest in some
or all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock,
from time to time, under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest as
1
selling stockholders under this prospectus. The selling stockholders also may transfer the shares
of common stock in other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with NASDR IM-2440.
In connection with the sale of our common stock or interests therein, the selling stockholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The selling stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered
by them will be the purchase price of the common stock less discounts or commissions, if any. Each
of the selling stockholders reserves the right to accept and, together with their agents from time
to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly
or through agents. We will not receive any of the proceeds from this offering. Upon any exercise
of the warrants by payment of cash, however, we will receive the exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares in open market
transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet
the criteria and conform to the requirements of that rule.
The selling stockholders and any underwriters, broker-dealers or agents that participate in
the sale of the common stock or interests therein may be “underwriters” within the meaning of
Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn
on any resale of the shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities
Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling
stockholders, the respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a
2
particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the common stock
may be sold in these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it has been registered or
qualified for sale or an exemption from registration or qualification requirements is available and
is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M
under the Exchange Act may apply to sales of shares in the market and to the activities of the
selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as
it may be supplemented or amended from time to time) available to the selling stockholders for the
purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling
stockholders may indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to the registration of the
shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement of which this
prospectus constitutes a part effective until the earlier of (1) such time as all of the shares
covered by this prospectus have been disposed of pursuant to and in accordance with the
registration statement or (2) the date on which the shares may be sold pursuant to Rule 144(k) of
the Securities Act.
3
