REGISTRATION RIGHTS AGREEMENT
This Agreement is made as of April __, 2006, by and among Caspian
Services, Inc., a Nevada corporation (the "Company"), and ______________________
("Holder") upon its decision to execute and deliver to the Company the Notice of
Election to Register and Questionnaire attached hereto as Exhibit A.
PREAMBLE
The Company desires to extend registration rights to Holder and other
prospective purchasers of Company Units purchased in a private placement made by
the Company, commencing on March 28, 2006, unless extended by the Company (the
"Private Placement").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, the Company and Holder agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
(a) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and
regulations thereunder, all as the same shall be in effect at the
time.
(c) "Holder" shall mean _______ and all other holders of restricted
common shares or warrants of Caspian Services, Inc., purchased in
the Private Placement or anyone to whom the registration rights
conferred by this Agreement have been transferred in compliance
with this Agreement.
(d) "Initiating Holders" shall mean any Holder or Holders of at least
fifty-one percent (51%) of the Registrable Securities then
outstanding.
(e) "Partnership" and "Partner" shall include, as the context may
require, a limited liability company and the member of members
thereof.
(f) "Private Placement" shall mean the Private Placement sale of up to
1,000,000 Units, each Unit consisting of two shares of restricted
common stock and one callable warrant to purchase an addition share
of common stock of the Company issued pursuant to the Confidential
Information Memorandum dated as of March 28, 2006.
(g) "Register," "registered" and "registration" shall refer to a
registration affected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration
statement, and compliance with applicable state securities laws of
such states in which Holders notify the Company of their intention
to offer Registrable Securities.
(h) "Registrable Securities" shall mean the following to the extent the
same have not been sold to the public (i) any and all shares of
restricted common stock of the Company issued or issuable pursuant
to the Private Placement and (ii) any and all shares of restricted
stock of the Company underlying warrants issued or issuable as part
of a Unit, or otherwise pursuant to the Private Placement.
Notwithstanding the foregoing, Registrable Securities shall not
include otherwise Registrable Securities (i) sold by a person in a
transaction in which his rights under this Agreement are not
properly assigned; or (ii) (A) sold in a transaction exempt from
the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer
restrictions, and restrictive legends with respect thereto, if any,
are removed upon the consummation of such sale or (B) the
registration rights associated with such securities have been
terminated pursuant to Section 12 of this Agreement.
(i) "Rule 144" shall mean Rule 144 under the Securities Act or any
successor or similar rule as may be enacted by the Commission from
time to time, but shall not include Rule 144A.
(j) "Rule 144A" shall mean Rule 144A under the Securities Act or any
successor or similar rule as may be enacted by the Commission from
time to time, but shall not include Rule 144.
(k) "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(l) "Unit" shall consist of two shares of restricted Company common
stock and one callable warrant to purchase an additional share of
Company common stock for a period of three years from the closing
date of the Private Placement for a price of $5.00 per share.
2. Restrictions on Transferability. The Registrable Securities shall not be
sold, assigned, transferred or pledged except upon the conditions specified in
this Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act. Each Holder will cause any proposed purchaser,
assignee, transferee, or pledgee of the Registrable Securities held by a Holder
to agree to take and hold such securities subject to the provisions and upon the
conditions specified in this Agreement.
3. Notice of Proposed Transfer. The Holder of each certificate or warrant
representing Registrable Securities agrees to comply in all respects with the
provisions of this Section 3. Each such Holder agrees not to make any
disposition of all or any portion of any Registrable Securities unless and
until:
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(a) There is in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or;
(b) (i) Such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the
proposed disposition, and
(ii) If reasonably requested by the Company, such Holder shall
furnish the Company with an opinion of counsel, reasonably
satisfactory to the Company that such disposition shall not
require registration of such shares under the Securities Act.
It is agreed, however, that no such opinion will be required
for Rule 144 or Rule 144A transactions, except in unusual
circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is a partnership, to a
partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of
any such partner or retired partner or the transfer by gift, will,
or intestate succession of any partner to his spouse or siblings,
lineal descendants or ancestors of such partner or spouse, provided
that such transferee agrees in writing to be subject to all of the
terms hereof to the same extent as if he were an original Holder
hereunder.
4. Requested Registration.
(a) If the Company shall receive from Initiating Holders a written
request that the Company effect registration with respect to all or
at least 51% of the outstanding Registrable Securities, the Company
shall:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable use its best efforts to register
(including, without limitation, the execution of an
undertaking to file post-effective amendments and any
other governmental requirements) all Registrable
Securities that the Holders request to be registered
within thirty (30) days after receipt of such written
notice by the Company; provided that the Company shall
not be obligated to file a registration statement
pursuant to this Section 4:
(A) prior to 120 days after the closing of the
Private Placement;
(B) in any particular state in which the Company
would be required to execute a general consent to
service of process in effecting such registration; or
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(C) after the Company has effected one such
registration pursuant to this Section 4 and such
registration has been declared or ordered effective.
Subject to the foregoing clauses (A) through (C), the Company
shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practical, but
in any event within ninety (90) days after receipt of the request
or requests of the Initiating Holders and shall use reasonable
best efforts to have such registration statement promptly declared
effective by the Commission whether or not all Registrable
Securities requested to be registered can be included; provided,
however, that if the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company and its shareholders for such
registration statement to be filed within such ninety (90) day
period and it is therefore essential to defer the filing of such
registration statement, the Company shall have an additional
period of not more than ninety (90) days after the expiration of
the initial ninety-day (90-day) period within which to file such
registration statement; provided, that during such time the
Company may not file a registration statement for securities to be
issued and sold for its own account.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request. In
such event or if any underwriting is required by subsection 4(c),
the Company shall include such information in the written notice
referred to in subsection 4(a)(i). In either such event, if so
requested in writing by the Company, the Initiating Holders shall
negotiate with an underwriter selected by the Company with regard
to the underwriting of such requested registration; provided,
however, that if a majority in interest of the Initiating Holders
have not agreed with such underwriter as to the terms and
conditions of such underwriting within twenty (20) days following
commencement of such negotiations, a majority in interest of the
Initiating Holders may select an underwriter of their choice. The
right of any Holder to registration pursuant to Section 4 shall be
conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) to the extent
provided herein. The Company shall (together with all Holders
proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
Notwithstanding any other provisions of this Section 4, if the
managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to
be underwritten, the Company shall so advise all Holders, and the
number of shares of Registrable Securities that may be included in
the registration and underwriting shall be allocated among Holders
thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders; provided,
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however, that securities to be included in such registration
statement to be offered by the Company, its officers and employees
shall be excluded from the registration statement prior to the
exclusion of any Registrable Securities held by the Holders. If any
Holder disapproves of the terms of the underwriting, he may elect
to withdraw therefrom by written notice to the Company, the
managing underwriter and the Initiating Holders. If, by the
withdrawal of such Registrable Securities, a greater number of
Registrable Securities held by other Holders may be included in
such registration (up to the limit imposed by the underwriters),
the Company shall offer to all holders who have included
Registrable Securities in the registration the right to include
additional Registrable Securities in the same proportion used in
determining the limitation as set forth above. Any Registrable
Securities which are excluded from the underwriting by reason of
the underwriter's marketing limitation or withdrawn from such
underwriting shall be withdrawn from such registration.
5. Expenses of Registration. In addition to the fees and expenses contemplated
by Section 6 hereof, all expenses incurred in connection with registration
pursuant to Section 4 hereof, including without limitation all registration,
filing and qualification fees, printing expenses, fees and disbursements of
counsel for the Company, and expenses of any special audits of the Company's
financial statements incidental to or required by such registration, shall be
borne by the Company, except that the Company shall not be required to pay
underwriters' fees, discounts or commissions relating to Registrable Securities
or fees of separate legal counsel of Holders.
6. Registration Procedures. In the case of registration effected by the Company
pursuant to this Agreement, the Company will keep each Holder participating
therein 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 pursuant to Section 4 continuously effective
for a period of one hundred twenty (120) days or such reasonable
period necessary to permit the Holder or Holders to complete the
distribution described in registration statement relating thereto,
or until the expiration of one year from the date the shares were
issued, whichever first occurs;
(b) promptly prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to comply with the
provisions of the Securities Act, and to keep such registration
statement effective for that period of time specified in Section
6(a) above;
(c) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
(d) use reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction, at the
earliest practicable date;
(e) subject to Section 4(a)(ii)(B), register or qualify such
Registrable Securities for offer and sale under the securities or
blue sky laws of such jurisdictions as a Holder or underwriter
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shall reasonably request in writing to the Company, and keep such
registration or qualification effective during the period set forth
in Section 6(a) above;
(f) enter into such customer agreements (including underwriting
agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold
or the underwriters, if any, reasonably, request in order to
expedite or facilitate the disposition of such Registrable
Securities);
(g) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement; and
(h) if the offering is underwritten, at the request of any Holder of
Registrable Securities to furnish on the date that Registrable
Securities are delivered to the underwriters for sale pursuant to
such registration: (i) an opinion dated as of such date of counsel
representing the Company for the purposes of such registration,
addressed to the underwriters and to such Holder, stating that such
registration statement has become effective under the Securities
Act and that (A) to the best knowledge of such counsel, no stop
order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B), the registration
statement, the related prospectus and each amendment or supplement
thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need
not express any opinion as to financial statements or other
financial data contained therein) and (C) to such other effects as
reasonably may be requested by counsel for the underwriters or by
such Holder or its counsel and (ii) a letter dated such date from
the independent public accountants retained by the Company,
addressed to the underwriters and to such seller, stating that they
are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration
statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, and such
letter shall additionally cover such other financial matters
(including information as to the period ending no more than five
business days prior to the date of such letter) with respect to
such registration as such underwriters reasonably may request; and
(i) notify each Holder, at any time a prospectus covered by such
registration statement is required to be delivered under the
Securities Act, of the happening of any event of which it has
knowledge as a result of which the prospectus included in such
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registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing; and
7. Indemnification.
(a) In the event of a registration of any of the Registrable Securities
under the Securities Act pursuant to Section 4, the Company will
indemnify and hold harmless each Holder of such Registrable
Securities thereunder, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls
such Holder or underwriter within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which such Holder, underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based
upon 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, or any violating by the Company
of any rule or regulation promulgated under the Securities Act or
any state securities law applicable to the Company and relating to
action or inaction required of the Company in connection with any
such registration, and will reimburse each such Holder, each of its
officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such
underwriter, for the reasonable legal and any other reasonable
expenses incurred in connection with investigating, defending or
settling any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to
the extent that any such claim, loss, damage or liability arises
out of or is based on any untrue statement or omission based upon
written information furnished to the Company by an instrument duly
executed by such Holder or underwriter specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by or issuable to
such Holder are included in the securities as to which such
registration is being effected, indemnify and hold harmless the
Company, each of its directors and officers, each underwriter, if
any, of the Company's each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company and
each underwriter within the meaning of the Securities Act, and each
other such Holder, each of its officers, directors and partners and
each person controlling such Holder, against all claims, losses,
expenses, 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 documents, or 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, and will reimburse the Company, such
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Holders, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses
incurred in connection with investigating, defending or settling
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 allege 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 an instrument duly executed
by such Holder specifically for use therein; provided, however, the
total amount for which any Holder, its officers, directors and
partners, and any person controlling such Holder, shall be liable
under this Section 7(b) shall not in any event exceed the aggregate
proceeds received by such Holder from the sale of Registrable
Securities sold by such Holder in such registration.
(c) Each party entitled to indemnification under this Section 7 (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 claims 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 litigation,
shall be approved by the Indemnified Party (whose approval shall
not be unreasonably 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 hereunder, unless such failure resulted in actual
detriment to the Indemnifying Party. 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 giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in
respect of such claim or litigation.
(d) Notwithstanding the foregoing, to the extent that the provisions on
indemnification contained in the underwriting agreements entered
into among the selling Holders, if any, the Company and the
underwriters in connection with the underwritten public offering
are in conflict with the foregoing provisions, the provisions in
the underwriting agreement shall be controlling as to the
Registrable Securities included in the public offering; provided,
however, that if, as a result of this Section 7(d), any Holder, its
officers, directors, and partners and any person controlling such
Holder is held liable for an amount which exceeds the aggregate
proceeds received by such Holder from the sale of Registrable
Securities included in a registration, as provided in Section 7(b)
above, pursuant to such underwriting agreement (the "Excess
Liability"), the Company shall reimburse any such Holder for such
Excess Liability.
(e) If the indemnification provided for in this Section 7 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 therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, 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
hand in connection with the statements or omissions which resulted
8
in such loss, liability, claim, damage or expense as well as any
other relevant equitable considerations. The relevant fault of the
indemnifying party and the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing,
the amount any Holder shall be obligated to contribute pursuant to
this Section 7(e) shall be limited to an amount equal to the
proceeds to such Holder of the Restricted Securities sold pursuant
to the registration statement which gives rise to such obligation
to contribute (less the aggregate amount of any damages which the
Holder has otherwise been required to pay in respect of such loss,
claim, damage, liability or action or any substantially similar
loss, claim, damage, liability or action arising from the sale of
such Restricted Securities).
(f) Survival of Indemnity. The indemnification provided by this Section
7 shall be a continuing right to indemnification and shall survive
the registration and sale of any securities by any Person entitled
to indemnification hereunder and the expiration or termination of
this Agreement.
8. Lock Up Agreement. In consideration for the Company agreeing to is
obligations under this Agreement, each Holder agrees in connection with any
registration of the Company's securities (whether or not such Holder is
participating in such registration) upon the request of the Company and the
underwriters managing any underwritten offering of the Company's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as the Company and the
underwriters may specify, so long as all Holders or stockholders holding more
than one percent (1%) of the outstanding common stock and all officers and
directors of the Company are bound by a comparable obligation provided, however,
that nothing herein shall prevent any Holder that is a partnership or
corporation from making a distribution of Registrable Securities to the partners
or shareholders thereof that is otherwise in compliance with applicable
securities laws, so long as such distributees agree to be so bound.
9. Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall promptly furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holders or Holders as the Company may request in writing and as shall be
required in connection with any registration referred to herein.
10. Rule 144 and 144A Reporting. With a view to making available to Holders of
Registrable Securities the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to:
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(a) make and keep public information available, as those terms are
understood and defined in Rule 144 and Rule 144A;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
11. Subsequent Registration Rights. From and after the date this registration
right is granted, the Company may, in its discretion, enter into any agreement
with any holder or prospective holder of any securities of the Company which
should allow such holder or prospective holder to include such securities in any
registration filed under Section 4 hereof.
12. Termination of Rights.
(a) The rights of any particular Holder to cause the Company to
register securities under Section 4 shall terminate with respect to
such Holder at such time as such Holder is able to dispose of all
of his Registrable Securities in one three-month period pursuant to
the provisions of Rule 144.
(b) Notwithstanding the provisions of paragraph (a) of this Section 12,
all rights of any particular Holder under this Agreement, other
than rights under Section 7, shall terminate at 5:00 P.M. Eastern
time on the date one (1) year after the closing date of the Private
Offering.
13. Representations and Warranties of the Company.
The Company represents and warrants to the Holder as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action
and will not violate any provision of law, any order of any court
or other agency of government, the Articles of Organization or
Bylaws of the Company or any agreement or conflict with, result in
a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other
instrument or results in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally
and (ii) the availability of equitable remedies as such remedies
may be limited by equitable principles of general applicability
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
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14. Miscellaneous.
(a) Amendments. This Agreement may be amended only by a writing signed
by the Holders of at least fifty-one percent (51%) of the
Registrable Securities, as constituted from time to time. The
Holders hereby consent to future amendments to this Agreement that
permit future investors, other than employees, officers or
directors of the Company, to be made parties hereto and to become
Holders of Registrable Securities; provided, however, that no such
future amendment may materially impair the rights of the Holders
hereunder without obtaining the requisite consent of the Holders,
as set forth above. For purposes of this Section, Registrable
Securities held by the Company or beneficially owned by any officer
or employee of the Company shall be disregarded and deemed not to
be outstanding.
(b) Counterparts. This Agreement may be executed in any number of
counter parts, all of which shall constitute a single instrument.
(c) Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and may be sent initially
by facsimile transmission and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or
by messenger, addressed (a) if to a Holder, at such Holder's
address set forth on the books of the Company, or at such other
address as such Holder shall be furnished to the Company in
writing, or (b) if to any other holder of any Registrable
Securities, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnished an
address to the Company, then to and at the address of the last
holder of such securities who has so furnished an address to the
Company, or (c) if to the Company, one copy should be sent to the
Company's current address, or at such other address as the Company
shall have furnished to the Holders. Each such notice or other
communication shall for all purposes of this Agreement be treated
as effective or having been given when delivered if delivered
personally, or, if sent by first class, postage prepaid mail, at
the earlier of its receipt or seventy-two (72) hours after the same
has been deposited in a regularly maintained receptacle for the
deposit of the United States mail, addressed and mailed as
aforesaid.
(d) Nonpublic Information. Any other provisions of this agreement to
the contrary notwithstanding, the Company's obligation to file a
registration statement, or cause such registration statement to
become and remain effective, shall be suspended for a period not to
exceed 45 days (and for periods not exceeding, in the aggregate, 90
days during the term of this Agreement) if there exists at the time
material non-public information relating to the Company which, in
the reasonable opinion of the Company, should not be disclosed.
(e) Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity
or unenforceability shall attach only to such provision and shall
not in any manner affect or render illegal, invalid or
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unenforceable any other provision of this Agreement, and this
Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
(f) Dilution. If, and as often as, there is any change in the common
stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any means, appropriate
adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to
the Common Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Utah without regard to
principles of conflict of law.
Dated as of the date first above written.
Caspian Services, Inc.
____________________________
Xxxxx Xxxxxxx, President
____________________________
______________, Director
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Exhibit A
NOTICE OF ELECTION TO REGISTER AND QUESTIONNAIRE
The undersigned holder of shares of the common stock, par value $.001
per share (the "common stock" or the "Registrable Securities") of Caspian
Services, Inc. (the "Company") purchased in a private placement offering by the
Company understands that the Company has filed or intends to file with the
Securities and Exchange Commission a registration statement (the "Shelf
Registration Statement") for the registration and the resale under Rule 415 of
the Securities Act of 1933, as amended (the "Securities Act"), of the common
stock in accordance with the terms of the Registration Rights Agreement, dated
as of April __, 2006 (the "Registration Rights Agreement") among the Company and
the private placement agent of the Company on behalf of the undersigned on
behalf of the prospective purchasers of the private placement offering. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
In order to sell or otherwise dispose of any common stock pursuant to
the Shelf Registration Statement, a holder of common stock generally will be
required to be named as a selling securityholder in the related prospectus or a
supplement thereto (as so supplemented, the "Prospectus"), deliver the
Prospectus to purchasers of common stock and be bound by the provisions of the
Registration Rights Agreement (including certain indemnification provisions, as
described below). Shareholders of Registrable Securities must complete and
deliver this Notice and Questionnaire in order to be named as selling
securityholders in the Prospectus. Shareholders of Registrable Securities who do
not complete, execute and return this Notice and Questionnaire (1) will not be
named as selling securityholders in the Shelf Registration Statement or the
Prospectus and (2) may not use the Prospectus for resales of Registrable
Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the Prospectus. Holders
of Registrable Securities are advised to consult their own securities law
counsel regarding the consequences of being named or not named as a selling
securityholder in the Shelf Registration Statement and the Prospectus.
Notice
The undersigned holder (the "Selling Securityholder") of Registrable
Securities hereby gives notice to the Company of its intention to sell or
otherwise dispose of common stock owned by it and listed below in Item (3),
unless otherwise specified in Item (3), pursuant to the Shelf Registration
Statement. The undersigned, by signing and returning this Notice and
Questionnaire, understands and agrees that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.
Pursuant to the Registration Rights Agreement, the undersigned has
agreed to indemnify and hold harmless the Company, the Company's directors and
the Company's officers who sign the Shelf Registration Statement and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), from and against certain losses arising in
connection with certain statements concerning the undersigned made in the Shelf
Registration Statement or the related prospectus in reliance upon the
information provided in this Notice and Questionnaire.
The undersigned hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
Questionnaire
1. (a) Full Legal Name of Selling Securityholder:
_________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as (a)
above) through which Registrable Securities listed in Item (3)
below are held:
_________________________________________________________________
2. Address for Notices to Selling Securityholder:
_________________________________________________________________
_________________________________________________________________
Telephone:
_________________________________________________________________
Fax:
_________________________________________________________________
Contact Person:
_________________________________________________________________
3. Ownership of Registrable Securities:
(a) Type and amount of Registrable Securities owned:
_________________________________________________________________
(b) Type and amount of Registrable Securities to be registered:
_________________________________________________________________
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4. Ownership and Beneficial Ownership of Other Securities of the Company owned
by the Selling Securityholder:
Except as set forth below in this Item (4), the undersigned is not the
beneficial or registered owner of any securities of the Company other than
the Regstrable Securities listed above in Item (3).
Type and Amount of Other Securities owned or beneficially owned:
__________________________________________________________________________
5. Relationship with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the past three
years.
State any exceptions here:
__________________________________________________________________________
6. Plan of Distribution:
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the common stock listed above in Item (3)
pursuant to the Shelf Registration Statement only as follows (if at all):
Such common stock may be sold directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions from the Selling
Securityholder or the purchaser. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may
be in excess of those customary in the types of transactions involved. The
common stock may be sold in one or more transactions at fixed prices,
prevailing market prices at the time of sale, prices related to the
prevailing market prices, varying prices determined at the time of sale,
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or negotiated prices. These sales may be effected in transactions on any
quotation service on which common stock may be listed or quoted at the
time of sale, including the in the over-the-counter market, otherwise than
on an exchange or services or in the over-the-counter market, or through
the settlement of short sales. These transactions may include block
transactions or crosses. Crosses are transactions in which the same broker
acts as agent on both sides of the trade. In connection with the sale of
common stock or otherwise, the Selling Securityholders may enter into
hedging transactions with broker-dealers or other financial institutions.
These broker-dealers or financial institutions may in turn engage in short
sales of the common stock in the course of hedging the positions they
assume with Selling Securityholders. The Selling Securityholders may also
sell common stock short and deliver common stock to close out such short
positions, or loan or pledge common stock to broker-dealers that in turn
may sell these securities.
State any exceptions here:
__________________________________________________________________________
Note: In no event will such method(s) of distribution take the form of
an underwritten offering of the Registrable Securities without the
prior agreement of the Company.
7. Registered Broker/Dealer:
Yes No
Is the Selling Securityholder is a registered broker-dealer. [ ] [ ]
If the Selling Securityholder is a registered broker-dealer, please state
all jurisdictions in which the Selling Securityholder is registered as a
broker-xxxxxx.
Yes No
If the Selling Securityholder is a registered broker-dealer,
did you receive your shares as compensation for investment [ ] [ ]
banking services?
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The undersigned acknowledges that it understands its obligation to comply
with the provisions of the Exchange Act and the rules thereunder relating to
stock manipulation, particularly Regulation M thereunder (or any successor rules
or regulations), in connection with any offering of common stock pursuant to the
Shelf Registration Statement. The undersigned agrees that neither it nor any
person acting on its behalf will engage in any transaction in violation of such
provisions.
The Selling Securityholder hereby acknowledges its obligations under the
Registration Rights Agreement to indemnify and hold harmless certain persons as
set forth therein. Pursuant to the Registration Rights Agreement, the Company
has agreed under certain circumstances to indemnify the Selling Securityholder
against certain liabilities.
In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective. All notices hereunder and
pursuant to the Registration Rights Agreement shall be made in writing, by hand
delivery, first-class mail or air courier guaranteeing overnight delivery at the
address set forth below. In the absence of any such notification, the Company
shall be entitled to continue to rely on the accuracy of the information in this
Notice and Questionnaire.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
Prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation, amendment or
supplementation of the Shelf Registration Statement and the Prospectus.
The terms of this Notice and Questionnaire, and the representations and
warranties contained herein, shall be binding upon, shall inure to the benefit
of and shall be enforceable by the respective successors, heirs, personal
representatives, and assigns of the Company and the Selling Securityholder with
respect to the common stock owned by the Selling Securityholder and listed in
Item (3) above. This agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Nevada applicable to contracts made
in the State of Nevada.
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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Date:_______________________ _________________________________
Selling Securityholder (Print or
type full legal name of holder of
Registrable Securities)
Name:____________________________
Title:___________________________
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
Company's U.S. address:
Caspian Services, Inc.
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Secretary
with a copy to:
Company counsel
Poulton & Yordan
000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
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