REGISTRATION RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of August 28, 2008, by and among Universal Travel Group, a Nevada
corporation, with headquarters located at Shennan Road, Hualian Center, Room
301-309, Shenzhen, the People’s Republic of China (the “Company”),
and
the investors listed on the Schedule of Buyers attached hereto (each, a
“Buyer”
and
collectively, the “Buyers”).
BACKGROUND
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities
Purchase Agreement”),
the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to each Buyer (i) shares (the
“Common
Shares”)
of the
Company's common stock, par value $0.001 per share (the “Common
Stock”),
and
(ii) warrants (the “Warrants”)
which
will be exercisable to purchase shares of Common Stock (as exercised, the
“Warrant
Shares”)
in
accordance with the terms of the Warrants.
B. In
accordance with the terms of the Securities Purchase Agreement, the Company
has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933
Act”),
and
applicable state securities laws.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
(a) “Additional
Effective Date”
means
the date the Additional Registration Statement is declared effective by the
SEC.
(b) “Additional
Effectiveness Deadline”
means
the date which is one hundred and eighty (180) calendar days after the
Additional Filing Date.
(c) “Additional
Filing Date”
means
the date on which the Additional Registration Statement is filed with the
SEC.
(d) “Additional
Filing Deadline”
means
if Additional Registrable Securities are required to be included in the
Additional Registration Statement, the later of (i) ninety (90) days after
the
Initial Effective Date or the last preceding Additional Effective Date, as
the
case may be, or (ii) six (6) months after the Initial Effective Date or the
last
preceding Additional Effective Date in the event the SEC were to deem the former
ninety-day period in (i) as premature for filing the Additional Registration
Statement or (iii) the date which is six (6) weeks after substantially all
of
the Registrable Securities registered under the immediately preceding
Registration Statement are sold, as applicable.
(e) “Additional
Registrable Securities”
means,
(i) any Cutback Shares not previously included on a Registration Statement
and
(ii) any share capital of the Company issued or issuable with respect to the
Cutback Shares, as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise.
(f) “Additional
Registration Statement”
means
a
registration statement or registration statements of the Company filed under
the
1933 Act covering any Additional Registrable Securities.
(g) “Additional
Required Registration Amount”
means
any Additional Registrable Securities not previously included on a Registration
Statement.
(h) “Business
Day”
means
any day other than Saturday, Sunday or any other day on which commercial banks
in The City of New York are authorized or required by law to remain
closed.
(i) “Closing
Date”
shall
have the meaning set forth in the Securities Purchase Agreement.
(j) “Cutback
Shares”
means
the Additional Required Registration Amount of Registrable Securities not
included in all Registration Statements previously declared effective hereunder
as a result of a limitation on the maximum number of shares of Common Stock
of
the Company permitted to be registered by the staff of the SEC pursuant to
Rule
415.
(k) “Effective
Date”
means
the Initial Effective Date and the Additional Effective Date, as
applicable.
(l) “Effectiveness
Deadline”
means
the Initial Effectiveness Deadline and the Additional Effectiveness Deadline,
as
applicable.
(m) “Eligible
Market”
means
the Over The Counter Bulletin Board, American Stock Exchange, the New York
Stock
Exchange, Inc., The NASDAQ Global Select Market, the NASDAQ Global Market or
The
NASDAQ Capital Market.
(n) “Filing
Deadline”
means
the Initial Filing Deadline and the Additional Filing Deadline, as
applicable.
(o) “Initial
Effective Date”
means
the date that the Registration Statement has been declared effective by the
SEC.
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(p) “Initial
Effectiveness Deadline”
means
the earlier of (I) the date which is one hundred eighty (180) calendar days
after the Closing Date and (II) the date which is five (5) Business Days after
the Company learns that no review of the Registration Statement will be made
by
the staff of the SEC or that the staff of the SEC has no further comments on
the
Registration Statement.
(q) “Initial
Filing Deadline”
means
forty-five (45) calendar days after the Closing Date.
(r) “Initial
Registrable Securities”
means
(i) the Common Shares, (ii) the Warrant Shares issued or issuable upon exercise
of the Warrants, and (iii) any capital stock of the Company issued or issuable,
with respect to the Common Shares, the Warrant Shares, and the Warrants, as
a
result of any stock split, stock dividend, recapitalization, exchange or similar
event or otherwise, without regard to any limitations on exercise of the
Warrants.
(s) “Initial
Required Registration Amount”
(I)
the
sum of (i) the number of Common Shares issued and (ii) the number of Warrant
Shares issued and issuable pursuant to the Warrants as of the trading day
immediately preceding the applicable date of determination, or (II) such other
amount as may be permitted by the staff of the SEC pursuant to Rule 415, but
not
less than the number of Common Shares issued.
(t) “Initial
Registration Statement”
means
a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Initial Registrable Securities.
(u) “Investor”
means
a
Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 and any transferee or assignee thereof
to
whom a transferee or assignee assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9.
(v) “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(w) “register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
(x) “Registrable
Securities”
means
the Initial Registrable Securities and the Additional Registrable
Securities.
(y) “Registration
Statement”
means
a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
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(z) “Required
Holders”
means
the holders of at least a majority of the Registrable Securities.
(aa) “Required
Registration Amount”
means
either the Initial Required Registration Amount or the Additional Required
Registration Amount, as applicable.
(bb) “Rule
415”
means
Rule 415 of Regulation C under the 1933 Act or any successor rule providing
for
offering securities on a continuous or delayed basis.
(cc) “SEC”
means
the United States Securities and Exchange Commission.
2. Registration.
(a) Initial
Mandatory Registration.
The
Company shall prepare, and, as soon as practicable but in no event later than
the Initial Filing Deadline, file with the SEC the Initial Registration
Statement on Form S-3 covering the resale of all of the Initial Registrable
Securities. In the event that Form S-3 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration
on
another appropriate form reasonably acceptable to the Required Holders, subject
to the provisions of Section 2(e). The Initial Registration Statement prepared
pursuant hereto shall register for resale at least the number of shares of
Common Stock equal to the Initial Registrable Securities determined as of the
date the Initial Registration Statement is initially filed with the SEC, subject
to adjustment as provided in Section 2(f). The Initial Registration Statement
shall contain the “Selling Stockholders” section and “Plan of Distribution”
attached hereto as Annex
I.
The
Company shall use its commercially reasonable efforts to have the Initial
Registration Statement declared effective by the SEC as soon as practicable,
but
in no event later than the Initial Effectiveness Deadline provided that in
the
event that the Company is unable to register for resale under Rule 415 all
of
the Initial Registrable Securities on the Registration Statement that it has
agreed to file pursuant to the first sentence of this Section 2(a) due to limits
imposed by the SEC’s interpretation of Rule 415, then the Company shall be
obligated to include in such Initial Registration Statement (which may be a
subsequent Registration Statement if the Company needs to withdraw the Initial
Registration Statement and refile a new Initial Registration Statement in order
to rely on Rule 415) only such limited portion of the Registrable Securities
(equivalent to the Initial Required Registration Amount) as the SEC shall
permit. Any exclusion of Registrable Securities shall be made pro rata among
the
Investors in proportion to the number of Registrable Securities held by such
Investors. By 9:30 a.m. New York time on the Business Day following the Initial
Effective Date, the Company shall file with the SEC in accordance with Rule
424
under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Initial Registration Statement.
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(b) Additional
Mandatory Registrations.
The
Company shall prepare, and, as soon as practicable but in no event later than
the Additional Filing Deadline, file with the SEC an Additional Registration
Statement on Form S-3 covering the resale of all of the Additional Registrable
Securities not previously registered in an Initial Registration Statement or
a
preceding Additional Registration Statement as the case may be. To the extent
the staff of the SEC does not permit the aforesaid Additional Registrable
Securities to be registered on an Additional Registration Statement, the Company
shall file Additional Registration Statements successively trying to register
on
each such Additional Registration Statement the maximum number of remaining
Additional Registrable Securities until the Additional Required Registration
Amount has been registered with the SEC. In the event that Form S-3 is
unavailable for such a registration, the Company shall use such other form
as is
available for such a registration on another appropriate form reasonably
acceptable to the Required Holders, subject to the provisions of Section 2(e).
The Company shall use its commercially reasonable efforts to have each
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Additional Effectiveness Deadline.
By 9:30 a.m. New York time on the Business Day following the Additional
Effective Date, the Company shall file with the SEC in accordance with Rule
424
under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Additional Registration Statement.
(c) Allocation
of Registrable Securities.
The
number of Registrable Securities included in any Registration Statement and
each
increase or decrease in the number of Registrable Securities included therein
shall be allocated pro rata among the Investors based on the number of
Registrable Securities held by each Investor at the time the Registration
Statement covering such number of Registrable Securities or increase or decrease
thereof is declared effective by the SEC. In the event that an Investor sells
or
otherwise transfers any of such Investor's Registrable Securities, each
transferee shall be allocated a pro rata portion of the then remaining number
of
Registrable Securities included in such Registration Statement for such
transferor. Any shares of Common Stock included in a Registration Statement
and
which remain allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be allocated to the
remaining Investors, pro rata based on the number of Registrable Securities
then
held by such Investors which are covered by such Registration Statement. In
no
event shall the Company include any securities other than Registrable Securities
on any Registration Statement without the prior written consent of the Required
Holders.
(d) Legal
Counsel.
Subject
to Section 5 hereof, the Required Holders shall have the right to select one
legal counsel to review and oversee any registration pursuant to this Section
2
(“Legal
Counsel”).
The
Company and Legal Counsel shall reasonably cooperate with each other in
performing the Company's obligations under this Agreement.
(e) Ineligibility
for Form S-3.
In the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale
of
the Registrable Securities on Form S-1 or on another appropriate form reasonably
acceptable to the Required Holders and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the SEC.
5
(f) Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities required and permitted by the SEC to be covered by such Registration
Statement or an Investor's allocated portion of the Registrable Securities
pursuant to Section 2(b), the Company shall amend the applicable Registration
Statement, or file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover at least the Required
Registration Amount as of the trading day immediately preceding the date of
the
filing of such amendment or new Registration Statement, in each case, as soon
as
practicable, but in any event not later than fifteen (15) days after the
necessity therefore arises. The Company shall use its commercially reasonable
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof. For purposes
of
the foregoing provision, the number of shares available under a Registration
Statement shall be deemed “insufficient to cover all of the Registrable
Securities” if at any time the number of shares of Common Stock available for
resale under such Registration Statement is less than the number of Registrable
Securities. The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the exercise of the Warrants and such
calculation shall assume that the Warrants are then exercisable into shares
of
Common Stock.
(g) Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If (i)
a Registration Statement covering all the Registrable Securities required to
be
covered thereby and required to be filed by the Company pursuant to this
Agreement is (A) not filed with the SEC on or before the respective Filing
Deadline (a “Filing
Failure”)
or (B)
not declared effective by the SEC on the respective Effectiveness Deadline,
(an
“Effectiveness
Failure”) or
(ii)
on any day after the respective Effective Date sales of all the Registrable
Securities included on such Registration Statement cannot be made (other than
during an Allowable Grace Period (as defined in Section 3(r)) pursuant to such
Registration Statement or otherwise (including, without limitation, because
of a
failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement, to register a sufficient number of shares of Common Stock or to
maintain the listing of the Common Stock) (a “Maintenance
Failure”)
then,
as partial relief for the damages to any holder by reason of any such delay
in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), (A) the Company shall pay to each holder of Registrable Securities
relating to such Registration Statement an amount in cash equal to two percent
(2.0%) of the aggregate Purchase Price (as such term is defined in the
Securities Purchase Agreement) of such Investor's Registrable Securities
included in such Registration Statement on each of the following dates: (i)
the
day of a Filing Failure; (ii) the day of an Effectiveness Failure; and (iii)
the
initial day of a Maintenance Failure; and (B) the Company shall pay to each
holder of Registrable Securities relating to such Registration Statement an
amount in cash equal to one percent (1.0%) of the aggregate Purchase Price
of
such Investor's Registrable Securities included in such Registration Statement
on each of the following dates: (i) on the thirtieth day after the date of
a
Filing Failure and every thirtieth day thereafter (pro rated for periods
totaling less than thirty days) until such Filing Failure is cured; (ii) on
the
thirtieth day after the date of an Effectiveness Failure and every thirtieth
day
thereafter (pro rated for periods totaling less than thirty days) until such
Effectiveness Failure is cured; and (iii) on the thirtieth day after the date
of
a Maintenance Failure and every thirtieth day thereafter (pro rated for periods
totaling less than thirty days) until such Maintenance Failure is cured. The
payments to which a holder shall be entitled pursuant to this Section 2(g)
are
referred to herein as “Registration
Delay Payments.”
Registration Delay Payments shall be paid on the later of (I) the dates set
forth above or (II) the third Business Day after the event or failure giving
rise to the Registration Delay Payments is cured. In the event the Company
fails
to make Registration Delay Payments in a timely manner, such Registration Delay
Payments shall bear interest at the rate of one and one-half percent (1.5%)
per
month (prorated for partial months) until paid in full.
6
3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement with the
SEC
pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company will use its
commercially reasonable efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
(a) The
Company shall submit to the SEC, within three (3) Business Days after the
Company learns that no review of a particular Registration Statement will be
made by the staff of the SEC or that the staff of the SEC has no further
comments on a particular Registration Statement, as the case may be, a request
for acceleration of effectiveness of such Registration Statement to a time
and
date not later than 48 hours after the submission of such request. The Company
shall keep each Registration Statement effective pursuant to Rule 415 at all
times during the period in which any of the Warrants are outstanding (the
“Registration
Period”).
The
Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein, or necessary to make the statements therein (in the case
of
prospectuses, in the light of the circumstances in which they were made) not
misleading.
(b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be
necessary to keep such Registration Statement effective at all times during
the
Registration Period, and, during such period, comply with the provisions of
the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth
in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “1934
Act”),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
7
(c) The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing
with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and any similar or successor reports) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects. The Company shall furnish to Legal Counsel,
without charge and upon Legal Counsel’s reasonable request, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after
the
same is prepared and filed with the SEC, one copy of any Registration Statement
and any amendment(s) thereto, including financial statements and schedules,
all
documents incorporated therein by reference, if requested by Legal Counsel
and
not otherwise available on the XXXXX system, and all exhibits and (iii) upon
the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto.
The
Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations pursuant to this Section 3.
(d) The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same
is
prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by
an
Investor and not otherwise available on the XXXXX system, all exhibits and
each
preliminary prospectus, (ii) upon the effectiveness of any Registration
Statement, such number of copies of the prospectus included in such Registration
Statement and all amendments and supplements thereto as such Investor may
reasonably request and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
(e) The
Company shall use its commercially reasonable efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not
be
required in connection therewith or as a condition thereto to (x) qualify to
do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel and each Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice
of
the initiation or threatening of any proceeding for such purpose.
8
(f) The
Company shall notify Legal Counsel and each Investor in writing of the happening
of any event, as promptly as practicable after becoming aware of such event,
as
a result of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(r), promptly prepare
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies
as
Legal Counsel or such Investor may reasonably request). The Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile on the same day of such effectiveness
and
by overnight mail), (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate. By 9:30 a.m. New York City
time on the date following the date any post-effective amendment has become
effective, the Company shall file with the SEC in accordance with Rule 424
under
the 1933 Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement.
(g) The
Company shall use its commercially reasonable efforts to prevent the issuance
of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities
for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(h) If
any
Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request of such
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time
on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to
underwriters in an underwritten public offering, addressed to the Investors,
and
(ii) an opinion, dated as of such date, of counsel representing the Company
for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.
9
(i) If
any
Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, the Company shall make available
for
inspection by (i) such Investor, (ii) Legal Counsel and (iii) one firm of
accountants or other agents retained by Legal Counsel (collectively, the
“Inspectors”),
all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree
to
hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors
are
so notified, unless (a) the disclosure of such Records is necessary to avoid
or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body
of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this
Agreement. Each Investor agrees that it shall, upon learning that disclosure
of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors' ability
to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
(j) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(k) [Reserved.]
(l) The
Company shall cooperate with the Investors who hold Registrable Securities
being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case
may
be, as the Investors may reasonably request and registered in such names as
the
Investors may request.
10
(m) If
requested by an Investor, the Company shall as soon as practicable (i)
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or
make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.
(n) The
Company shall use its commercially reasonable efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
(o) Unless
available on the XXXXX system, the Company shall make generally available to
its
security holders as soon as practical, but not later than ninety (90) days
after
the close of the period covered thereby, an earnings statement (in form
complying with, and in the manner provided by, the provisions of Rule 158 under
the 0000 Xxx) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the Effective Date of a
Registration Statement.
(p) The
Company shall otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.
(q) Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.
11
(r) Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a “Grace
Period”);
provided, that the Company shall promptly (i) notify the Investors in writing
of
the existence of material, non-public information giving rise to a Grace Period
in conformity with the provisions of this Section 3(r) (provided that in each
notice the Company will not disclose the content of such material, non-public
information to the Investors) and the date on which the Grace Period will begin,
and (ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed five (5)
consecutive days and during any three hundred sixty five (365) day period such
Grace Periods shall not exceed an aggregate of twenty (20) days and the first
day of any Grace Period must be at least five (5) trading days after the last
day of any prior Grace Period (each, an “Allowable
Grace Period”).
For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Investors receive the notice referred
to
in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to in such
notice. The provisions of Section 3(g) hereof shall not be applicable during
the
period of any Allowable Grace Period. Upon expiration of the Grace Period,
the
Company shall again be bound by the first sentence of Section 3(f) with respect
to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary,
the Company shall cause its transfer agent to deliver unlegended shares of
Common Stock to a transferee of an Investor in accordance with the terms of
the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the applicable
Registration Statement, prior to the Investor's receipt of the notice of a
Grace
Period and for which the Investor has not yet settled.
(s) Neither
the Company nor any Subsidiary or affiliate thereof shall identify any Buyer
as
an underwriter in any public disclosure or filing with the SEC, the Financial
Industry Regulatory Authority, Inc. or any Eligible Market and any Buyer being
deemed an underwriter by the SEC shall not relieve the Company of any
obligations it has under this Agreement or any other Transaction Document
(as
defined in the Securities Purchase Agreement); provided,
however,
that
the foregoing shall not prohibit the Company from including the disclosure
found
in the “Plan of Distribution” section attached hereto as Exhibit
B
in the
Registration Statement.
4. Obligations
of the Investors.
(a) At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of
the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor's Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations
of
the Company to complete any registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request.
(b) Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees
to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor's election
to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
12
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of copies of the
supplemented or amended prospectus as contemplated by Section 3(g) or the first
sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause
its
transfer agent to deliver unlegended shares of Common Stock to a transferee
of
an Investor in accordance with the terms of the Securities Purchase Agreement
in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt
of
a notice from the Company of the happening of any event of the kind described
in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.
(d) Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom
in
connection with sales of Registrable Securities pursuant to the Registration
Statement.
5. Expenses
of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements
of
counsel for the Company shall be paid by the Company. The Company is not liable
to the Investors for the fees and disbursements of Legal Counsel in connection
with registration, filing or qualification pursuant to Sections 2 and 3 of
this
Agreement.
6. Indemnification.
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
13
(a) To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, partners,
members, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”),
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue
Sky Filing”),
or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, “Violations”)
provided the Indemnified Claims do not exceed, with respect to each Investor,
the net proceeds of sale of the relevant Registrable Securities in that
Registration Statement. Subject to Section 6(c), the Company shall reimburse
the
Indemnified Persons, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by such
Indemnified Person for such Indemnified Person expressly for use in connection
with the preparation of the Registration Statement or any such amendment thereof
or supplement thereto, if such prospectus was timely made available by the
Company pursuant to Section 3(d); and (ii) shall not apply to amounts paid
in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed. Such indemnity shall remain in full force and effect regardless of
any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
(b) In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, officers, partners,
members, employees, agents, representatives of, and each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by
such
Investor expressly for use in connection with such Registration Statement;
and,
subject to Section 6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld
or
delayed; provided, further, however, that an Investor shall be liable under
this
Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not
exceed the net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything
to
the contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to
the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely basis
in
the prospectus, as then amended or supplemented.
14
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not
more than one counsel for such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of the Indemnified
Person or the Indemnified Party, as the case may be, the representation by
such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. In the case of an Indemnified
Person, legal counsel referred to in the immediately preceding sentence shall
be
selected by the Investors holding at least a majority in interest of the
Registrable Securities included in the Registration Statement to which the
Claim
relates. The Indemnified Party or Indemnified Person shall cooperate fully
with
the indemnifying party in connection with any negotiation or defense of any
such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or Claim. The indemnifying
party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of
any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to
entry
of any judgment or enter into any settlement or other compromise which does
not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such Claim or litigation and such settlement shall not include
any
admission as to fault on the part of the Indemnified Party or Indemnified
Person. Following indemnification as provided for hereunder, the indemnifying
party shall be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations relating to
the
matter for which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of
any such action shall not relieve such indemnifying party of any liability
to
the Indemnified Person or Indemnified Party under this Section 6, except to
the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
15
(d) The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
(e) The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. Contribution.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no Person involved
in the sale of Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) in
connection with such sale shall be entitled to contribution from any Person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities pursuant to such Registration
Statement.
8. Reports
Under the 1934 Act.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the public
without registration (“Rule
144”),
the
Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) file
with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and
16
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the
1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Investors to
sell
such securities pursuant to Rule 144 without registration.
9. Assignment
of Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to
the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; (iv) at
or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements
of
the Securities Purchase Agreement.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall
be
effective to the extent that it applies to less than all of the holders of
the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration also is offered to all of the parties
to
this Agreement.
11. Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars. All amounts owing under this Agreement or any Transaction
Document (as defined in the Securities Purchase Agreement) shall be paid in
US
dollars. All amounts denominated in other currencies shall be converted in
the
US dollar equivalent amount in accordance with the Exchange Rate on the date
of
calculation. “Exchange
Rate”
means,
in relation to any amount of currency to be converted into US dollars pursuant
to this Agreement, the US dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.
17
12. Judgment
Currency.
a) If
for
the purpose of obtaining or enforcing judgment against the Company in any court
in any jurisdiction it becomes necessary to convert into any other currency
(such other currency being hereinafter in this Section 12 referred to as the
“Judgment
Currency”)
an
amount due in US dollars under this Agreement, the conversion shall be made
at
the Exchange Rate prevailing on the Business Day immediately
preceding:
i) the
date
of actual payment of the amount due, in the case of any proceeding in the courts
of New York or in the courts of any other jurisdiction that will give effect
to
such conversion being made on such date: or
ii) the
date
on which the foreign court determines payment should be made, in the case of
any
proceeding in the courts of any other jurisdiction (the date as of which such
conversion is made pursuant to this Section being hereinafter referred to as
the
“Judgment
Conversion Date”).
b) If
in the
case of any proceeding in the court of any jurisdiction referred to in Section
12(a)(ii) above, there is a change in the Exchange Rate prevailing between
the
Judgment Conversion Date and the date of actual payment of the amount due,
the
applicable party shall pay such adjusted amount as may be necessary to ensure
that the amount paid in the Judgment Currency, when converted at the Exchange
Rate prevailing on the date of payment, will produce the amount of US dollars
which could have been purchased with the amount of Judgment Currency stipulated
in the judgment or judicial order at the Exchange Rate prevailing on the
Judgment Conversion Date.
c) Any
amount due from the Company under this provision shall be due as a separate
debt
and shall not be affected by judgment being obtained for any other amounts
due
under or in respect of this Agreement.
13. Miscellaneous.
(a) A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the
basis
of instructions, notice or election received from the record owner of such
Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
18
|
If
to Company:
|
||
|
Attention:
|
Xx.
Xxxxxxxxx Xxxxx
|
|
|
Address:
|
0/X
Xxxxxxx Xxxxxxxx, Xx. 0000 Xxxxxxx Xxxx,
|
|
|
Xxxxxxx
Futian District,
|
||
|
City
& State:
|
Shenzhen,
The People’s Republic of China
|
|
|
Telephone:
|
00-000-00000000
|
|
|
Fax:
|
00-000-00000000
|
|
|
Email:
|
00@xxxxx.xx
|
|
|
With
a copy (which will not constitute notice) to:
|
||
|
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
|
||
|
Attention:
|
Xxxxxxxx
Xxx, Esq.
|
|
|
Telephone:
|
(000)
000 0000
|
|
|
Fax:
|
(000)
000 0000
|
|
|
Email:
|
xxxx@xxxx.xxx
|
|
|
If
to Legal Counsel:
|
||
|
Xxxxxx
& Waller, L.L.P.
|
||
|
Attention:
|
Xxxx
Xxxxxx Xxxxxx
|
|
|
Address:
|
00000
Xxxxx Xxxxx, Xxxxx 0000
|
|
|
Xxxxxx,
Xxxxx 00000
|
||
|
Telephone:
|
(000)
000-0000
|
|
|
Fax:
|
(000)
000-0000
|
|
|
Email:
|
xx@xxxxxxxxxxxx.xxx,
|
|
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies to such Buyer's representatives as set forth on
the
Schedule of Buyers, or to such other address and/or facsimile number and/or
to
the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by
the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
19
(d) All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. The Company hereby appoints Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
with offices at 00 Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000, as its agent for service of process in New York.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(e) This
Agreement, the other Transaction Documents and the instruments referenced herein
and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to
herein and therein. This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(f) Subject
to the requirements of Section 9, this Agreement shall inure to the benefit
of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
(g) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(h) This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
20
(i) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(j) All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders, determined as if all of the Warrants held by Investors
then outstanding have been exercised for Registrable Securities without regard
to any limitations on exercise of the Warrants.
(k) The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
(l) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(m) The
obligations of each Buyer hereunder are several and not joint with the
obligations of any other Buyer, and no provision of this Agreement is intended
to confer any obligations on any Buyer vis-à-vis any other Buyer. Nothing
contained herein, and no action taken by any Buyer pursuant hereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers
are
in any way acting in concert or as a group with respect to such obligations
or
the transactions contemplated herein.
*
* * * *
*
21
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
|||
|
By:
|
|||
|
Name:
|
Xxxxxxxxx
Xxxxx
|
||
|
Title:
|
Chief
Executive Officer
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYER:
|
|||
|
ACCESS
AMERICA FUND, LP
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
BUYER:
|
|||
|
CHINAMERICA
FUND LP
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
BUYER:
|
|||
|
XXXX
INVESTMENT II LLC
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
23
|
BUYER:
|
|||
|
XXXXXX
CAPITAL INVESTMENTS, LLC
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
BUYER:
|
|||
|
CGM
as C/F XXXXXX X. XXXXXX XXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
BUYER:
|
|||
|
INVESTMENT
HUNTER, LLC
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
24
|
BUYER:
|
|||
|
MARED
INVESTMENTS
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
BUYER:
|
|||
|
HIGH
CAPITAL FUNDING, LLC
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
BUYER:
|
|||
|
XXXXXXX
LYNCH, PIERCE, XXXXXX &
XXXXX,
FBO XXXX X. XXXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
SCHEDULE
OF BUYERS
|
Buyer
|
Address and Facsimile
Number
|
Number of Common
Shares
|
Number of Warrant
Shares
|
Purchase Price
|
Legal Representative’s
Address and Facsimile
Number
|
|||||||||||
|
Access
America Fund, LP
|
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
645,161
|
322,581
|
$
|
1,000,000
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
Chinamerica
Fund LP
|
0000
Xx. Xxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000
Fax:
|
645,161
|
322,581
|
$
|
1,000,000
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
Xxxx
Investments II LLC
|
0000
Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
1,935,484
|
967,742
|
$
|
3,000,000
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
Xxxxxx
Capital Investments, LLC
|
000
X. Xxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, XX 00000
Fax:
|
350,000
|
175,000
|
$
|
542,500
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
CGM
as C/F Xxxxxx X. Xxxxxx XXX
|
000
X. Xxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, XX 00000
Fax:
|
150,000
|
75,000
|
$
|
232,500
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
Investment
Hunter, LLC
|
0000
Xxxxx Xxxxx, Xxxxxxxxx, XX 00000
Fax:
|
645,161
|
322,581
|
$
|
1,000,000
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
MARed
Investments
|
00000
Xxxx Xxxxxxxx, Xxxx Xxxx Xxxxx, XX 00000
Fax:
|
129,032
|
64,516
|
$
|
200,000
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
High
Capital Funding. LLC
|
000
Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
75,806
|
37,903
|
$ |
117,500
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx, FBO Xxxx X. Xxxxxxx
|
000
Xxxxxxxxxxxxx Xx., Xxxxx 0000, Xxxxxxx, XX 00000-0000
Fax:
|
12,903
|
6,452
|
$ |
20,000
|
Access
America Fund, LP
0000
Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000
Fax:
|
||||||||||
|
TOTAL
|
4,588,708
|
2,294,356
|
$
|
7,112,500
|
||||||||||||
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
American
Stock Transfer and Trust Co.
0000
00xx
Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
Xx Xxxxxxx Xxxxx
Ladies
and Gentlemen:
[We
are][I am] counsel to UNIVERSAL TRAVEL GROUP,
a
Nevada corporation (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of August [·],
2008
(the
“Securities Purchase
Agreement”),
entered into by and among the Company and the buyers named therein (such buyers
and their transferees, provided such transfer is in accordance with Section
9 of
the Registration Rights Agreement (defined below), are collectively referred
to
as the “Holders”)
pursuant to which the Company issued to the Holders its shares of the Company's
Common Stock, par value $0.001 per share (the “Common
Stock”)
and
warrants exercisable for shares of Common Stock (the “Warrants”).
Pursuant to the Securities Purchase Agreement, the Company also has entered
into
a Registration Rights Agreement with the Holders (the “Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the resale
of the Registrable Securities (as defined in the Registration Rights Agreement),
including the shares of Common Stock issuable upon exercise of the Warrants
under the Securities Act of 1933, as amended (the “1933
Act”).
In
connection with the Company's obligations under the Registration Rights
Agreement, on [·],
2008
the Company filed a Registration Statement on Form S-1 (File No.
333-[·])
(the
“Registration
Statement”)
with
the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names each of the Holders as a
selling stockholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC's
staff has advised [us][me] by telephone that the SEC has
entered an order declaring the Registration Statement effective under the 1933
Act at [ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and we
have no knowledge, after telephonic inquiry of a member of the SEC's staff,
that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.
This
letter shall serve as our standing instruction to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Holders
as
contemplated by the Company's Irrevocable Transfer Agent Instructions dated
[·],
2008.
|
Very
truly yours,
|
|
|
[ISSUER'S
COUNSEL]
|
|
|
By:_____________________
|
CC: [LIST
NAMES OF HOLDERS]
ANNEX
I
SELLING
STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those
previously issued to the Selling Stockholders and those issuable to the Selling
Stockholders upon exercise of the warrants. For additional information regarding
the issuances of common stock and the warrants, see “Private Placement of Common
Shares and Warrants” above. We are registering the shares of common stock in
order to permit the selling stockholders to offer the shares for resale from
time to time. Except for the ownership of the shares of common stock and the
warrants, the selling stockholders have not had any material relationship with
us within the past three years.
The
table
below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of common stock by each of the selling
stockholders. The second column lists the number of shares of common stock
beneficially owned by each selling shareholder, based on its ownership of the
shares of common stock and the warrants, as of [·],
2008,
assuming exercise of the warrants held by the selling stockholders on that
date,
without regard to any limitations on exercise.
The
third
column lists the shares of common stock being offered by this prospectus by
the
selling stockholders.
In
accordance with the terms of registration rights agreements with the holders
of
the shares of common stock and the warrants, this prospectus generally covers
the resale of at least the sum of (i) the number of shares of common stock
issued and (ii) the number of shares of common stock issued and issuable upon
exercise of the related warrants, determined as if the outstanding warrants
were
exercised, as applicable, in full, as of the trading day immediately preceding
the date this registration statement was initially filed with the SEC. The
fourth column assumes the sale of all of the shares offered by the selling
stockholders pursuant to this prospectus.
Under
the
terms of the warrants, a selling stockholder may not exercise the warrants,
to
the extent such exercise would cause such selling stockholder, together with
its
affiliates, to beneficially own a number of shares of common stock which would
exceed 9.99% of our then outstanding shares of common stock following such
exercise, excluding for purposes of such determination shares of common stock
issuable upon exercise of the warrants which have not been exercised. The number
of shares in the second column does not reflect this limitation. The selling
stockholders may sell all, some or none of their shares in this offering. See
“Plan of Distribution.”
|
Name of Selling Stockholder
|
Number of Shares of
Common Stock Owned
Prior to Offering
|
Maximum Number of Shares
of Common Stock to be Sold
Pursuant to this Prospectus
|
Number of Shares of
Common Stock Owned
After Offering
|
|||
(1)
[·]
[has][share] voting and investment power over these securities. [·]
disclaim[s] beneficial ownership over the securities held by [·].
The
selling stockholder acquired the securities offered for its own account in
the
ordinary course of business, and at the time it acquired the securities, it
had
no agreements, plans or understandings, directly or indirectly to distribute
the
securities.
PLAN
OF DISTRIBUTION
We
are
registering the shares of common stock previously issued and the shares of
common stock issuable upon exercise of the warrants to permit the resale of
these shares of common stock by the holders of the common stock and warrants
from time to time after the date of this prospectus. We will not receive any
of
the proceeds from the sale by the selling stockholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions
or
agent's commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions,
| · |
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
| · |
in
the over-the-counter market;
|
| · |
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
| · |
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
| · |
in
ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
|
| · |
in
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;
|
| · |
in
purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
|
| · |
on
an exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
in
privately negotiated transactions;
|
| · |
in
short sales;
|
| · |
in
sales pursuant to Rule 144;
|
| · |
broker-dealers
may agree with the selling securityholders to sell a specified number
of
such shares at a stipulated price per
share;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
If the
selling stockholders effect such transactions by selling shares of common
stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or
to
whom they may sell as principal (which discounts, concessions or commissions
as
to particular underwriters, broker-dealers or agents may be in excess of
those
customary in the types of transactions involved). In connection with sales
of
the shares of common stock or otherwise, the selling stockholders may enter
into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions
they
assume. The selling stockholders may also sell shares of common stock short
and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales.
The
selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.
The
selling stockholders may pledge or grant a security interest in some or all
of
the warrants or shares of common stock owned by them and, if they default in
the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer and donate the shares of common
stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of common stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of
any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under
the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which
this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We
will
pay all expenses of the registration of the shares of common stock pursuant
to
the registration rights agreement, estimated to be $[·]
in
total, including, without limitation, Securities and Exchange Commission filing
fees and expenses of compliance with state securities or “blue sky” laws;
provided, however, that a selling stockholder will pay all underwriting
discounts and selling commissions, if any. We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution. We may be indemnified
by
the selling stockholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to
us
by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreements, or we may be
entitled to contribution.
Once
sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.
