EXHIBIT 4.5
FORM OF REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), is made and entered
into as of the 27th day of March, 2000, by and among PROVIDENTIAL HOLDINGS,
INC., a Nevada corporation (the "Company"), and the Persons listed on the
Purchaser Signature Pages hereto (each of whom is individually referred to as a
"Purchaser" and all of whom collectively are referred to as the "Purchasers").
BACKGROUND
In connection with the consummation of the transactions contemplated by
that Series 1 Bridge Note Purchase and Security Agreement (the "Purchase
Agreement") of even date herewith by and among the Company and the Purchasers,
the Company has agreed, upon the terms and subject to the conditions of the
Purchase Agreement, to issue and sell to the Purchasers from time to time up to
$4,000,000 in maximum principal amount of Series 1 Convertible Subordinated
Secured Bridge Financing Notes (the "Bridge Notes") together with Common Stock
Purchase Warrants (the "Purchaser Warrants"). Attached to the Bridge Notes are
Repricing Warrants (the "Repricing Warrants" and together with the Purchaser
Warrants collectively, the "Warrants"). Collectively, the Bridge Notes, and the
Purchaser Warrants, and the Repricing Warrants are hereinafter collectively
referred to as the "Purchased Securities"). The Bridge Notes are convertible
into, and the Purchaser Warrants and the Repricing Warrants are exercisable for,
shares of the Company's common stock, .001 par value per share (the "Common
Stock"). The Common Stock issuable upon conversion of the Bridge Notes is
hereinafter referred to as the "Conversion Shares," and the Common Stock
issuable upon exercise or conversion of the Purchaser Warrants is hereinafter
referred to as the "Purchaser Warrant Shares," and the Common Stock issuable
upon exercise of the Repricing Warrants is hereinafter called the "Repricing
Warrant Shares." To induce Purchasers to execute and deliver the Purchase
Agreement, the Company has agreed to file a Registration Statement covering the
Conversion Shares, the Purchaser Warrant Shares, and the Repricing Warrant
Shares 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.
AGREEMENT
For and 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 the Purchasers
hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
capitalized terms are used with the meanings there after ascribed:
(a) "Investor" means any Purchaser and any transferee or assignee
thereof to whom any Purchaser assigns its rights under this Agreement and who
agrees to become bound by the provisions
of this Agreement in accordance with Section 9.
(b) "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof, or a governmental agency.
(c) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement or Registration Statements by the United States
Securities and Exchange Commission (the "SEC").
(d) "Registrable Securities" means the Conversion Shares, the
Purchaser Warrant Shares, the Repricing Warrant Shares, and any shares of
capital stock issued or issuable with respect to the Purchased Securities,
Conversion Shares, the Purchaser Warrant Shares, or the Repricing Warrant Shares
as a result of any stock split, stock dividend, recapitalization, exchange, or
similar event or otherwise.
(e) "Registration Statement" means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Registrable Securities.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Purchase Agreement.
SECTION 2. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company shall prepare and, as
soon as practicable but in no event later than sixty (60) days after the Initial
Closing Date (the "Filing Deadline"), file with the SEC a Registration Statement
on Form S-3 (or, if such form is unavailable for such a registration, on such
other form as is available for such a registration, subject to the consent of
each Purchaser and the provisions of Section (e), which consent will not be
unreasonably withheld), covering the resale of all of the Registrable
Securities. The Registration Statement shall state that, in accordance with Rule
416 promulgated under the 1933 Act, such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Bridge Notes and exercise of the Purchaser Warrants to
prevent dilution resulting from stock splits, stock dividends, or similar
transactions]. Such Registration Statement shall initially register for resale
at least 150% of the number of Registrable Securities as of the date immediately
preceding the date the Registration Statement initially is filed with the SEC,
subject to adjustment as provided in Section (b) hereof. The Company shall use
its best efforts to have the Registration Statement declared effective by the
SEC within one hundred eighty (180) days after the Initial Closing Date (the
"Registration Deadline"). The Company shall permit the registration statement to
become effective within five (5) business days after receipt (whether orally or
in writing) of a "no review" notice from the SEC.
(b) UNDERWRITTEN OFFERING. If any offering pursuant to a
Registration Statement pursuant to Section (a) involves an underwritten
offering, the Purchasers shall have the right to select one legal counsel and an
investment banker or bankers and manager or managers to administer their
interest in the offering, which investment banker or bankers or manager or
managers shall be
reasonably satisfactory to the Company.
(c) PIGGY-BACK REGISTRATIONS. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the Company
proposes to file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its
securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans) the Company shall promptly send to each
Investor who is entitled to registration rights under this Section (c) written
notice of the Company's intention to file a Registration Statement and of such
Investor's rights under this Section (c) and, if within twenty (20) days after
receipt of such notice, such Investor shall so request in writing, the Company
shall include in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, subject to the priorities
set forth in Section (d) below. No right to registration of Registrable
Securities under this Section (c) shall be construed to limit any registration
required under Section (a) hereof. The obligations of the Company under this
Section (c) may be waived by Investors holding a majority of the Registrable
Securities. If an offering in connection with which an Investor is entitled to
registration under this Section (c) is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.
(d) PRIORITY IN PIGGY-BACK REGISTRATION RIGHTS IN CONNECTION WITH
REGISTRATIONS FOR COMPANY ACCOUNT. If the registration referred to in Section
(c) is to be an underwritten public offering for the account of the Company and
the managing underwriter(s) advise the Company in writing, that in their
reasonable good faith opinion, marketing or other factors dictate that a
limitation on the number of shares of Common Stock which may be included in the
Registration Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration: (i)
first, all securities the Company proposes to sell for its own account, (ii)
second, up to the full number of securities proposed to be registered for the
account of the holders of securities entitled to inclusion of their securities
in the Registration Statement by reason of demand registration rights, and (iii)
third, the securities requested to be registered by the Investors and other
holders of securities entitled to participate in the registration, drawn from
them pro rata based on the number each has requested to be included in such
registration.
(e) ALLOCATION OF REGISTRABLE SECURITIES. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Person'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 shall be allocated to the remaining
Investors, pro rata based on the number of Registrable Securities then held by
such Investors.
(f) LEGAL COUNSEL. Subject to Section 5 hereof, the Investors
holding a majority of the
Registrable Securities shall have the right to select one legal counsel to
review and oversee any offering pursuant to this Section 2 ("Legal Counsel"),
which shall be Xxxxxxx Xxxxxxxx Xxxxx Xxxxxxxxxxx & Kuh, LLP or such other
counsel as thereafter designated by the holders of a majority of Registrable
Securities. The Company shall reasonably cooperate with Legal Counsel in
performing the Company's obligations under this Agreement
(g) ELIGIBILITY FOR FORM S-3. The Company represents, warrants
covenants that it has filed and shall file all reports required to be filed by
the Company with the SEC in a timely manner so as to obtain and maintain such
eligibility for the use of Form S-3. In the event that Form S-3 is not available
for registration of the Registrable Securities hereunder, then (i) the Company
shall register the Registrable Securities on another appropriate form and (ii)
the Company shall 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.
(h) EFFECT OF FAILURE TO OBTAIN AND MAINTAIN EFFECTIVENESS OF
REGISTRATION STATEMENT. If (i) the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) hereof is not declared effective by the SEC or before the Registration
Deadline, (ii) after the Registration Statement has been declared effective by
the SEC, the Registration Statement is withdrawn or suspended or if sales
otherwise cannot be made pursuant to the Registration Statement for a period of
at least fifteen (15) consecutive trading days or thirty (30) days in any twelve
(12) month period, or (iii) the Common Stock is not listed or included for
quotation on the OTC Bulletin Board (the "OTCBB"), the Nasdaq National Market
("NNM"), the Nasdaq SmallCap Market ("NSM"), the New York Stock Exchange (the
"NYSE") or the American Stock Exchange (the "AMEX") for a period of at least ten
(10) consecutive days, then the Company will make payments to the Investors in
such amounts and at such times as shall be determined pursuant to this Section
2(i) as partial relief for the damages to the Investors by reason of any such
delay in or reduction of their ability to sell the Registrable Securities (which
remedy shall not be exclusive of any other remedies available at law or in
equity). The Company shall pay to each holder of the Bridge Notes or Registrable
Securities an amount equal to the aggregate Purchase Price (as defined below) of
the Bride Notes ("Aggregate Share Price") multiplied by the Payment Percentage
(as defined below) times (x) the number of months (prorated for partial months)
following the Registration Deadline and prior to the date the Registration
Statement is declared effective by the SEC, provided, however, that there shall
be excluded from such period any delays which are solely attributable to changes
either required by the Investors in the Registration Statement with respect to
information relating to the Investors, including, without limitation, changes to
the plan of distribution, or to the failure of the Investors to conduct their
review of the Registration Statement pursuant to Section 4(a) below in a
reasonably prompt manner or changes reasonably requested by the Company as a
result of changes in such information; (y) the number of months (prorated for
partial months) after the end of the 15-day or 30-day period referenced in
clause (ii) above that sales cannot be made pursuant to the Registration
Statement after the Registration Statement has been declared effective
(including, without limitation, when sales cannot be made by reason of the
Company's failure to properly supplement or amend the prospectus included
therein in accordance with the terms of this Agreement or when such prospectus
otherwise contains a material misstatement or omission); or (z) the number of
months (prorated for partial months) after the end of the 30-day period
referenced in clause (iii) above that the Common Stock is not listed or included
for quotation on the OTCBB, NNM, NSM, NYSE or AMEX or that trading thereon is
halted after the Registration Statement has been declared effective. The Payment
Percentage shall be two percent
(2%) per each thirty (30) day period (or $20,000 per each 30-day for each
$1,000,000 of Purchase Price). Such amounts shall be paid in cash or, at the
Investor's option, may be pay in shares Common Stock valued at the Average
Market Price (as such term is defined in the Repricing Warrant). Any such shares
of Common Stock shall be Registrable Securities. If any Investor desires to
receive the amounts due hereunder in shares of Common Stock, it shall so notify
the Company within two (2) business days of the date on which such amounts are
first payable in cash and such amounts shall be issued beginning on the last day
upon which the cash amount would otherwise be due in accordance with the
following sentence. Payments of cash pursuant hereto shall be made within five
(5) days after the end of each period that gives rise to such obligation,
provided that, if any such period extends for more than thirty (30) days,
interim payments shall be made for each such thirty (30) day period. The term
"Purchase Price" means the purchase price paid by the Investors for the Bridge
Notes.
SECTION 3. RELATED OBLIGATIONS. Whenever an Investor has requested that
any Registrable Securities be registered pursuant to Section (c) hereof, or at
such time as the Company is obligated to file a Registration Statement with the
SEC pursuant to Section (a) hereof, the Company will use its best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
(a) The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on or prior
to the Filing Deadline), for the registration of Registrable Securities pursuant
to Section (a) and use its best efforts to cause such Registration Statement
relating to Registrable Securities to become effective as soon as possible after
such filing and in any event by the Registration Deadline, and keep the
Registration Statement effective pursuant to Rule 415 at all times until the
later of (i) the date as of which the Investors may sell all of the Registrable
Securities without restriction pursuant to Rule 144(k) promulgated under the
1933 Act (or successor thereto) or (ii) the date on which (A) the Investors
shall have sold all the Registrable Securities and (B) none of the Purchased
Securities is outstanding (the "Registration Period"), which 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 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 the
Registration Statement and the prospectus used in connection with the
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep the 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 the
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 the Registration
Statement. In the event the number of shares available under a Registration
Statement filed pursuant to this Agreement is insufficient to cover all of the
Registrable Securities, the Company shall amend the Registration Statement, or
file a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover all of the Registrable Securities, in each
case, as soon as practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to rely). The
Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed "insufficient to cover all of the Registrable Securities" if at any
time the number of Registrable Securities issued or issuable upon conversion of
the Purchased Securities is greater than the quotient determined by dividing (i)
the number of shares of Common Stock available for resale under such
Registration Statement by (ii) 1.25. For purposes of the calculation set forth
in the foregoing sentence, any restrictions on the convertibility of the Bridge
Notes or exercise of the Purchaser Warrants and the Repricing Warrants shall be
disregarded and such calculation shall assume that the Bridge Notes are then
convertible into shares of Common Stock at the then prevailing Conversion Price
(as defined in the Bridge Notes) and that the Purchaser Warrants and the
Repricing Warrants are exercised at the then current exercise price.
(c) The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and Legal Counsel, without
charge, (i) promptly after the same is prepared and filed with the SEC at least
one copy of the Registration Statement and any amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference, and all exhibits, the prospectus included in such Registration
Statement (including each preliminary prospectus) and all correspondence by or
on behalf of the Company to the SEC or the staff of the SEC and all
correspondence from the SEC or the staff of the SEC to the Company or its
representatives, related to such Registration Statement, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably
request), and (iii) such other documents, including copies of any preliminary or
final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor.
(d) The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as any Investor reasonably requests, (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 (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section (d) hereof, (B) subject
itself to general taxation in any such jurisdiction, or (C) file a general
consent to service of process in any such jurisdiction. The Company shall
promptly notify each Investor and Legal Counsel 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.
(e) In the event Investors who hold a majority of the Registrable
Securities being offered in the offering select underwriters for the offering,
the Company shall enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering.
(f) As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor and Legal in writing of the happening of
any 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 light of the circumstances under which they were
made, not misleading, and promptly prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to each Investor (or such other
number of copies as such Investor may reasonably request), with a copy to Legal
Counsel. The Company shall also promptly notify each Investor and Legal Counsel
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 each Investor and Legal Counsel 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.
(g) The Company shall use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment, and to notify each Investor who holds Registrable Securities
being sold (and, in the event of an underwritten offering, the managing
underwriters) and Legal Counsel of the issuance of such order and the resolution
thereof, or its receipt of actual notice of the initiation, or threatened
initiation of any proceeding for such purpose.
(h) The Company shall permit Legal Counsel to review and comment
upon the Registration Statement and all amendments and supplements thereto at
least seven (7) days prior to their filing with the SEC, and not file any
document in a form to which such counsel reasonably objects. The Company shall
not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval of
such counsel, which consent shall not be unreasonably withheld.
(i) At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the date that
Registrable Securities are delivered to an underwriter, if any, for sale in
connection with the Registration Statement (i) if required by an underwriter, 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 underwriters, 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 underwriters and the Investors.
(j) The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to a
Registration Statement, (iii) Legal Counsel, (iv) one firm of accountants or
other agents retained by the Investors, and (v) one firm of attorneys retained
by all such underwriters (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 to enable each Inspector to
exercise its due diligence responsibility, and cause the Company's officers,
directors, and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence provided, however, that
each Inspector shall 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 or any other agreement of which the
Inspector has knowledge. 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.
(k) 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 of which the Company has knowledge. 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.
(l) As soon as possible after the date that the Company meets the
eligibility criteria for listing or inclusion of its securities thereon, the
Company shall use its best efforts either to (i) apply for listing of its common
stock on a national securities exchange and cause all the Registrable Securities
covered by a Registration Statement to be listed thereon, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) to apply for securities to be designated and quoted on the Nasdaq National
Market or SmallCap Market and to cause of all the Registrable Securities covered
by the Registration Statement, to be quoted thereof. If, despite using its best
efforts, the Company is unsuccessful in satisfying the preceding clause (i) or
(ii), the Company shall use its best efforts to continue to maintain the
inclusion for quotation on the OTCBB and to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities. The Company shall
pay all fees and expenses in connection with satisfying its obligation under
this Section (l).
(m) The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, any managing
underwriter or underwriters, to 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 managing underwriter or underwriters, if any, or, if there is no
managing underwriter or underwriters, the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters, if any,
or the Investors may request. Not later than the date on which any Registration
Statement registering the resale of Registrable Securities is declared
effective, the Company shall deliver to its transfer agent instructions
substantially in the form attached as Exhibit F to the Purchase Agreement,
accompanied by any reasonably required opinion of counsel, that permit sales of
unlegended securities in a timely fashion that complies with then mandated
securities settlement procedures for regular way market transactions.
(n) The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.
(o) The Company shall provide a transfer agent and registrar of
all such Registrable Securities not later than the effective date of such
Registration Statement.
(p) If requested by the managing underwriters or an Investor, the
Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters and the
Investors agree should 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 sold to such underwriters,
the purchase price being paid therefor by such underwriters, and with respect to
any other terms of the underwritten (or best efforts underwritten) offering of
the Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and supplement or make amendments to any Registration
Statement if requested by a shareholder or any underwriter of such Registrable
Securities.
(q) The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable 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.
(r) The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
SECTION 4. OBLIGATIONS OF THE INVESTORS.
(a) At least seven (7) 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 the 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 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 the 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 the Registration Statement.
(c) In the event Investors holding a majority of the Registrable
Securities being registered determine to engage the services of an underwriter,
each Investor agrees to enter into and perform such Investor's obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations (only with
respect to violations which occur in reliance upon and in conformity with
information furnished in writing to the Company by such Investor expressly for
use in the Registration Statement for such underwritten public offering), with
the managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor notifies the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
(d) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section (g) or
the first sentence of (f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section (g) or the
first sentence of Section (f) and, if so directed by the Company, such Investor
shall deliver to the Company (at the expense of the Company) or destroy all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
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 Certificate of Designations 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.
(e) No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors entitled hereunder to approve such arrangements, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions.
SECTION 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 printing fees, accounting fees, and fees and disbursements of
counsel for the Company and fees and disbursements of Legal Counsel, shall be
borne by the Company.
SECTION 6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless, and defend each Investor who holds such
Registrable Securities, the directors, officers, partners, employees, agents,
and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and any underwriter (as defined in the 0000 Xxx) for
the Investors, and the directors and officers of, and each Person, if any, who
controls, any such underwriter 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, 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, in light of the circumstances under which the statements therein were
made, 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 light of the circumstances under which the statements therein were
made, not misleading, or, (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 (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section (d) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling person,
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 (a): (i) shall not apply to a Claim 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 any Indemnified Person or underwriter 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
(c); (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section (c),and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior
to the use giving rise to a violation and such Indemnified Person,
notwithstanding such advice, used (iii) shall not be available to the extent
such Claim is based on a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company, if such prospectus was
timely made available by the Company pursuant to Section (c), and (iv) 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. 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 (a), the Company, each of its directors, each
of its officers who signs the Registration Statement, each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, 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 (d), such Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section (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; provided further
however, that the Investor shall be liable under this Section (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 (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.
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers, and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
(d) 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 to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, 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. The Company shall
pay reasonable fees for only one separate legal counsel for the Investors, and
such
legal counsel shall be selected by the Investors holding 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 written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the 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. 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.
(e) 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.
(f) 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.
SECTION 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 contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of fraudulent misrepresentation, and
(iii) 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.
SECTION 8. REPORTS UNDER THE 1934 ACT. As long as any Purchased
Securities or Registrable Securities remain outstanding, the Company, 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 (it being understood that
nothing herein shall limit the Company's obligations under Section 7.3 of the
Purchase Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company 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.
SECTION 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 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 Purchase Agreement.
SECTION 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 Investors who
hold two-thirds of the Registrable Securities. 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 any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.
SECTION 11. MISCELLANEOUS.
(a) A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices, or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice, or election received from the registered owner of such Registrable
Securities.
(b) Any notice, consent, waiver, or other communication required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered (a) upon receipt, when delivered
personally, (b) upon receipt, when sent by facsimile, provided, that a copy is
mailed by U.S. certified mail, return receipt requested, (c) three (3) days
after
being sent by U.S. certified mail, return receipt requested, or (d) one (1) 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:
If to the Company: PROVIDENTIAL HOLDINGS, INC.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention:
Telephone:
Facsimile:
With a copy to: [Name of Firm]
____________________________
____________________________
Attention:
Telephone:
Facsimile:
If to any Purchaser, to its address and facsimile number on the signature page
of such Purchaser hereto, with copies to such Purchaser's counsel as set forth
on the signature page of such Purchaser hereto. Each party shall provide five
(5) days prior written notice to the other party of any change in address or
facsimile number.
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) The corporate laws of the State of Nevada shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other 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 non-exclusive
jurisdiction of the state and federal courts sitting 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.
(e) This Agreement supersedes all other prior oral or written
agreements between the Purchasers and the Company with respect to the matters
discussed herein, and this Agreement and the Purchase and the instruments
referenced herein ands therein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor any
Purchaser makes any representation, warranty, covenant, or undertaking with
respect to such matters.
(f) This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and permitted assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder.
This Agreement may be assigned by the Investors in accordance with the
provisions of Section 9.
(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 two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.
(i) 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.
(j) 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.
(k) 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 the 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.
COMPANY SIGNATURE PAGE
TO
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY:
PROVIDENTIAL HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxx
------------------
Xxxxx Xxxxxx
President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
TO
REGISTRATION RIGHTS AGREEMENT
PURCHASER:
By:______________________________________
Name:____________________________________
Title:___________________________________
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PURCHASER NAME ("PURCHASER")
ADDRESS AND
FACSIMILE NUMBER
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SECURITIES PURCHASED $____________
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PURCHASE PRICE __________________________________________
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PURCHASER'S LEGAL COUNSEL __________________________________________
ADDRESS AND
FACSIMILE NUMBER __________________________________________
__________________________________________
__________________________________________
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