FORM OF REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of December __, 2007, by and among Wonder Auto
Technology, Inc., a Nevada corporation (the “Company”),
and
the several purchasers signatory hereto (each a “Purchaser”
and
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof between the Company and each Purchaser (the “Purchase
Agreement”).
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of
which
are hereby acknowledged, the Company and each of the Purchasers agree as
follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
“Advice”
shall
have the meaning set forth in Section 6(d).
“Affiliate”
means,
with respect to any person, any other person which directly or indirectly
controls, is controlled by, or is under common control with, such
person.
“Agreement”
shall
have the meaning set forth in the Preamble.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.0001 per share, and any securities
into which such common stock may hereinafter be reclassified.
“Company”
shall
have the meaning set forth in the Preamble.
“Effective
Date”
means
the date that the Registration Statement filed pursuant to Section 2(a) is
first
declared effective by the Commission.
“Effectiveness
Deadline”
means,
with respect to (A) the Initial Registration Statement or the New Registration
Statement, the 90th
calendar
day following the Closing Date (or, in the event of a “full review” by the
Commission, the 120th
calendar
day following the Closing Date) and (B) any additional Registration Statements
that may be required pursuant to Section 2(a), the 90th
calendar
day following the date on which the Company, pursuant to SEC Guidance, is
permitted to register for re-sale the securities set forth in such additional
Registration Statement; provided,
however,
that if
the Company is notified by the Commission that one or more of the above
Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Deadline as to such Registration
Statement shall be the fifth (5th)
Trading
Day following the date on which the Company is so notified if such date precedes
the dates otherwise required above; provided,
further,
that if
the Effectiveness Deadline falls on a Saturday, Sunday or other day that the
Commission is closed for business, the Effectiveness Deadline shall be extended
to the next Business Day on which the Commission is open for business.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(b).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Filing
Deadline”
means,
(A) with respect to the Initial Registration Statement required to be filed
pursuant to Section 2(a), the 30th
calendar
day following the Closing Date and (B) with respect to any additional
Registration Statements that may be required pursuant to Section 2(a), the
earliest practical date on which the Company is permitted by SEC Guidance to
file such additional Registration Statement related to the Registrable
Securities, provided,
however,
that if
the Filing Deadline falls on a Saturday, Sunday or other day that the Commission
is closed for business, the Filing Deadline shall be extended to the next
Business Day on which the Commission is open for business.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Initial
Registration Statement”
means
the initial Registration Statement filed pursuant to Section 2(a) of this
Agreement.
“Losses”
shall
have the meaning set forth in Section 5(a).
“New
Registration Statement”
shall
have the meaning set forth in Section 2(a).
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Principal
Market”
means
the Trading Market on which the Common Stock is primarily listed on and quoted
for trading, which, as of the Closing Date, shall be the NASDAQ Global
Market.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a
deposition).
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Purchase
Agreement”
shall
have the meaning set forth in the Recitals.
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“Purchaser”
or
“Purchasers”
shall
have the meaning set forth in the Preamble.
“Registrable
Securities”
means
all of (i) the Shares and (ii) any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing,
provided,
that
the Holder has completed and delivered to the Company a Selling Stockholder
Questionnaire; and provided,
further,
that
Shares shall cease to be Registrable Securities upon the earliest to occur
of
the following: (A) sale pursuant to a Registration Statement or Rule 144 under
the Securities Act (in which case, only such security sold shall cease to be
a
Registrable Security); or (B) becoming eligible for sale without volume
limitations by the Holder pursuant to Rule 144(k).
“Registration
Statement”
means
any one or more registration statements of the Company filed under the
Securities Act that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement (including without limitation
the
Initial Registration Statement, the New Registration Statement and any Remainder
Registration Statements), amendments and supplements to such Registration
Statements, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statements.
“Remainder
Registration Statement”
shall
have the meaning set forth in Section 2(a).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"SEC
Guidance"
means
(i) any publicly-available written or oral guidance, comments, requirements
or
requests of the Commission staff and (ii) the Securities Act.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Selling
Stockholder Questionnaire”
means
a
questionnaire in the form attached as Annex
B
hereto,
or such other form of questionnaire as may reasonably be adopted by the Company
from time to time.
“Shares”
means
the shares of Common Stock issued or issuable to the Purchasers pursuant to
the
Purchase Agreement.
“Trading
Day”
means
(i) a day on which the Common Stock is listed or quoted and traded on its
Principal Market (other than the OTC Bulletin Board), or (ii) if the Common
Stock is not listed on a Trading Market (other than the OTC Bulletin Board),
a
day on which the Common Stock is traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted
on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported in the “pink sheets” by Pink Sheets LLC (or
any similar organization or agency succeeding to its functions of reporting
prices); provided,
that in
the event that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then Trading Day shall mean a Business
Day.
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“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.
2. Registration.
(a) On
or
prior to the Filing Deadline, the Company shall prepare and file with the
Commission a “Shelf” Registration Statement covering the resale of all of the
Registrable Securities not already covered by an existing and effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415, or if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of Registrable
Securities as the Holders may reasonably specify (the “Initial
Registration Statement”).
The
Initial Registration Statement shall be on Form S-3 (except if the Company
is
ineligible to register for resale the Registrable Securities on Form S-3, in
which case such registration shall be on another appropriate form in accordance
with Section
2(e))
and
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement)
the
“Plan of Distribution” section attached hereto as Annex
A.
Notwithstanding the registration obligations set forth in this Section
2,
in the
event the Commission informs the Company that all of the Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale
as
a secondary offering on a single registration statement, the Company agrees
to
promptly (i) inform each of the holders thereof, (ii) use its best efforts
to
file amendments to the Initial Registration Statement as required by the
Commission and/or (iii) withdraw the Initial Registration Statement and file
a
new registration statement (a “New
Registration Statement”),
in
either case covering the maximum number of Registrable Securities permitted
to
be registered by the Commission, on Form S-3 or such other form available to
register for resale the Registrable Securities as a secondary offering;
provided,
however,
that
prior to filing such amendment or New Registration Statement, the Company shall
be obligated to use its reasonable best efforts to advocate with the Commission
for the registration of all of the Registrable Securities in accordance with
the
SEC Guidance, including without limitation, the Manual of Publicly Available
Telephone Interpretations D.29. In the event the Company amends the Initial
Registration Statement or files a New Registration Statement, as the case may
be, under clauses (ii) or (iii) above, the Company will use its reasonable
best
efforts to file with the Commission, as promptly as allowed by Commission or
SEC
Guidance provided to the Company or to registrants of securities in general,
one
or more registration statements on Form S-3 or such other form available to
register for resale those Registrable Securities that were not registered for
resale on the Initial Registration Statement, as amended, or the New
Registration Statement (the “Remainder
Registration Statements”).
4
(b) The
Company shall use its reasonable best efforts to cause each Registration
Statement to be declared effective by the Commission as soon as practicable
and,
with respect to the Initial Registration Statement or the New Registration
Statement, as applicable, no later than the Effectiveness Deadline (including
filing with the Commission a request for acceleration of effectiveness in
accordance with Rule 461 promulgated under the Securities Act within five (5)
Business Days after the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that such Registration Statement will
not be “reviewed,” or not be subject to further review and the effectiveness of
such Registration Statement may be accelerated), and shall use its reasonable
best efforts to keep such Registration Statement continuously effective under
the Securities Act until the earlier of (i) such time as all of the Registrable
Securities covered by such Registration Statement have been publicly sold by
the
Holders or (ii) the date that all Registrable Securities covered by such
Registration Statement may be sold by non-Affiliates without volume restrictions
pursuant to Rule 144(k) (the “Effectiveness
Period”).
The
Company shall request effectiveness of a Registration Statement as of 5:00
p.m.
New York City time on a Trading Day. The Company shall promptly notify the
Holders via facsimile or electronic mail of a “.pdf” format data file of the
effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which shall
be the date requested for effectiveness of a Registration Statement. The Company
shall, by 9:30 a.m. New York City Time on the second Trading Day after the
Effective Date, file a final Prospectus with the Commission, as required by
Rule
424(b). Notwithstanding any other provision of this Agreement and subject to
the
payment of liquidated damages in Section 2(c), if any SEC Guidance sets forth
a
limitation of the number of Registrable Securities permitted to be registered
on
a particular Registration Statement (and notwithstanding that the Company used
diligent efforts to advocate with the Commission for the registration of all
or
a greater number of Registrable Securities), the inclusion of the Shares in
such
Registration Statement shall take precedence over and shall not be cut back
until the following securities of the Company are cut back and removed from
such
Registration Statement (in the following order): (i) any securities of the
Company to be included in such Registration Statement pursuant to Section 6(b)
(by reference to Schedule 3.1(y) to the Purchase Agreement), and (ii) Shares.
Any required cutbacks of Shares shall be applied to the Purchasers pro-rata
in
accordance with the number of such Shares sought to be included in such
Registration Statement by reference to such Purchaser’s (and in the case of a
subsequent transfer the initial Purchaser’s) aggregate Subscription Amount
relative to all Subscription Amounts.
(c) If:
(i)
the Initial Registration Statement is not filed with the Commission on or prior
to the Filing Deadline, (ii) the Initial Registration Statement or the New
Registration Statement, as applicable, is not declared effective by the
Commission (or otherwise does not become effective) for any reason on or prior
to the Effectiveness Deadline or (iii) after its Effective Date, (A) such
Registration Statement ceases for any reason (including without limitation
by
reason of a stop order, or the Company’s failure to update the Registration
Statement), but excluding the inability of any Holder to sell the Registrable
Securities covered thereby due to market conditions, to remain continuously
effective as to all Registrable Securities for which it is required to be
effective or (B) the Holders are not permitted to utilize the Prospectus therein
to resell such Registrable Securities, in the case of (A) and (B), for an
aggregate , of more than 20 consecutive calendar days or more than an aggregate
of 40 calendar days during any 12-month period (which need not be consecutive)
other than as a result of a breach of this Agreement by a Holder or a Holder’s
failure to return a Selling Stockholder Questionnaire within the time period
provided by Section 2(d) hereof, (any such failure or breach in clauses (i)
through (iii) above being referred to as an “Event,” and, for purposes of
clauses (i) or (ii), the date on which such Event occurs, or for purposes of
clause (iii), the date on which such 20 consecutive or 40 day calendar period
(as applicable) is exceeded, being referred to as “Event Date”), then in
addition to any other rights the Holders may have hereunder or under applicable
law, on each such Event Date and on each monthly anniversary of each such Event
Date (if the applicable Event shall not have been cured by such date) until
the
applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as partial liquidated damages and not as a penalty (“Liquidated Damages”),
equal to 1.0% of the aggregate purchase price paid by such Holder pursuant
to
the Purchase Agreement for any Registrable Securities then held by such Holder.
The parties agree that (1) in no event shall the Company be liable in any 30-day
period for Liquidated Damages under this Agreement in excess of 1.0% of the
aggregate purchase price paid by the Holders pursuant to the Purchase Agreement
and (2) the maximum aggregate Liquidated Damages payable to a Holder under
this
Agreement shall be ten percent (10%) of the aggregate purchase price paid by
such Holder pursuant to the Purchase Agreement. If the Company fails to pay
any
partial Liquidated Damages pursuant to this Section in full within five (5)
Business Days after the date payable, the Company will pay interest thereon
at a
rate of 1.0% per month (or such lesser maximum amount that is permitted to
be
paid by applicable law) to the Holder, accruing daily from the date such partial
Liquidated Damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial Liquidated Damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to the
cure of an Event, except in the case of the first Event Date.
5
(d) Each
Holder agrees to furnish to the Company a completed Selling Stockholder
Questionnaire not more than five (5) Trading Days following the date of this
Agreement. Each Holder further agrees that it shall not be entitled to be named
as a selling security holder in the Registration Statement or use the Prospectus
for offers and resales of Registrable Securities at any time, unless such Holder
has returned to the Company a completed and signed Selling Stockholder
Questionnaire. If a Holder of Registrable Securities returns a Selling
Stockholder Questionnaire after the deadline specified in the previous sentence,
the Company shall use its best efforts to take such actions as are required
to
name such Holder as a selling security holder in the Registration Statement
or
any pre-effective or post-effective amendment thereto and to include (to the
extent not theretofore included) in the Registration Statement the Registrable
Securities identified in such late Selling Stockholder Questionnaire. Each
Holder acknowledges and agrees that the information in the Selling Stockholder
Questionnaire will be used by the Company in the preparation of the Registration
Statement and hereby consents to the inclusion of such information in the
Registration Statement.
(e) 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 another appropriate form
reasonably acceptable to the 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
Commission.
3. Registration
Procedures
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a) Not
less
than five Trading Days prior to the filing of a Registration Statement and
not
less than one Trading Day prior to the filing of any related Prospectus or
any
amendment or supplement thereto (except for Annual Reports on Form 10-K, and
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar
or successor reports), the
Company shall furnish or otherwise make available to the
Holder
copies of such Registration Statement, Prospectus or amendment or supplement
thereto, as proposed to be filed, which documents will be subject to the review
of such Holder (it being acknowledged and agreed that if a Holder does not
object to or comment on the aforementioned documents within such five Trading
Day or one Trading Day period, as the case may be, then the Holder shall be
deemed to have consented to and approved the use of such documents). The Company
shall not file
any
Registration Statement or amendment or supplement thereto in a form to which
a
Holder reasonably objects
in good
faith, provided that, the Company is notified of such objection in writing
within the five (5) Trading Day or one (1) Trading Day period described above,
as applicable.
6
(b) (i)
Prepare and file with the Commission such amendments (including post-effective
amendments) and supplements, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement continuously effective as to the applicable Registrable Securities
for
its Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and, as so supplemented or amended,
to
be filed pursuant to Rule 424; (iii) respond as promptly as reasonably
practicable to any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and, as promptly as reasonably
possible, provide the Holders true and complete copies of all correspondence
from and to the Commission relating to such Registration Statement that pertains
to the Holders as “Selling Stockholders” but not any comments that would result
in the disclosure to the Holders of material and non-public information
concerning the Company; and (iv) comply with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement until such time as all of such
Registrable Securities shall have been disposed of (subject to the terms of
this
Agreement) in accordance with the intended methods of disposition by the Holders
thereof set forth in such Registration Statement as so amended or in such
Prospectus as so supplemented; provided, however, that each Purchaser shall
be
responsible for the delivery of the Prospectus to the Persons to whom such
Purchaser sells any of the Shares (including in accordance with Rule 172 under
the Securities Act), and each Purchaser agrees to dispose of Registrable
Securities in compliance with the plan of distribution described in the
Registration Statement and otherwise in compliance with applicable federal
and
state securities laws. 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
Exchange 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 Commission on the same day on which the Exchange Act report
which created the requirement for the Company to amend or supplement such
Registration Statement was filed.
(c) Notify
the Holders (which notice shall, pursuant to clauses (iii) through (vi) hereof,
be accompanied by an instruction to suspend the use of the Prospectus until
the
requisite changes have been made) as promptly as reasonably practicable (and,
in
the case of (i)(A) below, not less than three Trading Days prior to such filing,
in the case of (iii) and (iv) below, not more than one Trading Day after such
issuance or receipt, in the case of (v) below, not less than one Trading Day
after a determination by the Company that the financial statements in any
Registration Statement have become ineligible for inclusion therein and, in
the
case of (vi) below, not more than one Trading Day after the occurrence or
existence of such development) and (if requested by any such Person) confirm
such notice in writing no later than one Trading Day following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment
to a
Registration Statement is proposed to be filed; (B) when the Commission notifies
the Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on any Registration Statement (in
which case the Company shall provide to the Holder true and complete copies
of
all comments that pertain to the Holders as a “Selling Stockholder” or to the
“Plan of Distribution” and all written responses thereto, but not information
that the Company believes would constitute material and non-public information);
and (C) with respect to each Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the
Commission or any other Federal or state governmental authority for amendments
or supplements to a Registration Statement or Prospectus or for additional
information that pertains to the Holders as “Selling Stockholders” or the “Plan
of Distribution”; (iii) of the issuance by the Commission or any other federal
or state governmental authority of any stop order suspending the effectiveness
of a Registration Statement covering any or all of the Registrable Securities
or
the initiation of any Proceedings for that purpose; (iv) of the receipt by
the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale
in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference untrue in any material respect or that requires any revisions to
such
Registration Statement, Prospectus or other documents so that, in the case
of
such Registration Statement or the Prospectus, as the case may be, it will
not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading; and
(vi)
the occurrence or existence of any pending development with respect to the
Company that the Company believes may be material and that, in the determination
of the Company, makes it not in the best interest of the Company to allow
continued availability of a Registration Statement or Prospectus, provided,
that any
and all of such information shall remain confidential to each Holder until
such
information otherwise becomes public, unless disclosure by a Holder is required
by law; provided,
further,
that
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.
7
(d) Use
commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at soon as practicable.
(e) If
requested by a Holder, furnish to such Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto and
all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided,
that
the Company shall have no obligation to provide any document pursuant to this
clause that is available on the Commission’s XXXXX system.
(f) Prior
to
any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
registration or qualification) of such Registrable Securities for the resale
by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file
a
general consent to service of process in any such jurisdiction.
(g) If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement
and under law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
such
Holders may reasonably request.
(h) Following
the occurrence of any event contemplated by Section
3(c)(iii)-(vi),
as
promptly as reasonably practicable, prepare a supplement or amendment, including
a post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, no Registration Statement nor any Prospectus
will
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, form of prospectus or supplement thereto, in light
of the circumstances under which they were made), not misleading.
(i) Comply
with all applicable rules and regulations of the Commission.
8
(j) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by
such
Holder and, if required by the Commission, the natural persons thereof that
have
voting and dispositive control over the Shares. During any periods that the
Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder fails
to
furnish such information within three Trading Days of the Company’s request, any
liquidated damages that are accruing at such time as to such Holder only shall
be tolled and any Event that may otherwise occur solely because of such delay
shall be suspended as to such Holder only, until such information is delivered
to the Company.
4. Registration
Expenses.
All
fees and expenses incident to the Company’s performance of or compliance with
its obligations under this Agreement (excluding any underwriting discounts
and
selling commissions and all legal fees and expenses of legal counsel for any
Holder) shall be borne by the Company whether or not any Registrable Securities
are sold pursuant to a Registration Statement. The fees and expenses referred
to
in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with any Trading Market on
which
the Common Stock is then listed for trading, and (B) with respect to compliance
with applicable state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Company in connection
with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested by the Holders), (ii) printing
expenses (including, without limitation, expenses of printing certificates
for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the Holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the
Company, (v) Securities Act liability insurance, if the Company so desires
such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any underwriting, broker or similar fees or commissions of
any
Holder or, except to the extent provided for in the Transaction Documents,
any
legal fees or other costs of the Holders.
9
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify,
defend and hold harmless each Holder, the officers, directors, agents, partners,
members, managers, stockholders, Affiliates and employees of each of them,
each
Person who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
partners, members, managers, stockholders, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from
and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and investigation and
reasonable attorneys' fees) and expenses (collectively, “Losses”),
as
incurred, that arise out of or are based upon (i) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission to state a material fact required to be stated therein
or
necessary to make the statements therein (in the case of any Prospectus or
form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, or (ii) any violation or alleged violation
by
the Company of the Securities Act, Exchange Act or any state securities law
or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (A) such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Holder furnished
in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and approved
by such Holder expressly for use in a Registration Statement, such Prospectus
or
such form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex
A
hereto
for this purpose), (B) in the case of an occurrence of an event of the type
specified in Section
3(c)(iii)-(vi),
related
to the use by a Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated and defined
in Section
6(e)
below,
but only if and to the extent that following the receipt of the Advice the
misstatement or omission giving rise to such Loss would have been corrected
or
(C) any such Losses arise out of the Purchaser’s (or any other indemnified
Person’s) failure to send or give a copy of the Prospectus or supplement (as
then amended or supplemented) to the Persons asserting an untrue statement
or
alleged untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such Person if such statement or omission was corrected in such
Prospectus or supplement. The Company shall notify the Holders promptly of
the
institution, threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Company is
aware. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of an Indemnified Party and shall survive
the
transfer of the Registrable Securities by the Holders.
(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, arising out of or are based upon
(x)
such Holder’s failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue or alleged untrue statement of a material
fact
contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus, or any form of prospectus
or
supplement thereto, in light of the circumstances under which they were made)
not misleading (i) to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein
or
(ii) to the extent that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was reviewed
and
approved by such Holder expressly for use in a Registration Statement (it being
understood that the Holder has approved Annex
A
hereto
for this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (iii) in the case of an occurrence of an
event of the type specified in Section
3(c)(iii)-(vi),
to the
extent related to the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section
6(e).
In no
event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the net proceeds received by such Holder upon the
sale
of the Registrable Securities giving rise to such indemnification
obligation.
10
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all reasonable fees and expenses incurred
in connection with defense thereof; provided,
that
the failure of any Indemnified Party to give such notice shall not relieve
the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have prejudiced the Indemnifying
Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest exists if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party); provided,
that
the Indemnifying Party shall not be liable for the fees and expenses of more
than one separate firm of attorneys at any time for all Indemnified Parties.
The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. No Indemnifying Party shall, without the
prior
written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from
all
liability on claims that are the subject matter of such Proceeding.
Subject
to the terms of this Agreement, all fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within twenty Trading Days of written notice thereof to the
Indemnifying Party; provided,
that
the Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is finally judicially determined to not be entitled to
indemnification hereunder). 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 Party under this Section 5, except to the extent that the
Indemnifying Party is prejudiced in its ability to defend such
action.
(d) Contribution.
If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses,
then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in this Agreement, any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
11
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which
the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties and are not in dimunition or limitation of the indemnification
provisions under the Purchase Agreement.
6. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
(b) No
Piggyback on Registrations.
Except
and to the extent specified in Schedule 3.1(y) to the Purchase Agreement,
neither the Company nor any of its security holders (other than the Holders
in
such capacity pursuant hereto) may include securities of the Company in a
Registration Statement other than the Registrable Securities and the Company
shall not prior to the Effective Date enter into any agreement providing any
such right to any of its security holders. The Company shall not, from the
date
hereof until the date that is 60 days after the Effective Date of the
Registration Statement, prepare and file with the Commission a registration
statement relating to an offering for its own account under the Securities
Act
of any of its equity securities other than a registration statement on Form
S-8
or, in connection with an acquisition, on Form S-4. For the avoidance of doubt,
the Company shall not be prohibited from preparing and filing with the
Commission a registration statement relating to an offering of Common Stock
by
existing stockholders of the Company under the Securities Act pursuant to the
terms of registration rights held by such stockholder or from filing amendments
to registration statements filed prior to the date of this
Agreement.
(c) Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement and shall sell
the Registrable Securities only in accordance with a method of distribution
described in the Registration Statement.
12
(d) Discontinued
Disposition.
By its
acquisition of Registrable Securities, each Holder agrees that, upon receipt
of
a notice from the Company of the occurrence of any event of the kind described
in Section
3(c)(iii)-(vi),
such
Holder will forthwith discontinue disposition of such Registrable Securities
under a Registration Statement until it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company may provide appropriate
stop orders to enforce the provisions of this paragraph.
(e) No
Inconsistent Agreements.
Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof,
nor
shall the company or any of its Subsidiaries, on or after the date hereof,
enter
into any agreement with respect to its securities, that would have the effect
of
impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof.
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, or waived unless the same shall be in
writing and signed by the Company and Holders holding a majority of the then
outstanding Registrable Securities. Notwithstanding the foregoing, a waiver
or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of all
of
the Registrable Securities to which such waiver or consent relates; provided,
however,
that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(g) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be delivered as set forth in the Purchase Agreement.
(h) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors
and
assigns any rights, remedies, obligations, or liabilities under or by reason
of
this Agreement, except as expressly provided in this Agreement. The Company
may
not assign its rights (except by merger) or obligations hereunder without the
prior written consent of all the Holders of the then outstanding Registrable
Securities. Each Holder may assign its respective rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.
(i) Execution
and Counterparts.
This
Agreement may be executed in two or more counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party,
it
being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature
is
executed) with the same force and effect as if such facsimile or “.pdf”
signature were the original thereof.
(j) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of
the
Purchase Agreement.
(k) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any other remedies
provided by law.
13
(l) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their good faith reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(m) Headings.
The
headings in this Agreement are for convenience only and shall not limit or
otherwise affect the meaning hereof.
(n) Independent
Nature of Purchasers’ Obligations and Rights.
The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser hereunder, and no Purchaser shall
be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The decision of each Purchaser to purchase the Shares
pursuant to the Transaction Documents has been made independently of any other
Purchaser. Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership,
an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect
to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Shares or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined
as
an additional party in any Proceeding for such purpose. The Company acknowledges
that each of the Purchasers has been provided with the same Registration Rights
Agreement for the purpose of closing a transaction with multiple Purchasers
and
not because it was required or requested to do so by any Purchaser.
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IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
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IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
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Annex
A
PLAN
OF DISTRIBUTION
We
are
registering the shares of Common Stock issued to the selling stockholders to
permit the resale of these shares of Common Stock by the holders of the shares
of Common Stock 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 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 or in transactions
otherwise than on these exchanges or systems or in the over-the-counter market
and 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. The selling stockholders may use any
one
or more of the following methods when selling shares:
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
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| · |
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;
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| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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privately
negotiated
transactions;
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settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
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broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
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through
the writing or settlement of options or other hedging transactions,
whether such options are listed on an options exchange or
otherwise;
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a
combination of any such methods of sale;
and
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any
other method permitted pursuant to applicable
law.
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The
selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, as
permitted by that rule, or Section 4(1) under the Securities Act, if available,
rather than under this prospectus, provided that they meet the criteria and
conform to the requirements of those provisions.
Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to
participate in sales. 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. Such commissions will be
in
amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction will not be in excess of a
customary brokerage commission in compliance with FINRA Rule 2440; and in the
case of a principal transaction a markup or markdown in compliance with FINRA
IM-2440.
In
connection with sales of the shares of Common Stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the 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 if such short sale
shall take place after the date that this Registration Statement is declared
effective by the Commission, the selling stockholders may 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, to the extent permitted by applicable law.
The selling stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
Notwithstanding the foregoing, the selling stockholders have been advised that
they may not use shares registered on this registration statement to cover
short
sales of our common stock made prior to the date the registration statement,
of
which this prospectus forms a part, has been declared effective by the
SEC.
The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the shares of Common Stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of Common Stock from time to time 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 or agents participating in the
distribution of the shares of Common Stock may be deemed to be “underwriters”
within the meaning of Section 2(11) of the Securities Act in connection with
such sales. In such event, any commissions paid, or any discounts or concessions
allowed to, any such broker-dealer or agent and any profit on the resale of
the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Selling Stockholders who are "underwriters"
within the meaning of Section 2(11) of the Securities Act will be subject to
the
prospectus delivery requirements of the Securities Act and may be subject to
certain statutory liabilities of, including but not limited to, Sections 11,
12
and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange
Act of 1934, as amended, or the Exchange Act.
Each
selling stockholder has informed the Company that it is not a registered
broker-dealer and does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. Upon
the
Company being notified in writing by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of common
stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such selling stockholder and
of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such the shares of Common Stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference
in
this prospectus, and (vi) other facts material to the transaction. In no event
shall any broker-dealer receive fees, commissions and markups, which, in the
aggregate, would exceed eight percent (8%).
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 shelf registration statement, of
which this prospectus forms a part.
Each
selling stockholder 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
stockholder 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, including, without limitation, Securities
and
Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided,
however,
that
each selling stockholder will pay all underwriting discounts and selling
commissions, if any and any related legal expenses incurred by it. We will
indemnify the selling stockholders against certain 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 stockholders specifically for use
in
this prospectus, in accordance with the related registration rights agreements,
or we may be entitled to contribution.
Annex
B
SELLING
STOCKHOLDER NOTICE AND QUESTIONNAIRE
The
undersigned holder of shares of the common stock, par value $0.0001 per share
of
Wonder Auto Technology, Inc. (the “Company”)
issued
pursuant to a certain Securities Purchase Agreement by and among the Company
and
the Purchasers named therein, dated as of December __, 2007 (the “Agreement”),
understands that the Company intends to file with the Securities and Exchange
Commission a registration statement on Form S-3 (except if the Company is
ineligible to register for resale the Registrable Securities on Form S-3, in
which case such registration shall be on another appropriate form, the
“Resale
Registration Statement”)
for
the registration and the resale under Rule 415 of the Securities Act of 1933,
as
amended (the “Securities
Act”),
of
the Registrable Securities in accordance with the terms of the Agreement. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.
In
order
to sell or otherwise dispose of any Registrable Securities pursuant to the
Resale Registration Statement, a holder of Registrable Securities generally
will
be required to be named as a selling stockholder in the related prospectus
or a
supplement thereto (as so supplemented, the “Prospectus”),
deliver the Prospectus to purchasers of Registrable Securities (including
pursuant to Rule 172 under the Securities Act) and be bound by the provisions
of
the Agreement (including certain indemnification provisions, as described
below). Holders must complete and deliver this Notice and Questionnaire in
order
to be named as selling stockholders in the Prospectus. Holders
of Registrable Securities who do not complete, execute and return this Notice
and Questionnaire within five (5)Trading Days following the date of the
Agreement (1) will not be named as selling stockholders in the Resale
Registration Statement or the Prospectus and (2) may not use the Prospectus
for
resales of Registrable Securities.
Certain
legal consequences arise from being named as a selling stockholder in the Resale
Registration Statement and the Prospectus. Holders of Registrable Securities
are
advised to consult their own securities law counsel regarding the consequences
of being named or not named as a selling stockholder in the Resale Registration
Statement and the Prospectus.
NOTICE
The
undersigned holder (the “Selling
Stockholder”)
of
Registrable Securities hereby gives notice to the Company of its intention
to
sell or otherwise dispose of Registrable Securities owned by it and listed
below
in Item (3), unless otherwise specified in Item (3), pursuant to the Resale
Registration Statement. The undersigned, by signing and returning this Notice
and Questionnaire, understands and agrees that it will be bound by the terms
and
conditions of this Notice and Questionnaire and the Agreement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:
QUESTIONNAIRE
| 1. |
Name.
|
|
(a)
|
Full
Legal Name of Selling Stockholder:
|
|
|
|
|
(b)
|
Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are
held:
|
|
(c)
|
Full
Legal Name of Natural Control Person (which means a natural person
who
directly or indirectly alone or with others has power to vote or
dispose
of the securities covered by the
questionnaire):
|
2.
Address for Notices to Selling Stockholder:
|
Telephone:
|
|
|
Fax:
|
|
Contact Person:
|
|
E-mail address of Contact Person:
|
3.
Beneficial Ownership of Registrable Securities Issuable Pursuant to the
Agreement:
|
(a)
|
Type
and Number of Registrable Securities beneficially owned and issued
pursuant to the Agreement:
|
|
(b)
|
Number
of shares of Common Stock to be registered pursuant to this Notice
for
resale:
|
4.
Broker-Dealer Status:
|
(a)
|
Are
you a broker-dealer?
|
Yes o No o
| (b) |
If
“yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment
banking services to the Company?
|
Yes o No o
|
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
|
(c)
|
Are
you an Affiliate of a
broker-dealer?
|
Yes o No o
|
Note:
|
If
yes, provide a narrative explanation
below:
|
|
(d)
|
If
you are an Affiliate of a broker-dealer, do you certify that you
bought
the Registrable Securities in the ordinary course of business, and
at the
time of the purchase of the Registrable Securities to be resold,
you had
no agreements or understandings, directly or indirectly, with any
person
to distribute the Registrable
Securities?
|
Yes o No o
|
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
5.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Stockholder.
Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
Type
and
amount of other securities beneficially owned:
6.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its Affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or Affiliates)
during the past three years.
State
any
exceptions here:
7.
Plan of Distribution:
The
undersigned has reviewed the form of Plan of Distribution attached as Annex
A to
the Registration Rights Agreement, and hereby confirms that, except as set
forth
below, the information contained therein regarding the undersigned and its
plan
of distribution is correct and complete.
State
any
exceptions here:
***********
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the effective date of any applicable Resale Registration Statement.
All notices hereunder and pursuant to the Agreement shall be made in writing,
by
hand delivery, confirmed or facsimile transmission, first-class mail or air
courier guaranteeing overnight delivery at the address set forth below. In
the
absence of any such notification, the Company shall be entitled to continue
to
rely on the accuracy of the information in this Notice and
Questionnaire.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus.
The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.
By
signing below, the undersigned acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the provisions of the Exchange
Act and the rules and regulations thereunder, particularly Regulation M in
connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection
with
Registration Statements filed pursuant to the Registration Rights Agreement
and
any amendments or supplements thereto filed with the Commission pursuant to
the
Securities Act.
The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:
“An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling stockholders wanted
to do a short sale of common stock “against the box” and cover the short sale
with registered shares after the effective date. The issuer was advised that
the
short sale could not be made before the registration statement become effective,
because the shares underlying the short sale are deemed to be sold at the time
such sale is made. There would, therefore, be a violation of Section 5 if the
shares were effectively sold prior to the effective date.”
By
returning this Questionnaire, the undersigned will be deemed to be aware of
the
foregoing interpretation.
I
confirm
that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are
correct.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
| Dated: |
Beneficial Owner:
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
Xxxxx
X.
Xxxxxxxxx
Xxxxx
Xxxxxxx & Co.
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
Email:
xxxxx.x.xxxxxxxxx@xxx.xxx
