REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION
RIGHTS AGREEMENT
(“Agreement”), dated as of June 18, 2007, is made by and between SIONIX
CORPORATION, a Nevada corporation (the “Company”), and [investors
to be identified by Southridge Investment Group, LLC]
(the
“Subscriber”).
RECITALS
WHEREAS,
upon the terms and subject to the conditions of the Securities Purchase
Agreement (the “Purchase
Agreement”),
as of
even date, between the Subscriber and the Company, the Company has agreed
to
issue to the Subscriber up to _____________ shares (________) of the
common
stock of the Company, $0.001 par value per share (the “Common
Stock”),
pursuant to conversion(s) of an 8% subordinated convertible debenture
(“Debenture”),
issued on even date (the “Conversion
Shares”),
and
________ shares of Common Stock pursuant to exercise of the Warrant
(“Warrant
Shares”),
issued on even date (together the Conversion Shares and the Warrant Shares
hereinafter the “Subscribed
Shares”),
and
WHEREAS,
to induce the Subscriber to execute and deliver the Purchase Agreement,
the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or
any
similar successor statute (collectively, the “Securities
Act”),
and
applicable state securities laws with respect to the Subscribed
Shares.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants
contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Company and the Subscriber hereby
agree as
follows:
1. Definitions.
(a) As
used
in this Agreement, the following terms shall have the following
meaning:
(i) “Business
Day”
means
any
day
that is not a Saturday, Sunday, or legal holiday in the State of New
York when
commercial banking institutions are required to be closed.
(ii) “Potential
Material Event”
means
any of the following: (a) possession by the Company of material information
not
ripe for disclosure in a Registration Statement, which shall be evidenced
by
determinations in good faith by the Board of Directors of the Company
that
disclosure of such information in the Registration Statement would be
detrimental to the business and affairs of the Company, or (b) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely
affected by
disclosure in a Registration Statement at such time, which determination
shall
be accompanied by a good faith determination by the Board of Directors
of the
Company that the Registration Statement would be materially misleading
absent
the inclusion of such information.
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(iii) “Register”,
“registered”
and
“registration”
refer
to a registration effected by preparing and filing a Registration Statement
or
Statements in compliance with the Securities Act and pursuant to Rule
415 under
the Securities Act or any successor rule providing for offering securities
on a
delayed or continuous basis (“Rule
415”),
and
the declaration or ordering of effectiveness of such Registration Statement
by
the United States Securities and Exchange Commission (the “SEC”).
| (iv) |
“Registrable
Securities”
means the Subscribed Shares.
|
| (v) |
“Registration
Statement”
means a registration statement of the Company under the Securities
Act.
|
| (vi) |
“Subscription
Date”
means the date of this Agreement.
|
| (vii) |
“Subscriber”
has the meaning set forth in the preamble to this
Agreement.
|
(b) Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement.
2. Registration.
(a) Mandatory
Registration. The
Company shall prepare and file with the SEC, no later than forty-five
(45) days
after the Subscription Date (“Filing
Date”),
a
Registration Statement on Form SB-2 (“Registration
Statement”),
or
such other appropriate Registration Statement, pursuant to Rule 457(o)
of the
Securities Act, no less than the amount of Subscribed Shares, and to
use its
best efforts to cause the Registration Statement relating to the Registrable
Securities to become effective ninety (90) days after the Subscription
Date
(“Effective
Date”).
Such
Registration Statement shall state that, in accordance with the Securities
Act,
it also covers such indeterminate number of additional shares of Common
Stock as
may become issuable to prevent dilution resulting from stock splits,
or stock
dividends.
(b) Damages.
If the
Registration Statement covering the Registrable Securities required to
be filed
by the Company pursuant to Section 2(a) hereof is not filed by the Filing
Date
or declared effective by the Effective Date, then upon failure of either
event
the Subscriber shall be entitled to liquidated damages, payable in cash,
in the
sum of one and one-half percent (1.5%) of the Purchase Price (as defined
in the
Purchase Agreement) of the Debenture (a) for each thirty (30) day period
(or
pro-rata portion thereof) after the Filing Date that transpires until
the date
that the Company files the Registration Statement, and (b) for each thirty
(30)
day period (or pro-rata portion thereof) after the Effective Date that
transpires until such date as the Registration Statement is declared
effective;
provided,
however,
that
the aggregate liquidated damages payable in accordance with this Section
shall
not exceed 15% of the Purchase Price.
The
Company acknowledges that its failure to have the Registration Statement
filed
by the Filing Date or declared effective by the Effective Date (for any
reason
other than the requirement by the SEC of modifications to the structure
of the
transactions contemplated hereby that are unacceptable to the Company
or the
Subscriber) shall cause the Subscriber to suffer damages in an amount
that shall
be difficult to ascertain. Accordingly, the parties agree that it is
appropriate
to include in this Agreement a provision for liquidated damages. The
parties
acknowledge and agree that the liquidated damages provision set forth
in this
section represents the parties’ good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated
damages
shall not relieve the Company from its obligations to register the Common
Stock
and deliver the Common Stock pursuant to the terms of this Agreement,
the
Purchase Agreement and the Subscribed Shares.
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3. Obligation
of the Company. In
connection with the registration of the Registrable Securities, the Company
shall do each of the following:
(a) Prepare
promptly, and file with the SEC within forty-five (45) days of the Subscription
Date, a Registration Statement with respect to not less than the number
of
Registrable Securities provided in Section 2(a) above, and, thereafter,
use all
diligent efforts to cause the Registration Statement relating to the
Registrable
Securities to become effective ninety (90) days after the Subscription
Date, and
keep the Registration Statement effective at all times until the earliest
of (i)
the date that is one year after the completion of the last Closing Date
under
the Purchase Agreement, (ii) the date when the Subscriber may sell all
Registrable Securities under Rule 144 without volume limitations, or
(iii) the
date the Subscriber no longer owns any of the Registrable Securities
(collectively, 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 the light of the circumstances
under which they were made, not misleading;
(b) 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 as may be necessary to keep the Registration
Statement effective at all times during the Registration Period, and,
during the
Registration Period, and to comply with the provisions of the Securities
Act
with respect to the disposition of all Registrable Securities of the
Company
covered by the Registration Statement until the expiration of the Registration
Period;
(c) Permit
a
single firm of counsel designated by Subscriber to review the Registration
Statement and all amendments and supplements thereto a reasonable period
of time
(but not less than three (3) Business Days) prior to their filing with
the SEC,
and not file any document in a form to which such counsel reasonably
objects;
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(d)
Notify
Subscriber and Subscriber’s legal counsel identified to the Company
(“Subscriber’s
Counsel”)
(and,
in the case of (i)(A) below, not less than one (1) Business Day prior
to such
filing) and (if requested by any such person) confirm such notice in
writing no
later than one (1) Business Day following the day (i): (A) when a prospectus
or
any prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) whenever the SEC notifies the
Company
whether there will be a “review” of such Registration Statement; (C) whenever
the Company receives (or a representative of the Company receives on
its behalf)
any oral or written comments from the SEC respect of a Registration Statement
(copies or, in the case of oral comments, written or oral summaries of
such
comments shall be promptly furnished by the Company to Subscriber’s Counsel);
and (D) with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by
the SEC or
any other Federal or state governmental authority for amendments or supplements
to the Registration Statement or the prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement covering any or all of the Registrable
Securities
or the initiation of any proceedings for that purpose; (iv) if at any
time any
of the representations or warranties of the Company contained in any
agreement
(including the Purchase Agreement) contemplated hereby ceases to be true
and
correct in all material respects; (v) 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; and (vi) of the occurrence of any event that to the knowledge
of the
Company makes any statement made in the Registration Statement or the
prospectus
or any document incorporated or deemed to be incorporated therein by
reference
untrue in any material respect or that requires any revisions to the
Registration Statement, the prospectus or other documents so that, in
the case
of the 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 light of the circumstances under which they were made, not misleading.
In
addition, the Company shall furnish Subscriber’s Counsel with copies of all
intended written responses to the comments contemplated in clause (C)
of this
Section not later than one (1) Business Day in advance of the filing
of such
responses with the SEC so that Subscriber shall have the opportunity
to comment
thereon.
(e) Furnish
to Subscriber, (i) promptly after the same is prepared and publicly distributed,
filed with the SEC, or received by the Company, one (1) copy of the Registration
Statement, each preliminary prospectus and the prospectus, and each amendment
or
supplement thereto, and (ii) such number of copies of a prospectus, including
a
preliminary prospectus, and all amendments and supplements thereto and
such
other documents, as the Subscriber may reasonably request in order to
facilitate
the disposition of the Registrable Securities owned by the
Subscriber;
(f) Use
all
diligent efforts to (i) register and/or qualify the Registrable Securities
covered by the Registration Statement under such other securities or
blue sky
laws of such jurisdictions as the Subscriber may reasonably request and
in which
significant volumes of shares of Common Stock are traded, (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 at all times during the Registration
Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualification 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 3(f), (B) subject
itself
to general taxation in any such jurisdiction, (C) file a general consent
to
service of process in any such jurisdiction, (D) provide any undertakings
that
cause more than nominal expense or burden to the Company or (E) make
any change
in its charter or by-laws or any then existing contracts, which in each
case the
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders;
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(g) As
promptly as practicable after becoming aware of such event, notify the
Subscriber of the happening of any event of which the Company has knowledge,
as
a result of which the prospectus included in the Registration Statement,
as then
in effect, includes any untrue statement of a material fact or omits
to state a
material fact required to be stated therein or necessary to make the
statements
therein, in the light of the circumstances under which they were made,
not
misleading (“Registration
Default”),
and
uses all diligent efforts to promptly prepare a supplement or amendment
to the
Registration Statement or other appropriate filing with the SEC to correct
such
untrue statement or omission, and any other necessary steps to cure the
Registration Default, and deliver a number of copies of such supplement
or
amendment to the Subscriber as the Subscriber may reasonably request.
Failure to
cure the Registration Default within ten (10) Business Days shall result
in the
Company including liquidated damages of 2% of the cost of all Common
Stock then
held by the Subscriber for each 15 day period or portion thereof, beginning
on
the date of suspension.
(h) As
promptly as practicable after becoming aware of such event, notify the
Subscriber (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any notice of effectiveness
or any
stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;
(i) Notwithstanding
the foregoing, if at any time or from time to time after the date of
effectiveness of the Registration Statement, the Company notifies Subscriber
in
writing of the existence of a Potential Material Event (“Blackout
Notice”),
Subscriber shall not offer or sell any Registrable Securities, or engage
in any
other transaction involving or relating to the Registrable Securities,
from the
time of the giving of notice with respect to a Potential Material Event
until
Subscriber receives written notice from the Company that such Potential
Material
Event either has been disclosed to the public or no longer constitutes
a
Potential Material Event; provided,
however,
that (a)
the Company may not so suspend the right to such holders of Registrable
Securities for more than two ten (10) day periods in the aggregate during
any
12-month period (“Blackout
Period”)
with
at least a ten (10) Business Day interval between such periods, during
the
periods the Registration Statement is required to be in effect, or (b)
that if
such Blackout Period exceeds the permitted ten (10) day periods, the
Company
shall pay damages of 2%
of the
cost of all Common Stock then held by the Subscriber for each fifteen
(15) day
period or portion thereof, beginning on the date of the suspension.
(j) Use
its
commercially reasonable efforts to secure and maintain National Association
of
Securities Dealers, Inc. (“NASD”) authorization and quotation for such
Registrable Securities on the over-the-counter bulletin board and, without
limiting the generality of the foregoing, to arrange for at least two
market
makers to register with the NASD as such with respect to such Registrable
Securities, and ultimately to cause all the Registrable Securities covered
by
the Registration Statement to be listed on a national securities exchange
(including the NASDAQ Capital Market) and on each additional national
securities
exchange on which securities of the same class or series issued by the
Company
are then listed, if any, if the listing of such Registrable Securities
is then
permitted under the rules of such exchange; provided, however,
that
the Subscriber acknowledges that the Company does not currently meet
the
requirements for listing on a national securities exchange and that nothing
in
this section shall be construed to require the Company to pursue such
qualification until such time as the Company satisfies such requirements
for a
period of not less than forty-five (45) days;
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(k) Provide
a
transfer agent for the Registrable Securities not later than the Subscription
Date of the Registration Statement;
(l) Cooperate
with the Subscriber to facilitate the timely preparation and delivery
of
certificates for the Registrable Securities to be offered pursuant to
the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be,
as the
Subscriber may reasonably request and registration in such names as the
Subscriber may request; and, within five (5) Business Days after a Registration
Statement which includes Registrable Securities is ordered effective
by the SEC,
the Company shall deliver, and shall cause legal counsel selected by
the Company
to deliver, to the transfer agent for the Registrable Securities (with
copies to
the Subscriber) an appropriate instruction and opinion of such counsel,
if so
required by the Company’s transfer agent; and
(m) Take
all
other reasonable actions necessary to expedite and facilitate distribution
to
the Subscriber of the Registrable Securities pursuant to the Registration
Statement.
4. Obligations
of the Subscriber.
In
connection with the registration of the Registrable Securities, the Subscriber
shall have the following obligations;
(a) 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 the Subscriber that the Subscriber shall timely 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 timely execute such documents in connection
with such registration as the Company may reasonably request.
(b) The
Subscriber by such Subscriber’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; and
(c) The
Subscriber agrees that, upon receipt of any notice from the Company of
the
happening of any event of the kind described in Section 3(g), 3(h) or
3(i)
above, the Subscriber will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until the Subscriber receives the copies of the supplemented
or
amended prospectus contemplated by Section 3(g), 3(h) or 3(i) and, if
so
directed by the Company, the Subscriber shall deliver to the Company
(at the
expense of the Company) or destroy (and deliver to the Company a certificate
of
destruction) all copies in the Subscriber’s possession, of the prospectus
covering such Registrable Securities current at the time of receipt of
such
notice.
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5. Expenses
of Registration. (a)
All
reasonable expenses incurred in connection with Registrations, filings
or
qualifications pursuant to Section 3, including, without limitation,
all
Registration, listing, and qualifications fees, printers and accounting
fees,
the fees and disbursements of counsel for the Company shall be borne
by the
Company. A fee for a single counsel for Subscriber for the initial Registration
Statement and for each additional Registration Statement covering the
Registrable Securities shall be borne by the Company.
(b) Except
as
otherwise provided for in Schedule
5(b)
attached
hereto, the Company nor any of its subsidiaries has, as of the date hereof,
and
the Company shall not on or after the date of this Agreement, enter into
any
agreement with respect to its securities that is inconsistent with the
rights
granted to Subscriber in this Agreement or otherwise conflicts with the
provisions hereof. Except as otherwise provided for in Schedule
5(b),
the
Company has not previously entered into any agreement granting any registration
rights with respect to any of its securities to any person. Except as
otherwise
provided for in this Section 5, and without limiting the generality of
the
foregoing, without the written consent of Subscriber, the Company shall
not
grant to any person the right to request the Company to Register any
securities
of the Company under the Securities Act unless the rights so granted
are subject
in all respects to the prior rights in full of Subscriber set forth herein,
and
are not otherwise in conflict or inconsistent with the provisions of
this
Agreement and the other Transaction Documents.
6. Indemnification. After
Registrable Securities are included in a Registration Statement under
this
Agreement:
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(a) To
the
extent permitted by law, the Company will indemnify and hold harmless,
each
Subscriber, the directors, if any, of such Subscriber, the officers,
if any, of
such Subscriber, each person, if any, who controls the Subscriber within
the
meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended
(the “Exchange Act”) (each, an “Indemnified
Person”),
against any losses, claims, damages, liabilities or expenses (joint or
several)
incurred (collectively, “Claims”)
to
which any of them may become subject under the Securities Act, the Exchange
Act
or otherwise, 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 contained
in
the Registration Statement or any post-effective amendment thereof or
the
omission or alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein not misleading,
(ii)
any untrue statement or alleged untrue statement of a material fact contained
in
any preliminary prospectus if used prior to the Subscription Date of
such
Registration Statement, or contained in the final prospectus (as amended
or
supplemented, if the Company files any amendment thereof or supplement
thereto
with the SEC) or the omission or alleged omission to state therein any
material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading
or
(iii) any violation or alleged violation by the Company of the Securities
Act,
the Exchange Act, any state securities law or any rule or regulation
under the
Securities Act, the Exchange Act or any state securities law (the matters
in the
foregoing clauses (i) through (iii) being collectively referred to as
“Violations”).
The
Company shall reimburse the Subscriber, promptly as such expenses are
incurred
and are due and payable, for any reasonable legal fees or other reasonable
expenses incurred by them in connection with investigating or defending
any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) shall not (i)
apply to
any Claims 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
or on behalf of any Indemnified Person expressly for use in connection
with the
preparation of the Registration Statement or any such amendment thereof
or
supplement thereto, if such prospectus was timely made available by the
Company
pursuant to Section 3(b) hereof; (ii) with respect to any preliminary
prospectus, 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
3(b) hereof; (iii) be available to the extent such Claim is based on
a failure
of the Subscriber to deliver or cause to be delivered the prospectus
made
available by the Company; or (iv) 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. The Subscriber
will
indemnify the Company, its officers, directors and agents (including
legal
counsel) against any claims 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 or on behalf of such Subscriber, expressly for use
in
connection with the preparation of the Registration Statement, subject
to such
limitations and conditions set forth in the previous sentence. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or
on behalf of the Indemnified Person or Indemnified Party.
(b) Promptly
after receipt by an Indemnified Person under this Section 6 of notice
of the
commencement of any action (including any governmental action), such
Indemnified
Person 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, as the case may be; provided,
however,
that an
Indemnified Person shall have the right to retain its own counsel with
the
reasonable 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 and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person and any other party represented by such
counsel
in such proceeding. In such event, the Company shall pay for only one
separate
legal counsel for the Subscriber selected by the Subscriber. 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 under this Section 6, except to the
extent
that the indemnifying party is prejudiced in its ability to defend such
action.
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 such expense, loss, damage or liability is incurred and is
due and
payable.
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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
(a) 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; (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act)
shall be entitled to contribution from any seller of Registrable Securities
who
was not guilty of such fraudulent misrepresentation; and (c) 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.
8. Reports
under Exchange Act.
With a
view to making available to the Subscriber the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the
SEC that
may at any time permit the Subscriber to sell securities of the Company
to the
public without registration (“Rule
144”),
the
Company agrees to use its reasonable best efforts 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 Exchange Act;
(c) furnish
to the Subscriber so long as the Subscriber 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 Securities
Act and the
Exchange 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
solely if
unavailable by XXXXX, and (iii) such other information as may be reasonably
requested to permit the Subscribers to sell such securities pursuant
to Rule 144
without registration; and
(d)
at
the
request of any Subscriber of Registrable Securities, give its Transfer
Agent
irrevocable instructions (supported by an opinion of Company counsel,
if
required or requested by the Transfer Agent) to the effect that, upon
the
Transfer Agent’s receipt from such Subscriber of:
(i)
a
certificate (a “Rule
144 Certificate”)
certifying (A) that such Subscriber has held the shares of Registrable
Securities which the Subscriber proposes to sell (the “Securities
Being Sold”)
for a
period of not less than (1) year and (B) as to such other matters as
may be
appropriate in accordance with Rule 144 under the Securities Act, and
(ii)
an
opinion of counsel acceptable to the Company (for which purposes it is
agreed
that the initial Subscriber’s Counsel shall be deemed acceptable if such opinion
is not given by Company Counsel) that, based on the Rule 144 Certificate,
Securities Being Sold may be sold pursuant to the provisions of Rule
144, even
in the absence of an effective Registration Statement.
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The
Transfer Agent is to effect the transfer of the Securities Being Sold
and issue
to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability
of such
shares on the Transfer Agent’s books and records (except to the extent any such
legend or restriction results from facts other than the identity of the
Subscriber, as the seller or transferor thereof, or the status, including
any
relevant legends or restrictions, of the shares of the Securities Being
Sold
while held by the Subscriber). If the Transfer Agent requires any additional
documentation at the time of the transfer, the Company shall deliver
or cause to
be delivered all such reasonable additional documentation as may be necessary
to
effectuate the issuance of an unlegended certificate.
9. Miscellaneous.
(a) Registered
Owners.
A person
or entity is deemed to be a holder of Registrable Securities whenever
such
person or entity owns 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) Rights
Cumulative; Waivers.
The
rights of each of the parties under this Agreement are cumulative. The
rights of
each of the parties hereunder shall not be capable of being waived or
varied
other than by an express waiver or variation in writing. Any failure
to exercise
or any delay in exercising any of such rights shall not operate as a
waiver or
variation of that or any other such right. Any defective or partial exercise
of
any of such rights shall not preclude any other or further exercise of
that or
any other such right. No act or course of conduct or negotiation on the
part of
any party shall in any way preclude such party from exercising any such
right or
constitute a suspension or any variation of any such right.
(c) Benefit;
Successors Bound.
This
Agreement and the terms, covenants, conditions, provisions, obligations,
undertakings, rights, and benefits hereof, shall be binding upon, and
shall
inure to the benefit of, the undersigned parties and their heirs, executors,
administrators, representatives, successors, and permitted assigns.
(d) Entire
Agreement.
This
Agreement contains the entire agreement between the parties with respect
to the
subject matter hereof. There are no promises, agreements, conditions,
undertakings, understandings, warranties, covenants or representations,
oral or
written, express or implied, between them with respect to this Agreement
or the
matters described in this Agreement, except as set forth in this Agreement
and
in the other documentation relating to the transactions contemplated
by this
Agreement. Any such negotiations, promises, or understandings shall not
be used
to interpret or constitute this Agreement.
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(e) Assignment. The
rights to have the Company register Registrable Securities pursuant to
this
Agreement may be assigned by the Subscribers to any transferee, only
if: (a) the
assignment relates to not less than __________dollars ($________) of
Registrable
Securities and the Transferee is an Accredited Subscriber under Regulation
D not
in competition with the Company; (b) the Company receives a legal opinion
in
form and substance satisfactory to the Company that the proposed transfer
complies with federal and state securities laws and does not adversely
effect
the validity of the transactions executed (or to be executed) under this
Agreement and the Purchase Agreement under federal and state securities
laws;
(c) the assignment requires that the Transferee be bound by all of the
provisions contained in this Agreement, and Subscriber, the Company and
the
transferee or assignee (the “Transferee”)
enter
into a written agreement, which shall be enforceable by the Company against
the
Transferee and by the Transferee against the Company, to assign such
rights; and
(d) immediately following such transfer or assignment the further disposition
of
such securities by the transferee or assignee is restricted under the
Securities
Act and applicable state securities laws. Prior to the assignment the
company
shall have the right to perform its own due diligence regarding the assignee
and
have the right to approve the assignment, provided that such approval
shall not
be unreasonably withheld. In the event of any delay in filing or effectiveness
of the Registration Statement as a result of such assignment, the Company
shall
not be liable for any damages arising from such delay, or the payments
set forth
in Section 2(b) hereof.
(f) Amendment.
Any
provision 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 Subscriber.
Any
amendment or waiver effected in accordance with this Section 9(f) shall
be
binding upon the Company and any subsequent Transferees.
(g) Severability.
Each
part of this Agreement is intended to be severable. In the event that
any
provision of this Agreement is found by any court or other authority
of
competent jurisdiction to be illegal or unenforceable, such provision
shall be
severed or modified to the extent necessary to render it enforceable
and as so
severed or modified, this Agreement shall continue in full force and
effect.
(h) Notices.
Notices
required or permitted to be given hereunder shall be in writing and shall
be
deemed to be sufficiently given when personally delivered (by hand, by
courier,
by telephone line facsimile transmission, receipt confirmed, by
electronic mail either in the text of an email message or attached in
a commonly
readable format and the sender has received no generated notice that
the email
message has not been successfully delivered,
or other
means) or sent by certified mail, return receipt requested, properly
addressed
and with proper postage pre-paid (i) if to the Company, at its executive
office
and (ii) if to the Subscriber, at the address set forth under its name
in the
Purchase Agreement, with a copy to its designated attorney, or at such
other
address as each such party furnishes by notice given in accordance with
this
Section 9(h), and shall be effective, when personally delivered, upon
receipt
and, when so sent by certified mail, five (5) Business Days after deposit
with
the United States Postal Service.
(i) Governing
Law.
This
Agreement shall be governed by the interpreted in accordance with the
laws of
the State of New York without reference to its conflicts of laws rules
or
principles. Each of the parties consents to the exclusive jurisdiction
of the
federal courts of the State of New York in connection with any dispute
arising
under this Agreement and hereby waives, to the maximum extent permitted
by law,
any objection, including any objection based on forum
non coveniens,
to the
bringing of any such proceeding in such jurisdictions. Each
of
the parties hereby waives a trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other
in
respect of any matter arising out of or in connection with this
Agreement.
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(j) Consents.
The
person signing this Agreement on behalf of each party hereby represents
and
warrants that he has the necessary power, consent and authority to execute
and
deliver this Agreement on behalf of that party.
(k) Further
Assurances.
In
addition to the instruments and documents to be made, executed and delivered
pursuant to this Agreement, the parties hereto agree to make, execute
and
deliver or cause to be made, executed and delivered, to the requesting
party
such other instruments and to take such other actions as the requesting
party
may reasonably require to carry out the terms of this Agreement and the
transactions contemplated hereby.
(l) Section
Headings.
The
Section headings in this Agreement are for reference purposes only and
shall not
affect in any way the meaning or interpretation of this Agreement.
(m) Construction.
Unless
the context otherwise requires, when used herein, the singular shall
be deemed
to include the plural, the plural shall be deemed to include each of
the
singular, and pronouns of one or no gender shall be deemed to include
the
equivalent pronoun of the other or no gender.
(n) Execution
in Counterparts.
This
Agreement may be executed in two or more counterparts, each of which
shall be
deemed an original but all of which shall constitute one and the same
agreement.
This Agreement, once executed by a party, may be delivered to the other
party
hereto by facsimile transmission or electronic mail transmission of a
copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
A facsimile or electronic mail transmission of this signed Agreement
shall be
legal and binding on all parties hereto.
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IN
WITNESS WHEREOF,
the
parties have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above
written.
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