REGISTRATION RIGHTS AGREEMENT
Exhibit
99.2
This Registration Rights Agreement (the
“Agreement”) is made and
entered into as of April , 2009 by and among Atlas Mining Company, an
Idaho corporation (the “Company”), and the holders of
10% PIK-Election Convertible Notes due 2018 (the “Notes,” which term shall
include any PIK Notes) set forth on Exhibit A hereto (each an “Investor” and collectively the
“Investors”).
RECITALS
A. The
Notes are convertible into common stock (the “Common Stock”) of the Company
upon certain conditions as set forth in the Notes.
B. The
Company and the Investors have agreed that the Investors will be granted certain
registration and other rights with respect to the Common Stock issued upon
conversion of the Notes all as more fully set forth herein.
NOW, THEREFORE, in consideration of the
foregoing recitals and the mutual promises hereinafter set forth, the parties
hereto agree as follows:
AGREEMENTS
1. INFORMATION
1.1 Rule 144
Reporting. In order to provide the benefits of certain rules
and regulations of the Commission, which may at any time permit the sale of the
Registrable Securities (as defined below) to the public without registration,
the Company agrees, following the conversion of the Notes, to use all reasonable
efforts to:
(a) Make
and keep public information available, as those terms are understood and defined
in Rule 144 under the Securities Act (as defined below), at all times after the
date of this Agreement;
(b) File
with the Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the 1934 Act (as defined below);
and
(c) So
long as any Investor owns all or any portion of the Common Stock or
any Registrable Securities, furnish to such holder forthwith upon request a
written statement by the Company as to its compliance with the reporting
requirements of said Rule 144, and of the Securities Act and the 1934 Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as the Investor may reasonably
request in availing itself of any rule or regulation of the Commission allowing
the Investor to sell any such securities without registration.
2. REGISTRATION
RIGHTS
2.1 Definitions. For
purposes of this Section 2:
(a) Registration. The
terms “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement.
(b) Registrable
Securities. The term “Registrable Securities”
means: (i) all the shares of Common Stock of the Company issued
or issuable upon the conversion of the Notes; and (ii) all shares of Common
Stock of the Company issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of, all such shares of Common Stock
described in clause (i) of this subsection (b); excluding in all cases, however,
any Registrable Securities sold by a person pursuant to Rule 144
promulgated under the Securities Act or pursuant to a registration
statement.
(c) Registrable Securities Then
Outstanding. The number of shares of “Registrable Securities
then Outstanding” shall mean the number of shares of Common Stock which are
Registrable Securities and are then issued and outstanding.
(d) SEC. The term “SEC”
or “Commission” means the U.S. Securities and Exchange Commission.
(e) Securities Act. The
term “Securities Act” means the Securities Act of 1933, as amended.
(f) 0000 Xxx. The term
“1934 Act” means the Securities Exchange Act of 1934, as amended.
2.2 Registration.
(a) Registration upon Amendment to the
Articles of Incorporation.. Within ten days after the date on
which the articles of incorporation are amended so that there are sufficient
shares of Common Stock so that all outstanding Notes of the Series 10%
PIK-Election Convertible Notes due 2018 may be
converted, the Company will notify each person who is a registered holder of the
Shares (“Holder”). If a
Holder desires to include in a registration statement under the
Securities Act all or any part of the Registrable Securities then held, the
Holder must, within ten (10) days after receipt of the above-described
notice from the Company, so notify the Company in writing, and in the notice
must inform the Company of the number of Registrable Securities the Holder
wishes to include in such registration statement. Holders who elect
to participate in an offering are referred to collectively as “Selling
Shareholders.” The Company will file a registration statement
with the Commission under the Securities Act of all Registrable Securities which
the Selling Shareholders request to be registered and included in the
registration, subject only to the limitations of this
Section 2.2.
(b) Deferral. Notwithstanding
the foregoing, if the Company furnishes to the Selling Shareholders a
certificate signed by the President or Chief Executive Officer of the Company
stating that, in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for the registration statement to be filed at that time, and it is therefore
essential to defer the filing of a registration statement pursuant to this
Section 2.2, then the Company will have the right to defer the filing for a
period of not more than one hundred twenty (120) days after receipt of the
request of the Requestors.
2.3 Obligations of the
Company.
(a) Expenses. All
expenses incurred in connection with a registration pursuant to Section 2.2,
including without limitation all registration and qualification fees, printers’
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable costs and expenses of one counsel for the Selling Shareholders (but
the aggregate cost of the Company for such counsel to be limited to $10,000 per
registration) (but excluding brokers’ discounts and commissions), shall be borne
by the Company.
(b) Registration. When
required to effect the registration of any Registrable Securities under this
Agreement, the Company will, as expeditiously as reasonably
possible:
(i) Within
thirty days after the date on which the articles of incorporation are amended so
that there are sufficient shares of Common Stock so that all outstanding Notes
of the Series 10% PIK-Election Convertible Notes due 2018 may be
converted, the Company will prepare and file a registration statement relating
to the resale of any securities to be included therein pursuant to
2.2(a). Thereafter the Company will (x) use all reasonable efforts to
cause such registration statement to become effective, and (y) keep a
registration statement effective until the earlier of (A) the date on which the
Registrable Securities may be sold by Investor under Rule 144(b)(1) or (B) until
the Selling Shareholders have completed the distribution described in the
registration statement relating thereto; provided, however, that the Selling
Shareholders will suspend use of a prospectus contained in any such registration
statement immediately upon receipt of notice from the Company that the
prospectus does not meet the requirements of the Securities Act, 1934 Act or
applicable regulations. In such event, the Company will use all
reasonable efforts to amend promptly the registration statement to conform the
prospectus to the requirements of the Securities Act, 1934 Act and applicable
regulations, unless the Company delivers a certificate signed by the President
or Chief Executive Officer of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for an amendment to such
Registration to be effected at such time, in which event the Company will have
the right to defer the filing of the amendment to the registration statement for
a period of not more than one hundred twenty (120) days.
(ii) Prepare
and file with the SEC the amendments and supplements to the registration
statement and the prospectus used in connection with the registration statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the registration
statement.
(iii) Furnish
to each Selling Shareholder or its agents the number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and the other documents as they may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by them that
are included in the registration.
(iv) Use
its best efforts to register and qualify the securities covered by the
registration statement under the other securities or Blue Sky laws of the
jurisdictions as shall be reasonably requested by the Selling Shareholders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any states or jurisdictions or become subject to taxation
in any jurisdiction where it would be required to pay taxes solely as a result
of the filing.
(v) Notify
each Selling Shareholder at any time when a prospectus relating to Registrable
Securities is required to be delivered under the Securities Act of the happening
of any event as a result of which the prospectus included in the registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(vi)
If: (i) a Registration Statement is not filed on a timely basis as required by
2.3(b)(i), or (ii)) after its Effective Date, without regard for the reason
thereunder or efforts therefore, such Registration Statement ceases for any
reason to be effective and available to the Holders as to all Registrable
Securities to which it is required to cover at any time prior to the expiration
of its Effectiveness Period for more than an aggregate of 40 Trading Days (which
need not be consecutive) (any such failure or breach being referred to as an
“Event,” and for
purposes of clause (i) the date on which such Event occurs, or for purposes of
clause (ii) the date which such 40 Trading Day-period 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, equal to 1.0% of the aggregate amount of the principal and accrued
interest of the Note that was converted and has not theretofore been sold.. 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.
2.4 Furnish
Information. It is a condition precedent to the obligations of
the Company to take any action pursuant to Section 2.2 and 2.3 that each Selling
Shareholder shall furnish to the Company the information regarding it, the
Registrable Securities held by it, and the intended method of disposition of the
securities as shall be required to timely and reasonably effect the registration
of their Registrable Securities.
2.5 Indemnification.
(a) By the Company. To
the extent permitted by law, the Company will indemnify and hold harmless each
Selling Shareholder, and their respective members, officers, employees and
agents, any underwriter (as defined in the Securities Act) for the Selling
Shareholders and each person, if any, who controls any Selling Shareholder or
underwriter within the meaning of the Securities Act or the 1934 Act against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a “Violation”):
(i)any untrue statement or alleged
untrue statement of a material fact contained in the registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto;
(ii)the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or
(iii)any violation or alleged violation
by the Company of the Securities Act, the 1934 Act, any federal or state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any federal or state securities law in connection with the
offering covered by the registration statement;
and the
Company will reimburse each Selling Shareholder and their respective members,
officers, employees and agents, underwriter or controlling person for any legal
or other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that (A) the Company will not be liable, in an offering in
which the Company did not execute an underwriting agreement or in which there
was no underwriter, to any Selling Shareholder under this Section with respect
to any preliminary prospectus or the final prospectus to the extent that the
loss, liability, claim, damage or expense of the holder results from Selling
Shareholder selling Registrable Securities to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the final prospectus if the Company previously and timely furnished copies
thereof to such holder; (B) the indemnity agreement contained in this Subsection
2.5(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the written
consent of the Company (which consent shall not be unreasonably withheld), and
(C) the Company shall not be liable for any loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by a Selling Shareholder,
or its respective members, officers, employees and agents, underwriter or
controlling person thereof..
In addition, the Company agrees that,
as an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section, the
Company will reimburse each Selling Shareholder on a monthly basis for all
reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company’s obligation to reimburse each
Selling Shareholder for expenses and the possibility that the payments might
later be held to have been improper by a court of competent
jurisdiction. If any such interim reimbursement payment is so held to
have been improper, the person that received such payment will promptly return
it to the Company, together with interest, compounded daily, determined on the
basis of the prime rate announced from time to time by the Bank of America (or
its successor) (the “Prime
Rate“). Any such interim reimbursement payments which are not
made to a Selling Shareholder or any person entitled to indemnity within thirty
(30) days of a request for reimbursement will bear interest at the Prime Rate
from the date of such request.
(b) By each Selling
Shareholder. If permitted by law, each Selling Shareholder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, and any
underwriter against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
or underwriter may become subject under the Securities Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that the
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Shareholder expressly for use in connection with the
registration; and the Selling Shareholder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; but the indemnity
agreement contained in this Subsection 2.5(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Selling Shareholder, which
consent shall not be unreasonably withheld; and the total amounts payable in
indemnity by any Selling Shareholder under this Section 2.5(b) in respect
of any Violation shall not exceed the proceeds (net of underwriters’ and
brokers’ discounts and commissions) received by such Selling Shareholder in the
registered offering out of which such Violation arises. For the
avoidance of doubt, this provision shall not impose any indemnity obligation on
a Selling Shareholder if the Violation did not occur in reliance upon and in
conformity with written information furnished by such person.
(c) Notice. Promptly
after receipt by an indemnified party under this Section 2.5 of notice of
the commencement of any action (including any governmental action), indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 2.5, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party will 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 the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that if the indemnifying party assumes such defense the indemnifying
party will have no further liability for the fees and expenses of counsel paid
by the indemnified party, except that an indemnified party will have the right
to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party is inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party
represented by counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend action,
will relieve such indemnifying party of any liability to the indemnified party
under this Section 2.5, but the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 2.5.
(d) Contribution. If
the indemnification provided in this Section 2.5 is unavailable or insufficient
to hold harmless an indemnified party under Section 2.5(a) or (b), then
each indemnifying party will contribute to the amount paid or payable by the
indemnified party as a result of the losses, claims, damages or liabilities
referred to above (i) in the proportion appropriate to reflect the relative
benefits received by the Company on the one hand and the Selling Shareholders on
the other from the offering of the securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in the proportion
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Selling
Shareholder(s) on the other in connection with the statements or omissions that
resulted in the losses, claims, damages or liabilities, as well as any other
equitable considerations. The relative benefits received by the
Company on the one hand and the Selling Shareholder(s) on the other will be
deemed to be in the same proportion as the total net proceeds from the offering
received by the Company bear to the total net proceeds received by the Selling
Shareholder(s). The relative fault will be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
related to information supplied by the Company or written information supplied
by a Selling Shareholder, and the parties’ relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
Subsection (d) will be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim that is the subject of this
Section. Despite the provisions of this Section, a Selling
Shareholder will not be required to contribute any amount in excess of the
amount of the total net proceeds (net of commissions) received by the Selling
Shareholder from the sale of the securities pursuant to this Agreement exceeds
the amount of any damages or expenses that the Selling Shareholder has otherwise
been required to pay, or has incurred, 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
Act) will be entitled to contribution from any person who was not guilty of the
fraudulent misrepresentation.
(e) Survival. The
obligations of the Company and Investor under this Section 2.5 will survive
the completion of any offering of Registrable Securities in a registration
statement, and otherwise.
2.6 Termination of the Company’s Obligations. The Company will have no obligations pursuant to Sections 2.2 and 2.3 with respect to any Registrable Securities proposed to be sold in a registration pursuant to Section 2.2 and 2.3 if, in the reasonable opinion of counsel to the Company, (a) the Holder is not an affiliate and the Registrable Securities then registered or proposed to be registered to be registered may be sold without registration under the Securities Act pursuant to Rule 144 under the Securities Act and (b) the Holder is an affiliate and the Registrable Securities then registered or proposed to be registered to be registered may be sold in a three (3) month period without registration under the Securities Act pursuant to Rule 144 under the Securities Act.
3. GENERAL
PROVISIONS
3.1 Successors and
Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. This Agreement shall extend to all successive
transferees of the Common Stock and Registrable Securities, each of which
persons are hereby made third party beneficiaries hereof and may enforce the
terms of this Agreement as if a direct party hereto.
3.2 Third
Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns and third party beneficiaries hereof, any rights or
remedies under or by reason of this Agreement.
3.3 Governing
Law. Except as noted below, this Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.
3.4 Counterparts. This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original, but all of which together will constitute one and the same
instrument.
3.5 Headings. The
headings and captions used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, paragraphs,
exhibits and schedules shall, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by this reference.
3.6 Notices. Unless
otherwise provided, any notice required or permitted under this Agreement will
be given in writing and will be deemed effectively given and delivered upon
personal delivery to the party to be notified or upon deposit with the United
States Post Office, by registered, certified mail, Federal Express, or other
express courier, postage prepaid and addressed to each Investor at the address
as may be specified on Exhibit A below the name of such Investor at
such other address as any party or Company may designate by giving ten (10) days
advance written notice to all other parties. In addition to notices
to Selling Shareholders and Investors as the case may be, a Selling Shareholder
or Investor may designate from time to time one other person to receive notices
from the Company and the Company will send duplicate notices to such person at
the time of the notice to the Selling Shareholder or the Investor.
3.7 Attorneys’ Fees. If
any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party may recover its reasonable attorneys’ fees,
experts’ fees and costs, including those for pretrial, trial, on appeal, in
arbitration and in bankruptcy and all other costs and necessary disbursements
associated with any such actions, in addition to any other relief to which such
party is entitled.
3.8 Adjustments for Stock Splits,
Etc. Wherever in this Agreement there is a reference to a
specific number of shares of Common Stock of the Company of any class or series,
then, upon the occurrence of any subdivision, combination or stock dividend of
such class or series of stock, the specific number of shares so referenced in
this Agreement shall automatically be proportionally adjusted to reflect the
effect on the outstanding shares of such class or series of stock by such
subdivision, combination or stock dividend.
3.9 Aggregation of
Stock. All shares held or acquired by affiliated entities or
persons shall be counted together for the purpose of determining the
availability of any rights under this Agreement.
3.10 Amendments and
Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and those holders owning more than 75% of the
Registrable Securities. Any amendment or waiver effected in
accordance with this Section shall be binding upon each future holder of
Registrable Securities and the Company. No waiver of any of the provisions of
this Agreement shall be deemed to be or will constitute a waiver of any other
provisions hereof, whether or not similar, nor will any such waiver constitute a
continuing waiver. No waiver shall be binding unless expressed as
such in a document executed by the party making the waiver.
3.11 Severability. If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision(s) will be excluded from this Agreement and the
balance of the Agreement will be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.
3.12 Entire
Agreement. This Agreement, together with all exhibits and
schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter
hereof.
3.13 Confidentiality. Each
Investor agrees that, except with the prior written consent of the Company, it
shall at all times keep confidential and not divulge, furnish or make accessible
to anyone any confidential information, knowledge or data concerning or relating
to the business or financial affairs of the Company to which such party has been
or shall become by reason of this Agreement, discussions or negotiations
relating to this Agreement, or the performance of the obligations hereunder;
provided, however, that no obligation shall exist with regard to (i) information
that is generally known or publicly available at the date hereof (ii)
information that becomes generally known or publicly available through no action
or inaction of the Investor, or (iii) with respect to all such confidential
information, 12 months after the date hereof. The provisions of this
Section 3.13 shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by the
parties.
(the
remainder of this page is intentionally left blank)
IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.
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“COMPANY”
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ATLAS
MINING COMPANY, a Idaho corporation
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By:
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Printed
Name:
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Xxxxx
Xxxxxxx
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Its:
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Chief
Executive Officer
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“INVESTOR”
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By:
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Printed
Name:
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Its:
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