REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March
15, 2007, by and among THE CERTO GROUP CORP., a Delaware corporation (the
"Company"), and the undersigned Buyers listed on Schedule I attached hereto
(each, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers (i) secured
convertible debentures in the aggregate principal amount of Three Hundred Sixty
Five Thousand Dollars ($365,000) (the "Convertible Debentures") which shall be
convertible into shares of the Company's common stock, par value $0.001 per
share (the "Common Stock," as converted, the "Conversion Shares") in accordance
with the terms of the Convertible Debentures, and (ii) warrants (the
"Warrants"), which will be exercisable to purchase shares of Common Stock (as
exercised, collectively, the "Warrant Shares"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Securities Purchase
Agreement.
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyers hereby
agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
(a) "Effectiveness Deadline" means, with respect to any Registration
Statement required to be filed hereunder, one hundred eightieth (180th) calendar
day following the receipt of a written demand from the Buyers requesting the
filing of such Registration Statement; provided, however, in the event the
Company is notified by the Commission that the above Registration Statements
will not be reviewed or is no longer subject to further review and comments, the
Effectiveness Date 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 required above.
(b) "Filing Deadline" means, thirty (30) calendar days following the
receipt of a written demand from the Buyers requesting the filing of a
Registration Statement.
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(c) "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
(d) "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.
(e) "Registrable Securities" means all of (i) the Conversion Shares
issuable upon conversion of the Convertible Debentures, (ii) the Warrant Shares
issued or issuable upon exercise of the Warrants, (iii) any additional shares
issuable in connection with any anti-dilution provisions in the Warrants or the
Convertible Debentures (without giving effect to any limitations on exercise set
forth in the Warrants or Convertible Debentures) and (iv) any shares of Common
Stock issued or issuable with respect to the Conversion Shares, the Convertible
Debentures, the Warrant Shares, or the Warrants as a result of any stock split,
dividend or other distribution, recapitalization or similar event or otherwise,
without regard to any limitations on the conversion of the Convertible
Debentures or exercise of the Warrants.
(f) "Registration Statement" means the registration statements required
to be filed hereunder and any additional registration statements contemplated by
Section 3(c), including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
(g) "Required Registration Amount" means an amount equal to thirty three
percent (33%) of the outstanding shares of the Company Common Stock, excluding
"insiders" as of the date the Registration Statement is filed (or such lesser
amount as the SEC may permit as evidenced in comments received to a filed
Registration Statement) to be issued as Conversion Shares issued and issuable
pursuant to the Convertible Debentures and/or Warrant Shares issued and issuable
pursuant to the Warrants, as determined in the sole discretion of the Investor.
(h) "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 purpose and effect as such Rule.
2. REGISTRATION.
(a) On or prior to each Filing Deadline, the Company shall prepare and
file with the SEC a Registration Statement on Form S-1 or SB-2 (or, if the
Company is then eligible, on Form S-3) covering the resale of the Required
Registration Amount . The Registration Statement prepared pursuant hereto shall
register for resale at least the number of shares of Common Stock equal to the
Required Registration Amount as of date the Registration Statement is initially
filed with the SEC. The Registration Statement shall contain the "Selling
Stockholders" and "Plan of Distribution" sections in substantially the form
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attached hereto as Exhibit A and contain all the required disclosures set forth
on Exhibit B. The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the Effectiveness Deadline. By 9:30 am on the date following the date
of effectiveness, the Company shall file with the SEC in accordance with Rule
424 under the 1933 Act the final Prospectus to be used in connection with sales
pursuant to such Registration Statement. The Company shall cause the
Registration Statement to remain effective until all of the Required
Registration Amount have been sold or may be sold without volume restrictions
pursuant to Rule 144(k), as determined by the counsel to the Company, addressed
and acceptable to the Company's transfer agent and the affected Holders
("Registration Period"). Prior to the filing of the Registration Statement with
the SEC, the Company shall furnish a copy of the Initial Registration Statement
to the Buyers for their review and comment. The Buyers shall furnish comments on
the Initial Registration Statement to the Company within twenty-four (24) hours
of the receipt thereof from the Company.
(b) Failure to File or Obtain Effectiveness of the Registration
Statement. If: (i) a Registration Statement is not filed on or prior to its
Filing Date (if the Company files a Registration Statement without affording the
Holders the opportunity to review and comment on the same as required by Section
3(a), the Company shall not be deemed to have satisfied this clause (i)), or
(ii) the Company fails to file with the SEC a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act, within five
Trading Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the SEC that a Registration Statement will not be
"reviewed," or not subject to further review, or (iii) a Registration Statement
filed or required to be filed hereunder is not declared effective by the SEC by
its Effectiveness Deadline, or (iv) after the effectiveness, a Registration
Statement ceases for any reason to remain continuously effective as to the
Required Registration Amount for which it is required to be effective, or the
Holders are otherwise not permitted to utilize the Prospectus therein to resell
such Required Registration Amount for more than 30 consecutive calendar days or
more than an aggregate of 40 calendar days during any 12-month period (which
need not be consecutive calendar days) (any such failure or breach being
referred to as an "Event"), then in addition to any other rights the holders of
the Convertible Debentures 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 of Convertible Debentures
an amount in cash, as partial liquidated damages ("Liquidated Damages") and not
as a penalty, equal to 2.0% of the aggregate purchase price paid by such holder
pursuant to the Securities Purchase Agreement for any Convertible Debentures
then held by such holder. The parties agree that (1) the Company shall not be
liable for Liquidated Damages under this Agreement with respect to any Warrants
or Warrant Shares and (2) the maximum aggregate Liquidated Damages payable to a
holder of Convertible Debentures under this Agreement shall be twenty-four
percent (24%) of the aggregate Purchase Price paid by such holder pursuant to
the Securities Purchase Agreement. 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.
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(c) Liquidated Damages. The Company and the Buyer hereto acknowledge and
agree that the sums payable under subsection 2(b) above shall constitute
liquidated damages and not penalties and are in addition to all other rights of
the Buyer, including the right to call a default. The parties further
acknowledge that (i) the amount of loss or damages likely to be incurred is
incapable or is difficult to precisely estimate, (ii) the amounts specified in
such subsections bear a reasonable relationship to, and are not plainly or
grossly disproportionate to, the probable loss likely to be incurred in
connection with any failure by the Company to obtain or maintain the
effectiveness of a Registration Statement, (iii) one of the reasons for the
Company and the Buyer reaching an agreement as to such amounts was the
uncertainty and cost of litigation regarding the question of actual damages, and
(iv) the Company and the Buyer are sophisticated business parties and have been
represented by sophisticated and able legal counsel and negotiated this
Agreement at arm's length.
(d) Commission Limitations. Notwithstanding anything contained herein to
the contrary, in the event that the Commission limits the amount of Registrable
Securities that may be included and sold by selling security holders in the
Registration Statement pursuant to Rule 415, or any other basis, the Company may
reduce the number of Registrable Securities included in the Registration
Statement on behalf of the Buyers or even withdraw such Registration Statement
if required by the Commission (in case of an exclusion as to a portion of such
Registrable Securities, such portion to be allocated among such Buyers in
proportion to the respective numbers of Registrable Securities requested to be
registered by each such Buyer). The Company will then use its best efforts at
the first opportunity that is permitted by the Commission, but in no event later
than the later of sixty (60) calendar days from the date substantially all of
the Registrable Securities registered under the Registration Statement have been
sold by the Buyers or six (6) months from the date the Registration Statement
was declared effective, to register for resale the Registrable Securities that
have been excluded from being registered. In such event the Company shall give
the Holder prompt notice of the number of the Registrable Securities excluded
and the Company will not be liable for any Liquidated Damages for in connection
with the excluded Registrable Securities.
3. RELATED OBLIGATIONS.
(a) The Company shall, not less than three (3) Trading Days prior to the
filing of each Registration Statement and not less than one (1) Trading Day
prior to the filing of any related amendments and supplements to all
Registration Statements (except for annual reports on Form 10-K or Form 10-KSB),
furnish to each Buyer copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the reasonable and prompt review of such Buyers,
The Company shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Buyers shall reasonably
object in good faith; provided that, the Company is notified of such objection
in writing no later than two (2) Trading Days after the Buyers have been so
furnished copies of a Registration Statement.
(b) The Company shall (i) prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the Prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the Securities Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and prepare and
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file with the SEC such additional Reegistration Statements in order to register
for resale under the Securities Act all of the Registratble 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 possible to any comments received from the SEC with
respect to a Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Buyers true and complete copies of all
correspondence from and to the SEC relating to a Registration Statement
(provided that the Company may excise any information contained therein which
would constitute material non-public information as to any Buyer which has not
executed a confidentiality agreement with the Company); and (iv) comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company's filing a report on Form 10-KSB, Form 10-QSB or Form 8-K
or any analogous report under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company shall incorporate such report by reference
into the Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the Exchange Act report is
filed which created the requirement for the Company to amend or supplement the
Registration Statement.
(c) In the event the number of shares available under a Registration
Statement filed pursuant to this Agreement is insufficient to cover all the
Registrable Securities issued or issuable upon conversion of the Convertible
Debentures or the Warrants the Buyers shall have the right to demand that the
Company file such additional Registration Statements, as may be necessary until
all of the Reigstrable Securities have been registered, in accordance with the
terms hereof and Sections 1(a) and (b) herein.
(d) The Company shall furnish to each Buyer whose Registrable Securities
are included in any Registration Statement, without charge, (i) at least one (1)
copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, and (ii) such other documents as such Buyer may reasonably request
from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Buyer.
(e) The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by a Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as any
Buyer reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
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for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its articles of incorporation or by-laws, (x) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Buyer who holds Registrable
Securities of the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or "blue sky" laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
(f) As promptly as practicable after becoming aware of such event or
development, the Company shall notify each Buyer in writing of the happening of
any event as a result of which the Prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to each Buyer. The
Company shall also promptly notify each Buyer in writing (i) when a Prospectus
or any Prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to each Buyer
by facsimile on the same day of such effectiveness), (ii) of any request by the
SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(g) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify each Buyer who holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
(h) If, after the execution of this Agreement, a Buyer believes, after
consultation with its legal counsel, that it could reasonably be deemed to be an
underwriter of Registrable Securities, at the request of any Buyer, the Company
shall furnish to such Buyer, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as a Buyer
may reasonably request (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Buyers.
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(i) If, after the execution of this Agreement, a Buyer believes, after
consultation with its legal counsel, that it could reasonably be deemed to be an
underwriter of Registrable Securities, at the request of any Buyer, the Company
shall make available for inspection by (i) any Buyer and (ii) one (1) firm of
accountants or other agents retained by the Buyers (collectively, the
"Inspectors") all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree, and
each Buyer hereby agrees, to hold in strict confidence and shall not make any
disclosure (except to a Buyer) or use any Record or other information which the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the Securities Act, (b) the release of
such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
(j) The Company shall hold in confidence and not make any disclosure of
information concerning a Buyer provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Buyer is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such Buyer and allow such Buyer, at the Buyer's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
(k) The Company shall use its best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be listed on
each 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 or (ii) the
inclusion for quotation on the National Association of Securities Dealers, Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).
(l) The Company shall cooperate with each Buyer who holds Registrable
Securities being offered and, to the extent applicable, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Buyers may reasonably request and registered in such
names as the Buyers may request.
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(m) The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
(n) The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve (12) month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the Registration Statement.
(o) The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
(p) Within two (2) business days after a Registration Statement which
covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Buyer whose
Registrable Securities are included in such Registration Statement) confirmation
that such Registration Statement has been declared effective by the SEC in the
form attached hereto as Exhibit C.
(q) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by each Buyer of Registrable Securities
pursuant to a Registration Statement.
4. OBLIGATIONS OF THE BUYERS.
(a) Each Buyer agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(f) or the first
sentence of Section 3(e), such Buyer will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement covering such
Registrable Securities until such Buyer's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of Section 3(e) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended certificates for shares of Common Stock to
a transferee of a Buyer in accordance with the terms of the Securities Purchase
Agreement in connection with any sale of Registrable Securities with respect to
which a Buyer has entered into a contract for sale prior to the Buyer's receipt
of a notice from the Company of the happening of any event of the kind described
in Section 3(f) or the first sentence of 3(e) and for which the Buyer has not
yet settled.
(b) Each Buyer covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to the Registration Statement.
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5. EXPENSES OF REGISTRATION.
All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees shall be paid by the Company.
6. INDEMNIFICATION.
With respect to Registrable Securities which are included in a Registration
Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Buyer, the directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Buyer within the meaning of the Securities Act or the Exchange Act
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a material fact contained in any final prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any rule
or regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). The Company shall
reimburse the Buyers and each such controlling person promptly as such expenses
are incurred and are due and payable, for any legal fees or disbursements 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): (x) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto; (y) shall not be available to the
extent such Claim is based on a failure of the Buyer to deliver or to cause to
be delivered the prospectus made available by the Company, if such prospectus
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was timely made available by the Company pursuant to Section 3(c); and (z) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Buyers pursuant to Section 9 hereof.
(b) In connection with a Registration Statement, each Buyer agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers, employees, representatives, or agents
and each Person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (each an "Indemnified Party"), against any
Claim or Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or is based upon any Violation, in each case to
the extent, and only to the extent, that such Violation occurs in reliance upon
and in conformity with written information furnished to the Company by such
Buyer expressly for use in connection with such Registration Statement; and,
subject to Section 6(d), such Buyer will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of such Buyer, which consent shall
not be unreasonably withheld; provided, further, however, that the Buyer shall
be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Buyer as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Buyers pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any prospectus shall not inure to
the benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the prospectus was corrected and such new prospectus
was delivered to each Buyer prior to such Buyer's use of the prospectus to which
the Claim relates.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one (1) counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
10
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
(d) The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no 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
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Buyers the benefits of Rule 144
promulgated under the Securities Act or any similar rule or regulation of the
SEC that may at any time permit the Buyers to sell securities of the Company to
the public without registration ("Rule 144") the Company agrees to:
11
(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 Securities Act and the Exchange Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents as are required by the applicable provisions of Rule 144; and
(c) furnish to each Buyer so long as such Buyer 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, and
(iii) such other information as may be reasonably requested to permit the Buyers
to sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and Buyers who
then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 9 shall be binding upon each
Buyer and the Company. No such amendment shall be effective to the extent that
it applies to fewer than all of the holders of the Registrable Securities. No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.
10. MISCELLANEOUS.
(a) A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable Securities or
owns the right to receive the Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two (2) or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) No Piggyback on Registrations. Except as set forth on Schedule 10(b)
attached hereto, neither the Company nor any of its security holders (other than
the Buyers in such capacity pursuant hereto) may include securities of the
Company in the initial Registration Statement other than the Registrable
Securities. The Company shall not file any other registration statements until
the initial Registration Statement required hereunder is declared effective by
the SEC, provided that this Section 10(b) shall not prohibit the Company from
filing amendments to registration statements already filed.
12
(c) Piggy-Back Registrations. If at any time during the Registration
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the SEC a registration statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Buyer a written notice of
such determination and, if within fifteen (15) days after the date of such
notice, any such Buyer shall so request in writing, the Company shall include in
such registration statement all or any part of such Registrable Securities such
Buyer requests to be registered; provided, however, that, the Company shall not
be required to register any Registrable Securities pursuant to this Section
10(c) that are eligible for resale pursuant to Rule 144(k) promulgated under the
Securities Act or that are the subject of a then effective Registration
Statement.
(d) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company, to: The Certo Group Corp.
000 Xxxxxx Xxxxx Xxxxx Xxxxxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With Copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to an Buyer, to its address and facsimile number on the Schedule of Buyers
attached hereto, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers or to such other address and/or facsimile number and/or to
the attention of such other person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
13
(e) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(f) The laws of the State of New Jersey shall govern all issues
concerning the relative rights of the Company and the Buyers as its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New Jersey, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New Jersey or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New Jersey. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the Superior Courts of the State of
New Jersey, sitting in Xxxxxx County, New Jersey and federal courts for the
District of New Jersey sitting Newark, New Jersey, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(g) This Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.
(h) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
14
(j) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(k) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
(l) This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, each Buyer and the Company have caused their signature
page to this Registration Rights Agreement to be duly executed as of the date
first above written.
COMPANY:
THE CERTO GROUP CORP.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: President, Chief Executive
Officer and Chairman
16
IN WITNESS WHEREOF, each Buyer and the Company have caused their signature
page to this Registration Rights Agreement to be duly executed as of the date
first above written.
BUYER:
CORNELL CAPITAL PARTNERS, L.P.
By: Yorkville Advisors, LLC
Its: Investment Manager
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Portfolio Manager
17
SCHEDULE I
SCHEDULE OF BUYERS
Address/Facsimile
Address/Facsimile Number of Buyer's
Buyer Number of Buyer Representative
__________________________________ ________________________________________ ______________________________________
Cornell Capital Partners, L.P. 000 Xxxxxx Xxxxxx - Xxxxx 0000 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000 Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
18
EXHIBIT A
SELLING STOCKHOLDERS
AND PLAN OF DISTRIBUTION
Selling Stockholders
The shares of Common Stock being offered by the selling stockholders are
issuable upon conversion of the convertible debentures and upon exercise of the
warrants. For additional information regarding the issuance of those convertible
notes and warrants, see "Private Placement of Convertible Debentures and
Warrants" above. We are registering the shares of Common Stock in order to
permit the selling stockholders to offer the shares for resale from time to
time. Except as otherwise notes and except for the ownership of the convertible
Debentures and the warrants issued pursuant to the Securities Purchase
Agreement, the selling stockholders have not had any material relationship with
us within the past three years.
The table below lists the selling stockholders and other information
regarding the beneficial ownership of the shares of Common Stock by each of the
selling stockholders. The second column lists the number of shares of Common
Stock beneficially owned by each selling stockholder, based on its ownership of
the convertible debentures and warrants, as of ________, 200_, assuming
conversion of all convertible debentures and exercise of the warrants held by
the selling stockholders on that date, without regard to any limitations on
conversions or exercise.
The third column lists the shares of Common Stock being offered by this
prospectus by the selling stockholders.
In accordance with the terms of a registration rights agreement with the
selling stockholders, this prospectus generally covers the resale of at least
(i) 300% of the number of Conversion Shares issued and issuable pursuant to the
convertible debentures as of the trading day immediately preceding the date the
registration statement is initially filed with the SEC, and (ii) 100% of the
number of warrant shares issued and issuable pursuant to the warrants as of the
trading day immediately preceding the date the registration statement is
initially filed with the SEC. Because the conversion price of the convertible
debentures and the exercise price of the warrants may be adjusted, the number of
shares that will actually be issued may be more or less than the number of
shares being offered by this prospectus. The fourth column assumes the sale of
all of the shares offered by the selling stockholders pursuant to this
prospectus.
Under the terms of the convertible debentures and the warrants, a selling
stockholder may not convert the convertible debentures or exercise the warrants
to the extent such conversion or exercise would cause such selling stockholder,
together with its affiliates, to beneficially own a number of shares of Common
Stock which would exceed 4.99% of our then outstanding shares of Common Stock
following such conversion or exercise, excluding for purposes of such
determination shares of Common Stock issuable upon conversion of the convertible
debentures which have not been converted and upon exercise of the warrants which
have not been exercised. The number of shares in the second column does not
reflect this limitation. The selling stockholders may sell all, some or none of
their shares in this offering. See "Plan of Distribution."
19
Maximum Number of Shares
Number of Shares Owned to be Sold Pursuant to Number of Shares
Name of Selling Stockholder Prior to Offering this Prospectus Owned After Offering
---------------------------------------- ---------------------- ------------------------- --------------------
Cornell Capital Partners, L.P. (1)
(1) Cornell Capital Partners, L.P. is a Cayman Island limited partnership.
Cornell is managed by Yorkville Advisors, LLC. Investment decisions for
Yorkville Advisors are made by Xxxx Xxxxxx, its portfolio manager.
20
Plan of Distribution
Each Selling Stockholder (the "Selling Stockholders") of the common stock
and any of their pledgees, assignees and successors-in-interest may, from time
to time, sell any or all of their shares of common stock on the __________ or
any other stock exchange, market or trading facility on which the shares are
traded or in private transactions. These sales may be at fixed or negotiated
prices. A Selling Stockholder may use any one or more of the following methods
when selling shares:
o ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o 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;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
o through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
o a combination of any such methods of sale; or
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.
In connection with the sale of the common stock or interests therein, 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
Common Stock in the course of hedging the positions they assume. The Selling
Stockholders may also enter into option or other transactions with
21
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).
The Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents 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. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder. In addition,
any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than under
this prospectus. There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
22
EXHIBIT B
OTHER DISCLOSURES
See attachment provided separately.
23
EXHIBIT C
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Attention:
Re: THE CERTO GROUP CORP.
Ladies and Gentlemen:
We are counsel to The Certo Group Corp., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Securities Purchase Agreement") entered into
by and among the Company and the Buyers named therein (collectively, the
"Buyers") pursuant to which the Company issued to the Buyers shares of its
Common Stock, par value $0.001 per share (the "Common Stock"). Pursuant to the
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Buyers (the "Registration Rights Agreement") pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement) under the
Securities Act of 1933, as amended (the "Securities Act"). In connection with
the Company's obligations under the Registration Rights Agreement, on
____________ ____, the Company filed a Registration Statement on Form ________
(File No. 333-_____________) (the "Registration Statement") with the Securities
and Exchange SEC (the "SEC") relating to the Registrable Securities which names
each of the Buyers as a selling stockholder there under.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the Securities Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the Securities Act pursuant to the
Registration Statement.
Very truly yours,
[Law Firm]
By: __________________________________
cc: [LIST NAMES OF BUYERS]
