REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”)
is made
and entered into as of April 21, 2006, by and among The
Tube Media Corp.,
a
Delaware corporation (the “Company”),
and
the investors signatory hereto (each a “Purchaser”
and
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Purchase Agreement, dated as of the date
hereof, among the Company and the Purchasers (the “Purchase
Agreement”).
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchasers agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
respective meanings set forth in this Section 1:
“Advice”
shall
have the meaning set forth in Section 6(c).
“Business
Day”
means a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.0001 per share, and any securities
into which such common stock may hereafter be reclassified.
“Effective
Date”
means
the date that the Registration Statement filed pursuant to Section 2(a) is
first
declared effective by the Commission.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(b).
“Event”
shall
have the meaning set forth in Section 2(c).
“Event
Date” shall
have the meaning set forth in Section 2(c).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Filing
Date”
means,
with respect to the Registration Statement required to be filed to cover the
resale by the Holders of the Registrable Securities, the 60th
calendar
day following the Closing Date.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Interest
Shares”
means
the Company’s good faith estimate of the maximum number of shares of Common
Stock issuable, at the Company’s option in accordance with the terms of the
Purchase Agreement, during the term of the Notes in satisfaction of interest
payments that may due and owing thereunder.
“Losses”
shall
have the meaning set forth in Section 5(a).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Notes”
means
the Company’s 7% Convertible Notes issued to the Purchasers pursuant to the
Purchase Agreement.
“Person”
means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“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.
“Registrable
Securities”
means:
(i) one hundred fifty percent (150%) of the Conversion Shares, (ii) one hundred
fifty percent (150%) of the Interest Shares, (iii) one hundred fifty percent
(150%) of the Warrant Shares and (iv) any securities issued or issuable upon
any
stock split, dividend or other distribution, recapitalization or similar event,
or any conversion or exercise price adjustment with respect to any of the
securities referenced in (i), (ii) or (iii) above.
“Registration
Statement”
means a
registration statement which is required to register the resale of the
Registrable Securities, and including 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 therein.
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“Required
Effectiveness Date”
means,
with respect to the Registration Statement required to be filed to cover the
resale by the Holders of the Registrable Securities, the earlier of: (i) the
120th
day
following the Closing Date, and (ii) the fifth Trading Day following the date
on
which the Company is notified by the Commission that the Registration Statement
will not be reviewed or is no longer subject to further review and comments.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Subscription
Amount”
means,
with respect to each Purchaser, the purchase price indicated below such
Purchaser’s name on the signature page to the Purchase Agreement.
“Trading
Day”
means
(i) a day on which the Common Stock is listed or quoted and traded on its
primary Trading Market (other than the OTC Bulletin Board), or (ii) if the
Common Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is
not quoted on any Trading Market, a day on which the Common Stock is quoted
in
the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided,
that in
the event that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market, the NASDAQ Capital Market or OTC Bulletin Board on
which
the Common Stock is listed or quoted for trading on the date in
question.
“Warrants”
means
the
Common Stock purchase warrants issued or issuable to the Purchasers pursuant
to
the Purchase Agreement.
“Warrant
Shares” means
the
shares of Common Stock issued or issuable upon exercise of the
Warrants.
2. Registration.
(a) On
or
prior to the Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering the resale of all Registrable Securities
for
an offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form SB-2 (except if the Company is eligible
to register for resale the Registrable Securities on Form S-3 in the future,
the
Company shall file a post effective amendment to the registration statement
on
Form S-3 covering the Registrable Securities and shall use its commercially
reasonable efforts to cause such Registration Statement to be declared effective
as promptly as practicable thereafter) and shall contain (except if otherwise
required pursuant to written comments received from the Commission upon a review
of such Registration Statement) the “Plan of Distribution” attached hereto as
Annex
A.
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(b) The
Company shall use its reasonable best efforts to cause the Registration
Statement to be declared effective by the Commission as soon as practicable
and,
in any event, no later than the Required Effectiveness Date (including filing
with the Commission a request for acceleration of effectiveness in accordance
with Rule 461 promulgated under the Securities Act within five (5) Business
Days
after the date that the Company is notified (orally or in writing, whichever
is
earlier) by the Commission that a Registration Statement will not be “reviewed,”
or not be subject to further review and the effectiveness of the Registration
Statement may be accelerated) and shall use its commercially reasonable efforts
to keep the Registration Statement continuously effective under the Securities
Act until the earlier of the date that all Registrable Securities covered by
the
Registration Statement have been sold or may be sold by non-affiliates without
volume restrictions pursuant to Rule 144(k) as determined by the counsel to
the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the affected Holders (the
“Effectiveness
Period”).
Such
Registration Statement shall also cover, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. It is agreed and understood that the Company shall, from time to
time, be obligated to file an additional Registration Statement to cover any
Registrable Securities which are not registered for resale pursuant to a
pre-existing Registration Statement.
(c)
If:
(i) the Registration Statement is not filed on or prior to the 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)
hereof, the Company shall not be deemed to have satisfied this clause (i)),
(ii)
a Registration Statement is not declared effective by the Commission on or
prior
to the Required Effectiveness Date or (iii) after its Effective Date 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
20
consecutive Trading Days or an aggregate of 60 Trading Days (which need not
be
consecutive)(any such failure or breach being referred to as an “Event,”
and for
purposes of clause (i) and (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 20 consecutive or 60 Trading Day
period (as applicable) is exceeded, being referred to as “Event
Date”),
then
in addition to any other rights available to the Holders: (x) on such Event
Date
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 Subscription Amount
paid by such Holder pursuant to the Purchase Agreement (which remedy shall
not
be exclusive of any other remedies available under this Agreement); and (y)
on
each monthly anniversary of each such Event Date thereof (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
Subscription Amount paid by such Holder pursuant to the Purchase Agreement.
The
parties agree that the Company will not be liable for liquidated damages under
this Section 2(c) in respect of any consideration paid by the Purchasers upon
exercise of the Warrants. If the Company fails to pay any partial liquidated
damages pursuant to this Section in full within ten days after the date payable,
the Company will pay interest thereon at a rate of 10% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such partial liquidated damages are due until
such
amounts, plus all such interest thereon, are paid in full. The partial
liquidated damages pursuant to the terms hereof shall apply on a 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. Notwithstanding the foregoing, the maximum amount of
payment to a Holder associated with any and all Events shall not exceed 12%
of
the aggregate Subscription Amount paid by such Holder pursuant to the Purchase
Agreement.
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(d) With
the
exception that the Company may file a registration statement with respect to
any
securities for which the Company has provided registration rights as of the
date
hereof and as set forth in the Disclosure Schedules to the Purchase Agreement,
the Company shall not, from the date hereof until the Effective Date of the
Registration Statement, prepare and file with the Commission 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 a
registration statement on Form S-8.
(e) Each
Holder shall furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex
B
(a
“Selling
Holder Questionnaire”).
The
Company shall not be required to include the Registrable Securities of a Holder
in a Registration Statement and shall not be required to pay any liquidated
or
other damages under Section 2(c) to any Holder who fails to furnish to the
Company a fully completed Selling Holder Questionnaire at least two Trading
Days
prior to the Filing Date (subject to the requirements set forth in Section
3(a)).
3. Registration
Procedures
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a) Not
less
than three Trading Days prior to the filing of a Registration Statement or
any
related Prospectus or any amendment or supplement thereto, furnish to each
Holder copies of the “Selling Stockholders” section of such document, the “Plan
of Distribution” and any risk factor contained in such document that addresses
specifically this transaction or the Selling Stockholders, as proposed to be
filed, which documents will be subject to the review of such Holder. The Company
shall not file a Registration Statement, any Prospectus or any amendments or
supplements thereto in which the “Selling Stockholder” section thereof differs
from the disclosure received from a Holder in its Selling Holder Questionnaire
(as amended or supplemented), except as may otherwise be required by applicable
securities law or the Commission.
-5-
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably practicable to any comments received from the Commission with respect
to each Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration
Statement that pertains to the Holders as Selling Stockholders but not any
comments that would result in the disclosure to the Holders of material and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by the
Registration Statement.
(c) Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing) and (if requested
by any such Person) confirm such notice in writing as promptly as reasonably
possible (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on any
Registration Statement (in which case the Company shall provide true and
complete copies thereof and all written responses thereto to each of the Holders
that pertain to the Holders as a Selling Stockholder or to the Plan of
Distribution, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has been declared
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement
or Prospectus or for additional information that pertains to the Holders as
Selling Stockholders or the Plan of Distribution; (iii) of the issuance by
the
Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation
of
any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference untrue in any material respect or that requires any revisions to
such
Registration Statement, Prospectus or other documents so that, in the case
of
such Registration Statement or the Prospectus, as the case may be, it will
not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading; and
(vi)
of the occurrence or existence of any event relating to the Company that the
Company believes may be material and that, in the good faith determination
of
the Company makes it not in the best interests of the Company to suspend the
use
of any prospectus included in any Registration (but in no event, without the
prior written consent of a Purchaser, shall the Company disclose to such
Purchaser any of the facts or circumstances regarding such event or any other
material non-public information relating thereto).
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(d) Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, as soon as practicable.
(e) If
requested by a Holder, furnish to such Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto and
all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that the Company shall have no
obligation to provide any document pursuant to this clause that is available
on
the XXXXX system.
(f) Prior
to
any public offering of Registrable Securities, use its reasonable best efforts
to register or qualify or cooperate with the selling Holders in connection
with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of those jurisdictions within the United States
as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do
any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the
Registration Statements; provided,
that
the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject the Company to general service of process in any jurisdiction where
it
is not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(g) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statements, which certificates shall be free,
to
the extent permitted by the Purchase Agreement and under law, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holders may reasonably request. In
connection therewith, if required by the Company’s transfer agent, the Company
shall promptly after the effectiveness of the Registration Statement cause
an
opinion of counsel as to the effectiveness of the Registration Statement to
be
delivered to and maintained with its transfer agent, together with any other
authorizations, certificates and directions required by the transfer agent,
which authorize and direct the transfer agent to issue such Registrable
Securities without legend upon sale by the holder of such shares of Registrable
Securities under the Registration Statement.
(h) Following
the occurrence of any event contemplated by Sections 3(c)(v) through 3(c)(vi),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, no Registration Statement nor any Prospectus
will
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, form of prospectus or supplement thereto, in light
of the circumstances under which they were made), not misleading. If the Company
notifies the Holders in accordance with Sections 3(c)(ii) through 3(c)(v) above
to suspend the use of any Prospectus until the requisite changes to such
Prospectus have been made, then the Holders shall suspend use of such
Prospectus. The foregoing sentence shall not be deemed to limit, in any manner,
the obligation of the Company to pay the liquidated damages arising under,
and
in accordance with, Section 2(c).
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(i) As
long
as any Holder owns Notes, Warrants or Warrant Shares, the Company covenants
to
use commercially reasonable timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed
by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as any Holder owns Notes, Warrants or Warrant Shares,
if
the Company is not required to file reports pursuant to Section 13(a) or 15(d)
of the Exchange Act, it will prepare and furnish to the Holders and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
such
Person to sell Notes and Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including compliance with the provisions
of the Purchase Agreement relating to the transfer of the Notes and Warrant
Shares.
(j) Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request.
4. Registration
Expenses.
All
fees and expenses incident to the Company’s performance of or compliance with
its obligations under this Agreement (excluding any underwriting discounts
and
selling commissions) shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
Trading Market on which the Common Stock is then listed for trading, and (B)
in
compliance with applicable state securities or Blue Sky laws), (ii) printing
expenses (including, without limitation, expenses of printing certificates
for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the
Company, (v) Securities Act liability insurance, if the Company so desires
such
insurance, (vi) fees and expenses of all other Persons retained by the Company
in connection with the consummation of the transactions contemplated by this
Agreement and (vii) fees and expenses of one counsel to the Holders in an amount
not to exceed $10,000. In addition, the Company shall be responsible for all
of
its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of the Holders.
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5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, agents, partners, members,
shareholders and employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20
of
the Exchange Act) and the officers, directors, agents and employees of each
such
controlling Person, to the fullest extent permitted by applicable law, from
and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys'
fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or relating to (i) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex
A
hereto
for this purpose) or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to
be
stated therein or necessary to make the statements therein (in the case of
any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (A) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form
of
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has approved Annex A hereto for this purpose) or (2) in the case
of
an occurrence of an event of the type specified in Section 3(c)(ii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company
has
notified such Holder in writing that the Prospectus is outdated or defective
and
prior to the receipt by such Holder of an Advice (as defined in Section 6(d)
below); provided,
however,
that
the indemnity agreement contained in this Section 5(a) shall not apply to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is
aware
in connection with the transactions contemplated by this Agreement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of an Indemnified Party (as defined in Section 5(c)) and
shall survive the transfer of the Registrable Securities by the
Holders.
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(b) Indemnification
by Holders.
Each
Holder shall, notwithstanding any termination of this Agreement, severally
and
not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of
a
material fact contained in any Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of
any
Prospectus, or any form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading to the extent, but
only
to the extent that, (A) such untrue statements or omissions are based solely
upon information regarding such Holder furnished in writing to the Company
by
such Holder expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in the Registration Statement (it being understood
that the Holder has approved Annex
A
hereto
for this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto, (B) sales of the Registrable (B) in the case
of
an occurrence of an event of the type specified in Section 3(c)(ii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company
has
notified such Holder in writing that the Prospectus is outdated or defective
and
prior to the receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission
giving rise to such Loss would have been corrected; provided,
however,
that
the indemnity agreement contained in this Section 5(b) shall not apply to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the selling Holder, which consent shall not be
unreasonably withheld. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving
rise
to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided,
that
the failure of any Indemnified Party to give such notice shall not relieve
the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
-10-
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party), provided,
that the Indemnifying Party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not
be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from
all
liability on claims that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within twenty Trading Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided,
that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which
the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
-11-
The
indemnity and contribution agreements contained in this Section are not in
dimunition or limitation of the indemnification provisions under the Purchase
Agreement.
6. Miscellaneous
(a) Remedies.
In the
event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
(b) Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement and applicable
state and federal securities laws.
(c) Discontinued
Disposition.
Each
Holder further agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of
the
kind described in Section 3(c), such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement
until such Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement declared effective by the Commission or until
it
is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
(d) Piggy-Back
Registrations.
If at
any time during the Effectiveness 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 Commission 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 stock option or other employee or director benefit plans, then
the Company shall send to each Holder written notice of such determination
and,
if within ten days after receipt of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement
all
or any part of such Registrable Securities such holder requests to be
registered, subject to customary underwriter cutbacks applicable to all holders
of registration rights on a pro rata basis; provided
that if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may,
at
its election, give written notice of such determination to such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with
such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 6(d) for the same period as the delay in
registering such other securities.
-12-
(e) Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by all of the parties hereto.
The Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act, of each
Purchaser.
(f) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 9.4 of the Purchase Agreement.
(g) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. The rights of the Holders hereunder,
including the right to have the Company register Registrable Securities pursuant
to this Agreement, may be assigned by each Holder to transferees or assignees
of
all or any portion of the Registrable Securities, but only if (i) the Holder
agrees in writing with the transferee or assignee to assign such rights, and
a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment, (ii) the Company is, within a reasonable time after
such
transfer or assignment, furnished with written notice of the name and address
of
such transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (iii) at or before the
time the Company received the written notice contemplated by clause (ii) of
this
sentence, the transferee or assignee agrees in writing with the Company to
be
bound by all of the provisions contained herein and (iv) the transferee is
an
“accredited investor” as that term is defined in Rule 501 of Regulation
D.
(h) Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
-13-
(i) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) will be commenced in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts 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 Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for 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. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
Proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If any party shall commence a Proceeding to enforce any
provisions of this Agreement, then the prevailing party in such Proceeding
shall
be reimbursed by the other parties for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
(j) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(k) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(l) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
-14-
(m) Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser hereunder, and no Purchaser shall
be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The decision of each Purchaser to purchase Securities
pursuant to the Transaction Documents has been made independently of any other
Purchaser. Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership,
an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect
to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined
as
an additional party in any Proceeding for such purpose. The Company acknowledges
that each of the Purchasers has been provided with the same Registration Rights
Agreement for the purpose of closing a transaction with multiple Purchasers
and
not because it was required or requested to do so by any Purchaser.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES TO FOLLOW]
-15-
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
| THE TUBE MEDIA CORP. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES OF PURCHASERS TO FOLLOW]
-16-
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
|
NAME
OF
INVESTING ENTITY
|
||
|
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| AUTHORIZED SIGNATORY | ||
| |
|
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| By: | ||
|
Name: |
||
| Title: | ||
| ADDRESS FOR NOTICE | ||
| |
|
|
| c/o: | ||
|
|
||
| Street: | ||
|
|
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| City/State/Zip: | ||
|
|
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| Attention: | ||
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| Tel: | ||
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| Fax: | ||
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| Email: | ||
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-17-
Annex
A
Plan
of
Distribution
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any 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. The Selling Stockholders may use any one or more
of
the following methods when selling shares:
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
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;
|
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
privately
negotiated transactions;
|
|
short
sales;
|
|
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
|
a
combination of any such methods of sale;
and
|
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under 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. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
-18-
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of Common Stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
Upon
the
Company being notified in writing by a Selling Stockholder that any material
agreement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and
of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares of Common Stock were sold, (iv) the commissions
paid or discounts or concessions allowed to such broker-dealers, where
applicable, (v) that such broker-dealer(s) did not conduct any investigation
to
verify the information set out or incorporated by reference in this prospectus,
and (vi) other facts material to the transaction. In addition, upon the Company
being notified in writing by a Selling Stockholder that a donee or pledgee
intends to sell more than 500 shares of Common Stock, a supplement to this
prospectus will be filed if then required in accordance with applicable
securities laws.
The
Selling Stockholders also may transfer the shares of Common Stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this
prospectus.
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. Discounts, concessions, commissions and
similar selling expenses, if any, attributable to the sale of shares will be
borne by the selling stockholder. Each Selling Stockholder has represented
and
warranted to the Company that it acquired the securities subject to this
registration statement in the ordinary course of such Selling Stockholder’s
business and, at the time of its purchase of such securities such Selling
Stockholder had no agreements or understandings, directly or indirectly, with
any person to distribute any such securities.
The
Company has advised each Selling Stockholder that it may not use shares
registered on this Registration Statement to cover short sales of Common Stock
made prior to the date on which this Registration Statement shall have been
declared effective by the Commission. If the Selling Stockholders use this
prospectus for any sale of the Common Stock, they will be subject to the
prospectus delivery requirements of the Securities Act. The Selling Stockholders
will be responsible to comply with the applicable provisions of the Securities
Act and Exchange Act, and the rules and regulations thereunder promulgated,
including, without limitation, Regulation M, as applicable to such Selling
Stockholders in connection with resales of their respective shares under this
Registration Statement.
We
are
required to pay all fees and expenses incident to the registration of the
shares, but we will not receive any proceeds from the sale of the Common Stock.
We have agreed to indemnify the selling stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities
Act.
-19-
Annex
B
The
Tube
Media Corp.
Selling
Securityholder Questionnaire
| 1. |
Your
identity and background as the Beneficial Holder of Common Stock
and
Warrants
|
| (a) |
Your full legal name:
|
|||
| (b) | Citizenship: | |||
| (c) | Social Security No. or Taxpayer ID No.: | |||
| (d) | Your address, telephone number, facsimile number and email address: |
| Address: | ||||
|
Telephone No.: |
||||
| Fax No.: | ||||
| Email Address: | ||||
| Contact Person: | ||||
| (e) | Full legal name of person through which you hold the Common Stock and Warrants only if different than as set forth in Item 1(a) above (i.e. name of your broker or the DTC participant, if applicable, through which your shares of Common Stock are held): |
| Name of broker: | ||||
|
DTC No.: |
||||
| Contact Person: | ||||
| Telephone No.: | ||||
| 2. |
Your
Relationship with the
Company
|
| (a) | Have you or any of your affiliates, officers, directors or principal equity holders (owners of 5% or more of the equity securities of the undersigned) held any position or office or have you had any other material relationship with the Company (or its predecessors or affiliates) within the past three years? | |||
| o Yes | ||||
| o No |
-20-
| (b) | If your response to Item 2(a) above is yes, please state the nature and duration of your relationship with the Company: | |||
|
|
||||
|
|
| 3. |
Your
interest in the Common Stock and
Warrants
|
| (a) | State the total number of shares (identifying separately those number of shares of Common Stock underlying the Warrants) you expect to purchase in connection with the proposed sale of Common Stock and Warrants by the Company: | |||
|
|
||||
| (b) | Do you beneficially own1 any securities of the Company other than the securities you will receive in connection with the proposed sale of Common Stock and Warrants by the Company? | |||
| o Yes | ||||
| o No | ||||
| (c) | If your answer to Item 3(b) above is yes, state the type, the aggregate amount or number of shares of such other securities of the Company beneficially owned by you: | |||
| Type: | ||||
| Aggregate Amount/Number of Shares: | ||||
| CUSIP No(s).: | ||||
| Holder of record: |
|
Note: List separately shares held of
record jointly
with another person, in a fiduciary capacity or in a name other
than your
own. Attach additional sheets and itemize, if
necessary.
|
__________________________
| 1NOTE: |
For
purposes of this question, shares are considered “beneficially owned” by a
person if the person, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has
or shares
voting power and/or investment power with respect to such shares.
“Voting
power” is the power to vote or direct the voting of the shares, and
“investment power” is the power to dispose of (or direct the disposition
of) the shares.
|
-21-
| (d) | Do you have both sole voting power and sole investment power with respect to all the shares to be purchased in the proposed sale of Common Stock and Warrants by the Company and any shares already beneficially owned by you? | |||
| o Yes | ||||
| o No | ||||
| (e) | If your answer to Item 3(d) above is no, provide information in the space below with respect to why you do not have sole voting power and sole investment power, including the number of shares as to which you do not have sole voting or investment power. | |||
|
|
||||
|
|
||||
|
|
||||
| (f) | Do you wish to disclaim beneficial ownership of any of the shares of Common Stock and Warrants (either to be purchased in the proposed offering or currently owned) that are described above? | |||
| o Yes | ||||
| o No | ||||
| (g) | If your answer to Item 3(f) is yes, provide information in the space below with respect to why you wish to disclaim beneficial ownership, including the number of shares as to which beneficial ownership is disclaimed. | |||
|
|
||||
|
|
||||
|
|
||||
| (h) | Do you have the right to acquire beneficial ownership of any shares of Common Stock within 60 days? | |||
| o Yes | ||||
| o No | ||||
| (i) | If your answer to Item 3(h) is yes, state the number of shares as to which you have the right to acquire beneficial ownership within 60 days in the space provided below and describe the date and circumstances under which you have any such right of acquisition. |
-22-
|
|
||||
|
|
||||
|
|
||||
| (j) | At the time of your receipt of the Common Stock and Warrants upon the completion of the proposed sale of Common Stock and Warrants, will you have any agreements or understandings, directly or indirectly, with any person to distribute the Common Stock and Warrants? | |||
| o Yes | ||||
| o No | ||||
| (k) | If your response to Item 3(j) above is yes, please describe such agreements or understandings: | |||
|
|
||||
|
|
| 4. |
Beneficial
Ownership
|
| (a) | Is the beneficial holder of the Common Stock and Warrants (whether now held or to be purchased) an SEC-reporting company? | |||
| o Yes | ||||
| o No | ||||
| (b) | If your answer to Item 4(a) above is no, name the natural person(s) who exercise voting or investment control over the Common Stock and Warrants (whether now held or to be purchased) and give their current titles and describe the relationship of such individuals to the beneficial owner, including their relationships with any intermediate entities, naming such entities: | |||
| Name(s) of Natural Person(s) and Title(s): | ||||
|
|
||||
|
|
-23-
| 5. |
NASD
Affiliates and Associates
|
| (a) | Are you a member of The National Association of Securities Dealers, Inc. (“NASD”) or a broker-dealer registered pursuant to Section 15 of the Exchange Act? | |||
| o Yes | ||||
| o No | ||||
| (b) | If “yes” to Section 5(a), did you receive your Common Stock and Warrants as compensation for investment banking services to the Company? | |||
| o Yes | ||||
| o No | ||||
| Note: If “no”, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. | ||||
| (c) | Are any of your affiliates or any member of your immediate family2 a member of the NASD or a broker-dealer registered pursuant to Section 15 of the Exchange Act? | |||
| o Yes | ||||
| o No | ||||
| (d) | If your response to Item 5(a) and 5(c) above is no, are you, any of your affiliates or any member of your immediate family an “affiliate” of a member of the NASD or a broker-dealer registered pursuant to Section 15 of the Exchange Act? | |||
| o Yes | ||||
| o No | ||||
| Note: For the purposes of this Item 5(d), an “affiliate” of a registered broker-dealer shall include any company that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such NASD member or broker-dealer, but excludes any individuals who are merely employed by such NASD member or broker-dealer or its affiliates. | ||||
| (e) | If your response to Item 5(d) above is “yes”, do you certify that you bought the Common Stock and Warrants in the ordinary course of business, and at the time of the purchase of the Common Stock and Warrants to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Common Stock and/or Warrants ? | |||
| o Yes | ||||
| o No |
2 Immediate
family includes your parents, mother-in-law, father-in-law,
spouse, sibling,
brother-in-law or sister-in-law, children, son-in-law or daughter-in-law,
and
any other individual who is supported to a materiel extent
by
you.
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| Note: If “no”, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, beneficial
owners of Common Stock and Warrants are advised to consult their own securities
law counsel regarding the consequences of being named or not being named as
a
selling securityholder in the Registration Statement and the related
prospectus.
The
undersigned acknowledges its obligation to comply with the provisions of the
Securities Exchange Act of 1934 and the rules thereunder relating to stock
manipulation, particularly Regulation M thereunder (or any successor rules
or
regulations), in connection with any offering of Common Stock pursuant to the
Registration Statement. The undersigned agrees that neither it nor any person
acting on its behalf will engage in any transaction in violation of such
provisions.
The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:
“An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling shareholders wanted
to do a short sale of common stock “against the box” and cover the short sale
with registered shares after the effective date. The issuer was advised that
the
short sale could not be made before the registration statement become effective,
because the shares underlying the short sale are deemed to be sold at the time
such sale is made. There would, therefore, be a violation of Section 5 if the
shares were effectively sold prior to the effective date.”
By
returning this Questionnaire, the undersigned will be deemed to be aware of
the
foregoing interpretation.
Upon
any
sale of Common Stock pursuant to the Registration Statement, the selling
securityholder will be required to deliver to the Transfer Agent (with a copy
to
the Company) the Notice of Transfer (completed and signed) in the form attached
as Exhibit
A
hereto
and hereby undertakes to do so.
In
the
event that the undersigned transfers all or any portion of the Company’s Common
Stock or Warrants after the date on which the information in this Questionnaire
is provided to the Company, the undersigned agrees to notify the transferee(s)
at the time of transfer of its rights and obligations hereunder.
By
signing below, the undersigned consents to the disclosure of the information
contained in this Questionnaire and the inclusion of such information in the
Registration Statement, the related prospectus and any state securities or
“Blue
Sky” applications. The undersigned understands that the information in this
Questionnaire will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement or related
prospectus.
By
signing below, the undersigned represents that the information provided herein
is accurate and complete. The undersigned agrees to promptly notify the Company
of any inaccuracies or changes in the information provided herein that may
occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.
-25-
Once
this
Questionnaire is executed by the undersigned beneficial holder and received
by
the Company, the terms of this Questionnaire, and the representations and
warranties contained herein, shall be binding on, shall inure to the benefit
of
and shall be enforceable by the respective successors, heirs, personal
representatives and assigns of the Company and shall be governed in all respects
by the internal laws of the State of Delaware.
Dated:
____________, 2006
|
(Name) [Please print or type] |
||
| By: | ||
|
(Authorized Signature) |
||
| Title: | ||
|
|
||
-26-
