REGISTRATION RIGHTS AGREEMENT
Exhibit
10.3
REGISTRATION
RIGHTS AGREEMENT
(this
"Agreement"),
dated
as of October 19, 2007, by and among Xxxxx.xxx Holdings, Inc., a Delaware
corporation, and the undersigned buyers (each, a "Buyer",
and
collectively, the "Buyers").
WHEREAS:
A. In
connection with the Investment Agreement by and between the Company and Buyer
dated even date herewith (the "Investment
Agreement"),
the
Company has agreed, upon the terms and subject to the conditions set forth
in
the Investment Agreement, to issue and sell to Buyer (i) shares (the
"Common
Shares")
of the
Company's common stock, par value $0.0001 per share (the "Common
Stock"),
and
(ii) warrants (the "Warrants")
which
will be exercisable to purchase shares of Common Stock (as exercised,
collectively the "Warrant
Shares")
in
accordance with the terms of the Warrants.
B. To
induce
the Buyers to execute and deliver the Investment 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 "1933
Act"),
and
applicable state securities laws following the date upon which the Company’s
Common Stock is first publicly tradable.
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 each of the Buyers hereby agree as
follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Investment Agreement. As used in this Agreement,
the
following terms shall have the following meanings:
a. “1933
Act”
means
the Securities Act of 1933, as amended.
b. “1934
Act” means
the
Exchange Act of 1934, as amended.
c. "Business
Day"
means
any day other than Saturday, Sunday or any other day on which commercial banks
in the City of New York are authorized or required by law to remain
closed.
d. “Buyer"
means a
Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 and any transferee or assignee thereof
to
whom a transferee or assignee assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9.
e. "Closing
Date"
shall
have the meaning set forth in the Investment Agreement.
f. "Effective
Date"
means
the date the Registration Statement is declared effective by the
SEC.
g. "Effectiveness
Deadline"
means
the date that is 150 days after the date of the Initial Offering.
h. “Initial
Offering”
means
the date upon which the Company (or its successor) becomes a public reporting
company under the Exchange Act of 1934, as amended.
i. "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
j. "register,"
"registered,"
and
"registration"
refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to
Rule 415 and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
k. "Registrable
Securities"
means
(i) the Common Shares, (ii) the Warrant Shares issued or issuable upon exercise
of the Warrants, and (iii) any capital stock of the Company issued or issuable
with respect to the Common Shares, the Warrant Shares, or the Warrants as a
result of any stock split, stock dividend, recapitalization, exchange or similar
event or otherwise, without regard to any limitations on exercise of the
Warrants.
l. "Registration
Statement"
means a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
m. "Required
Holders"
means
the holders of at least a majority of the Registrable Securities.
n. "Required
Registration Amount"
means
the sum of (i) the number of Common Shares issued and (ii) the number of Warrant
Shares issued and issuable pursuant to the Warrants as of the trading day
immediately preceding the applicable date of determination.
o. "Rule
415"
means
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.
p. "SEC"
means
the United States Securities and Exchange Commission.
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2. Registration.
a. Mandatory
Registration; Additional Registrations.
The
Company agrees, as soon as practicable after date of the Initial Offering but
no
later than five (5) business days after such date (the “Filing Deadline”), to
file with the SEC a Registration Statement under the Act covering the resale
of
all of the Registrable Securities. 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 determined as of the date the
Registration Statement is initially filed with the SEC. 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 Business Day following the Effective
Date,
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 and Buyer hereby acknowledge that in accordance with Rule 415, the
Company may not be allowed to register all of the Registrable Securities in
the
Registration Statement. If this occurs, the Company, upon Buyer’s request, shall
be required to file additional Registration Statements to include any of the
Registrable Securities that were not registered in the Registration Statement,
provided that such Registrable Securities can be registered at such time to
comply with Rule 415. In addition, if any of the Registrable Securities have
not
been registered in the Registration Statement or additional Registration
Statements, the Buyer shall be provided with notice of the filing of a
Registration Statement ten (10) days prior to such filing and given the
opportunity to request the inclusion of any Registrable Securities that have
not
previously been registered in a Registration Statement, provided that such
Registrable Securities can be registered at such time to comply with Rule
415.
b. Allocation
of Registrable Securities.
The
initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein shall
be allocated pro rata among the Buyers according to the total amount of
securities entitled to be included therein owned by each Buyer or in such other
proportions as shall mutually be agreed to by such Buyers. In the event that
any
Buyer sells or otherwise transfers any of the Registrable Securities, each
transferee shall be allocated a pro rata portion of the then remaining number
of
Registrable Securities included in such Registration Statement for such
transferor. In no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of the Required Holders on the Closing Date.
c. Legal
Counsel.
Subject
to Section 5 hereof, the Required Holders shall have the right to select one
legal counsel to review and oversee any registration pursuant to this Section
2
("Legal
Counsel"),
as
designated by the Required Holders. The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company's obligations
under this Agreement.
d. Ineligibility
for Form S-3.
In the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale
of
the Registrable Securities on another appropriate form reasonably acceptable
to
the Required Holders and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the SEC.
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e. Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or any Buyer's
allocated portion of the Registrable Securities pursuant to Section 2(b), the
Company shall amend the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable),
or
both, so as to cover at least the Required Registration Amount as of the trading
day immediately preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but in any event
not later than fifteen (15) days after the necessity therefor arises. The
Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following
the
filing thereof. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed "insufficient to cover
all of the Registrable Securities" if at any time the number of shares of Common
Stock available for resale under the Registration Statement is less than the
product determined by multiplying (i) the Required Registration Amount as of
such time by (ii) 0.90. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on the exercise of the Warrants
and such calculation shall assume that the Warrants are then exercisable for
shares of Common Stock at the then prevailing Exercise Price (as defined in
the
Warrants).
f. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If (i)
a Registration Statement covering all of the Registrable Securities required
to
be covered thereby and required to be filed by the Company pursuant to this
Agreement is (a) not filed on or before the Filing Deadline other than due
to
the determination by the underwriter not to file in its sole discretion based
on
adverse market conditions (“Filing
Failure”),
or
(b) not declared effective by the SEC on or before the respective Effectiveness
Deadline for any reason other than due to the determination by the underwriter
not to make the registration statement effective in its sole discretion based
on
adverse market conditions (an "Effectiveness
Failure")
then,
as partial relief for the damages to any holder by reason of any such delay
in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Registrable Securities relating
to such Registration Statement an amount in cash equal to one percent (1.0%)
of
the aggregate Purchase Price (as such term is defined in the Investment
Agreement) of such Buyer's Registrable Securities included in such Registration
Statement on each Registration Delay Payment Date (as defined below) of the
following dates: (i) the day of a Filing Failure and on every thirtieth day
(pro
rated for periods totaling less than thirty days) thereafter until such Filing
Failure is cured and (ii) the day of an Effectiveness Failure and on every
thirtieth day (pro rated for periods totaling less than thirty days) thereafter
until such Effectiveness Failure is cured. If, on any day after the Effective
Date, sales of all of the Registrable Securities required to be included on
such
Registration Statement that have not already been sold by Buyers pursuant to
the
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(r)) pursuant to such Registration Statement
or
otherwise (including, without limitation, because of a failure to keep such
Registration Statement effective, to disclose such information as is necessary
for sales to be made pursuant to such Registration Statement, to register a
sufficient number of shares of Common Stock or to maintain the listing of the
shares of Common Stock) (a "Maintenance
Failure")
then,
as partial relief for the damages to any holder by reason of any such delay
in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each Buyer of Registrable Securities who
has
not already sold all of its shares of Common Stock relating to such Registration
Statement an amount in cash equal to one-half of one percent (.5%) of the
aggregate Purchase Price (as such term is defined in the Investment Agreement)
of such Buyer's Registrable Securities included in such Registration Statement
that have not already been sold pursuant to the Registration Statement on the
initial day of a Maintenance Failure and on every thirtieth day (pro rated
for
periods totaling less than thirty days) thereafter until such Maintenance
Failure is cured. The payments to which a holder shall be entitled pursuant
to
this Section 2(f) are referred to herein as "Registration
Delay Payments."
In the
event the Company fails to make Registration Delay Payments in a timely manner,
such Registration Delay Payments shall bear interest at the rate of one and
one-half percent (1.5%) per month (prorated for partial months) until paid
in
full. Notwithstanding anything herein or in the Investment Agreement to the
contrary in no event shall the aggregate amount of Registration Delay Payments
exceed, in the aggregate, ten percent (10%) of the aggregate Purchase
Price.
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3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement with the
SEC
pursuant to Section 2, the Company will use its best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have
the
following obligations:
a. The
Company shall submit to the SEC, within two (2) Business Days after the Company
learns that no review of a particular Registration Statement will be made by
the
staff of the SEC or that the staff has no further comments on a particular
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request. The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Buyer may sell all of the Registrable
Securities covered by such Registration Statement without restriction pursuant
to Rule 144(k) (or any successor thereto) promulgated under the 1933 Act and
is
not otherwise prohibited by the SEC or any statute, rule, regulation or other
applicable law from selling any such Registrable Securities pursuant to such
Rule or (ii) the date on which the Buyer shall have sold all of the Registrable
Securities covered by such Registration Statement (the "Registration
Period").
The
Company shall use its best efforts to ensure that each Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit
to
state a material fact required to be stated therein, or necessary to make the
statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.
b. The
Company shall 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 1933 Act, as may
be
necessary to keep such Registration Statement effective at all times during
the
Registration Period, and, during such period, comply with the provisions of
the
1933 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 filing a
report on Form 10-QSB, Form 10-KSB or any analogous report under the Securities
Exchange Act of 1934, as amended (the "1934
Act"),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
5
c. The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing
with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-KSB, and Reports on Form 10-QSB and any
similar or successor reports) within a reasonable number of days prior to their
filing with the SEC, and (B) not file any Registration Statement or amendment
or
supplement thereto in a form to which Legal Counsel reasonably objects. The
Company shall not submit a request for acceleration of the effectiveness of
a
Registration Statement or any amendment or supplement thereto without the prior
approval of Legal Counsel, which consent shall not be unreasonably withheld.
The
Company shall furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after
the
same is prepared and filed with the SEC, one copy of any Registration Statement
and any amendment(s) thereto, including financial statements and schedules,
all
documents incorporated therein by reference, if requested by the Buyer, and
all
exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate
with
Legal Counsel in performing the Company's obligations pursuant to this Section
3.
d. The
Company shall furnish to the Buyer, without charge, (i) promptly after the
same
is prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by
the
Buyer, all exhibits and each preliminary prospectus, (ii) upon the effectiveness
of any Registration Statement, ten (10) copies of the prospectus included in
such Registration Statement and all amendments and supplements thereto (or
such
other number of copies as the Buyer may reasonably request) and (iii) such
other
documents, including copies of any preliminary or final prospectus, as the
Buyer
may reasonably request from time to time in order to facilitate the disposition
of the Registrable Securities owned by the Buyer.
e. The
Company shall use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Buyer
of
the Registrable Securities covered by a Registration Statement under such other
securities or "blue sky" laws of all applicable jurisdictions in the United
States, (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 for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (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 Legal Counsel and Buyer 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 threatening of any proceeding
for
such purpose.
6
f. The
Company shall notify Legal Counsel and Buyer in writing of the happening of
any
event, as promptly as practicable after becoming aware of such 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 the 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, subject to Section 3(r), 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 Legal Counsel and Buyer (or such other number of copies as Legal
Counsel or Buyer may reasonably request). The Company shall also promptly notify
Legal Counsel and 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 Legal Counsel and Buyer by facsimile
on
the same day of such effectiveness and by overnight mail), (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 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 Legal Counsel and Buyer 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
the
Buyer is required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request of the
Buyer, the Company shall furnish to Buyer, on the date of the effectiveness
of
the Registration Statement and thereafter from time to time on such dates as
the
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, addressed to the Buyer, 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 Buyer.
7
i. If
the
Buyer is required under applicable securities laws to be described in the
Registration Statement as an underwriter, then at the request of the Buyer
in
connection with such Buyer’s due diligence requirements, the Company shall make
available for inspection by (i) the Buyer, (ii) Legal Counsel and (iii) one
firm
of accountants or other agents retained by the Buyer (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
to
hold in strict confidence and shall not make any disclosure (except to the
Buyer) or use of 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 1933 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 has knowledge. The 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. Nothing herein (or in any other
confidentiality agreement between the Company and the Buyer) shall be deemed
to
limit the Buyer’s ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
j. The
Company shall hold in confidence and not make any disclosure of information
concerning the 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 the Buyer is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to the 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.
8
k. The
Company shall use its best efforts either to (i) cause all of the Registrable
Securities covered by a Registration Statement 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) secure designation and
quotation of all of the Registrable Securities covered by a Registration
Statement on The NASDAQ Global Market or (iii) if, despite the Company's best
efforts to satisfy, the preceding clauses (i) and (ii) the Company is
unsuccessful in satisfying the preceding clauses (i) and (ii), to secure the
inclusion for quotation on The NASDAQ Global Market or the American Stock
Exchange for such Registrable Securities and, without limiting the generality
of
the foregoing, to use its best efforts to arrange for at least two market makers
to register with the National Association of Securities Dealers, Inc.
("NASD")
as
such with respect to such Registrable Securities. The Company shall pay all
fees
and expenses in connection with satisfying its obligation under this Section
3(k).
l. The
Company shall cooperate with the Buyer and, to the extent applicable, 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.
m. If
requested by the Buyer, the Company shall (i) as soon as practicable incorporate
in a prospectus supplement or post-effective amendment such information as
the
Buyer reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as
soon
as practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) as soon
as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Buyer holding any Registrable
Securities.
n. The
Company shall use its best efforts to cause the Registrable Securities covered
by a 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.
o. 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, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering
a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration
Statement.
p. 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.
9
q. Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered 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 Buyers 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
A.
r. Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a "Grace
Period");
provided, that the Company shall promptly (i) notify the Buyer in writing of
the
existence of material, non-public information giving rise to a Grace Period
(provided that in each notice the Company will not disclose the content of
such
material, non-public information to the Buyer) and the date on which the Grace
Period will begin, and (ii) notify the Buyer in writing of the date on which
the
Grace Period ends; and, provided further, that no Grace Period shall exceed
sixty (60) consecutive days and during any three hundred sixty five (365) day
period such Grace Periods shall not exceed an aggregate of one hundred twenty
(120) days and the first day of any Grace Period must be at least two (2)
trading days after the last day of any prior Grace Period (each, an
"Allowable
Grace Period").
For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Buyer receives the notice referred
to in
clause (i) and shall end on and include the later of the date the Buyer receives
the notice referred to in clause (ii) and the date referred to in such notice.
The provisions of Section 3(g) hereof shall not be applicable during the period
of any Allowable Grace Period. Upon expiration of the Grace Period, the Company
shall again be bound by the first sentence of Section 3(f) with respect to
the
information giving rise thereto unless such material, non-public information
is
no longer applicable. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock
to a
transferee of the Buyer in accordance with the terms of the Investment Agreement
in connection with any sale of Registrable Securities with respect to which
the
Buyer has entered into a contract for sale, and delivered a copy of the
prospectus included as part of the applicable Registration Statement (unless
an
exemption from such prospectus delivery requirements exists), prior to the
Buyer's receipt of the notice of a Grace Period and for which the Buyer has
not
yet settled.
4. Obligations
of the Buyer.
a. At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify the Buyer in writing of the
information the Company requires from such Buyer if such Buyer elects to have
any of such Buyer's Registrable Securities included in such Registration
Statement. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of the Buyer that such Buyer shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and
the
intended method of disposition of the Registrable Securities held by it as
shall
be reasonably required to effect the effectiveness of the registration of such
Registrable Securities and shall execute such documents in connection with
such
registration as the Company may reasonably request.
10
b. The
Buyer, by such Buyer's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Buyer has notified the Company in writing of such Buyer's election to
exclude all of such Buyer's Registrable Securities from such Registration
Statement.
c. The
Buyer
agrees that, upon receipt of any notice from the Company of the happening of
any
event of the kind described in Section 3(g) or the first sentence of 3(f),
such
Buyer will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Buyer's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g) or the first sentence of 3(f) 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 shares of Common Stock to a transferee of the Buyer in accordance
with the terms of the Investment Agreement in connection with any sale of
Registrable Securities with respect to which the 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(g) or the first
sentence of 3(f) and for which the Buyer has not yet settled.
d. The
Buyer
covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom
in
connection with sales of Registrable
Securities pursuant to the Registration Statement.
5. Expenses
of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements
of
counsel for the Company and one counsel for the Buyers (such fees and
disbursements of counsel for the Buyers shall not exceed $20,000) shall be
paid
by the Company.
11
6. Indemnification.
In
the
event any Registrable Securities 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, managers, members,
partners, employees, agents, representatives of, and each Person, if any, who
controls the Buyer within the meaning of the 1933 Act or the 1934 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
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations").
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): shall not apply to a Claim (a) 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 any Buyer expressly for use in connection
with the preparation of the Registration Statement or any such amendment thereof
or supplement thereto or the omission or alleged omission in such written
information to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, if such prospectus was timely
made available by the Company pursuant to Section 3(d); (b) 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, including a corrected prospectus,
if such prospectus or corrected prospectus was timely made available by the
Company pursuant to Section 3(d); (c) in which amounts are paid in settlement
of
any Claim and such settlement is effected without the prior written consent
of
the Company, which consent shall not be unreasonably withheld or delayed; (d)
in
which a Buyer fails to cease all offers and sales of Registrable Securities
in
accordance with Section 4(c) herein; and (e) arising out of or based upon a
breach by any Buyer of such Buyer’s obligations set forth herein. 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.
b. In
connection with any Registration Statement in which the Buyer is participating,
such 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 who signs the
Registration Statement and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified
Party"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or
Indemnified Damages arise out of or are 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(c), such Buyer will reimburse any legal or other expenses
reasonably incurred by an Indemnified Party 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 or delayed. 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.
12
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 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 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. In the case of an Indemnified Person, legal counsel
referred to in the immediately preceding sentence shall be selected by the
Buyer. 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 reasonably 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, and such settlement shall not include
any admission as to fault on the part of the Indemnified Party. 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.
13
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 Person involved
in the sale of Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) in
connection with such sale shall be entitled to contribution from any Person
involved in such sale 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 pursuant to such Registration
Statement.
8. Reports
Under the 1934 Act.
With
a
view to making available to the Buyer the benefits of Rule 144 promulgated
under
the 1933 Act or any other 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:
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 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and
c. furnish
to the Buyer so long as such Buyer owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, that it has complied
with the reporting requirements of Rule 144, the 1933 Act and the 1934 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.
14
9. Assignment
of Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Buyer
to
any transferee of all or any portion of such Buyer's Registrable Securities
if:
(i) the Buyer 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, contemporaneous
with
such transfer or assignment, furnished with written notice of (a) the name
and
address of such transferee or assignee, and (b) the securities with respect
to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933
Act
and applicable state securities laws; (iv) at or before the time the Company
receives 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 (v) such transfer shall have been made
in
accordance with the applicable requirements of the Investment
Agreement.
10. 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 the Required
Holders. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Buyer and the Company. No such amendment shall be
effective to the extent that it applies to less 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.
11. 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.
b. 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),
so long as such facsimile is followed by mail delivery of the same information
contained in such facsimile, or (iii) one 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 for such
communications shall be:
If
to
Company:
Xxxxx.xxx
Holdings, Inc.
0000
X.
Xxxxxxx Xxxxxxx
Xxxx
Xxxxx, XX 00000
Attn:
Xxxx Xxxxx IV
15
with
a
copy to:
Rele
& Xxxxxx LLC
0000
Xxxxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxx, Esq.
If
to a
Buyer, to its address and facsimile number set forth 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, or (B)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, or receipt from a nationally recognized overnight delivery
service in accordance with clause (A) or (B) above, respectively.
c. 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.
d. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, 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.
16
e. This
Agreement, the other Transaction Documents (as defined in the Investment
Agreement) and the instruments referenced herein and therein constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein.
This
Agreement, the other Transaction Documents and the instruments referenced herein
and therein supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
f. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit
of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
g. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h. 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.
i. 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 any 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.
j. All
consents and other determinations required to be made by the Buyer pursuant
to
this Agreement shall be made, unless otherwise specified in this Agreement,
by
the Required Holders.
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.
m. The
Corporation Trust Company is currently the Company’s agent for the receipt of
service of process, located at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware in the County of New Castle. The Company agrees that any
document may be effectively served in connection with any action, suit or
proceeding in the United States by service on its agent. Buyer consents and
agrees that the Company may, in its reasonable discretion, appoint a substitute
agent for the receipt of service of process located within the Untied States
with notice to the Secretary of State of Delaware, and that upon such
appointment, the appointment of The Corporation Trust Company as agent may
be
revoked.
17
n. Currency.
As used
herein, "Dollar", "US Dollar" and "$" each mean the lawful money of the United
States.
Remainder
of Page Intentionally Left Blank.
18
IN
WITNESS WHEREOF,
the
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
||
|
XXXXX.XXX
HOLDINGS, INC.
|
||
| |
|
|
| By: | /s/ Xxxx Xxxxx IV | |
|
Name: Xxxx Xxxxx IV |
||
|
Title:
Chief Executive Officer
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYER:
|
||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
2
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
[Name
of
Transfer Agent]
Attention:
Re: Xxxxx.xxx
Holdings, Inc.
Ladies
and Gentlemen:
[We
are][I am] counsel to Xxxxx.xxx Holdings, Inc., a Delaware corporation (the
"Company"),
and
have represented the Company in connection with that certain Investment
Agreement (the "Investment
Agreement")
entered into by and among the Company and the Buyers named therein (the
"Holders")
pursuant to which the Company issued to the Holders shares of the Company's
common stock, par value $0.0001 per share (the "Common
Stock")
and
warrants exercisable for shares of Common Stock (the "Warrants").
Pursuant to the Investment Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (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),
including the shares of Common Stock issuable upon exercise of the Warrants,
under the Securities Act of 1933, as amended (the "1933
Act").
In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form ___ (File No. 333-_____________) (the "Registration
Statement")
with
the Securities and Exchange Commission (the "SEC")
relating to the Registrable Securities which names the Holder as a selling
stockholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC's
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at
[ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and
[we][I] 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 1933 Act
pursuant to the Registration Statement.
This
letter shall serve as our standing instruction to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Holders
as
contemplated by the Company's Irrevocable Transfer Agent Instructions dated
________ __, 2007.
| Very truly yours, | ||
| [ISSUER'S COUNSEL] | ||
| |
|
|
| By: | ||
|
|
||
| CC: [LIST NAMES OF HOLDERS] | ||
3
EXHIBIT
B
SELLING
STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those
previously issued to the Selling Stockholders and those issuable to the Selling
Stockholders upon exercise of the warrants. For additional information regarding
the issuances of common stock and the warrants, see "Private Placement of Common
Shares 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 for the ownership of the shares of common stock and the
warrants, 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 shareholder, based on its ownership of the
shares of common stock and the warrants, as of __________ __, 2007, assuming
exercise of the warrants held by the selling stockholders on that date, without
regard to any limitations on 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 registration rights agreements with the holders
of
the shares of common stock and the warrants, this prospectus generally covers
the resale of at least the sum of (i) the number of shares of common stock
issued and (ii) the number of shares of common stock issued and issuable upon
exercise of the related warrants, determined as if the outstanding warrants
were
exercised, as applicable, in full, as of the trading day immediately preceding
the date this registration statement was initially filed with the SEC. 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 warrants, a selling stockholder may not exercise the warrants,
to
the extent such 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
exercise, excluding for purposes of such determination shares of common stock
issuable 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."
|
Name
of Selling Stockholder
|
Number
of Shares of Common Stock Owned Prior to Offering
|
Maximum
Number of Shares of Common Stock to be Sold Pursuant to this
Prospectus
|
Number
of Shares of Common Stock Owned After Offering
|
|||||||
|
[Buyer]
|
0
|
|||||||||
PLAN
OF DISTRIBUTION
We
are
registering the shares of common stock previously issued and the shares of
common stock issuable upon exercise of the warrants to permit the resale of
these shares of common stock by the holders of the common stock and warrants
from time to time after the date of this prospectus. We will not receive any
of
the proceeds from the sale by the selling stockholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions
or
agent's commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions, on any national securities exchange or quotation service on which
the securities may be listed or quoted at the time of sale; in the
over-the-counter market; in transactions otherwise than on these exchanges
or
systems or in the over-the-counter market; through the writing of options,
whether such options are listed on an options exchange or otherwise;
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; sales
pursuant to Rule 144; broker-dealers
may agree with the selling securityholders 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.
If
the
selling stockholders effect such transactions by selling shares of common
stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or
to
whom they may sell as principal (which discounts, concessions or commissions
as
to particular underwriters, broker-dealers or agents may be in excess of
those
customary in the types of transactions involved). In connection with sales
of
the shares of common stock or otherwise, the selling stockholders may enter
into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions
they
assume. The selling stockholders may also sell shares of common stock short
and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales.
The
selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.
The
selling stockholders may pledge or grant a security interest in some or all
of
the warrants or shares of common stock owned by them and, if they default in
the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer and donate the shares of common
stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of common stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of
any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under
the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which
this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We
will
pay all expenses of the registration of the shares of common stock pursuant
to
the registration rights agreement, estimated to be
$[ ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or "blue sky" laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions, if
any.
We will indemnify the selling stockholders against liabilities, including some
liabilities under the Securities Act, in accordance with the registration rights
agreements, or the selling stockholders will be entitled to contribution. We
may
be indemnified by the selling stockholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling stockholder specifically for use
in
this prospectus, in accordance with the related registration rights agreements,
or we may be entitled to contribution.
Once
sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.
