REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is made and entered
into as of January 13, 2006, by and among Consolidated Energy, Inc., a Wyoming
corporation (the "Company"), and the persons and entities signatory hereto
(each, a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), the
Company has agreed to issue and sell to the Purchasers the Company's 8% Senior
Secured Convertible Notes (the "Notes") and Warrants to purchase shares of its
Common Stock; and
WHEREAS, to induce the Purchasers to execute and deliver the Purchase
Agreement and to purchase the Notes and the Warrants, the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as
amended, with respect to the Conversion Shares and the Warrant Shares.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which are hereby acknowledged by the parties, the
Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used but not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section 3(m).
"Board" shall have the meaning set forth in Section 3(m).
"Business Day" means any day except Saturday, Sunday and any day which is a
legal holiday or a day on which banking institutions in the state of Texas
generally are authorized or required by law or other government actions to
close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, $.001 par value.
"Effectiveness Date" means with respect to the Registration Statement the
earlier of (i) the 150th calendar day following the Closing Date or (ii) May 31,
2006, and, with respect to any additional Registration Statements which may be
required pursuant to Section 3(o), the 60th calendar day following the date on
which the Company first knows, or reasonably should have known, that such
additional Registration Statement is required hereunder, before which the
Company will use its best efforts to cause the Registration Statement to become
effective, and (ii) the date which is within five (5) Business Days of the date
on which the Commission informs the Company (a) that the Commission will not
review the Registration Statement, or (b) that the Company may request the
acceleration of the effectiveness of the Registration Statement.
"Effectiveness Period" shall have the meaning set forth in Section 2.
"Event" shall have the meaning set forth in Section 8(d).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means, collectively, each holder from time to time of Registrable
Securities including, without limitation, each Purchaser and its assignees. To
the extent this Agreement refers to an election, consent, waiver, request or
approval of or by the Holder, such reference shall mean an election, consent,
waiver, request or approval by the holders of a majority in interest of the
then-outstanding Registrable Securities (on an as exercised basis).
"Indemnified Party" shall have the meaning set forth in Section 6(c).
"Indemnifying Party" shall have the meaning set forth in Section 6(c).
"Liquidated Damages" shall have the meaning set forth in Section 8(d).
"Losses" shall have the meaning set forth in Section 6(a).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political 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 the 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 the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
"Registrable Securities" means (i) all of the shares of Common Stock
issuable upon conversion in full of the Notes, (ii) all shares issuable as
interest on the Notes assuming all permissible interest payments are made in
shares of Common Stock and the Notes are held until maturity, (iii) all Warrant
Shares, (iv) any additional shares issuable in connection with any anti-dilution
provisions in the Notes or the Warrants (in each case, without giving effect to
any limitations on conversion set forth in the Notes or limitations on exercise
set forth in the Warrant), (v) all shares of Common Stock issuable upon exercise
of warrants issuable to the placement agent and (vi)any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing. If the number of Registrable
Securities shall equal or exceed 50% of the issued and outstanding Common Stock
on the actual filing date, then the initial Registration Statement shall
register a number of shares which shall be 100,000 shares less than the number
of shares which is 50% of the number of shares of Common Stock outstanding on
such actual filing date, and the remaining Registrable Securities shall be
subject to Section 3(o)(ii). In such event, the number of shares to be
registered for each Holder shall be reduced pro-rata among all Holders. Each
Holder shall have the right to designate which of its Registrable Securities
shall be eliminated from such initial Registration Statement.
"Registration Statement" means the registration statements required to be
filed hereunder and any additional registration statements contemplated by
Section 3(o), including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
"Required Filing Date" means the thirtieth (30th) calendar day immediately
following the Closing Date, and, with respect to any additional Registration
Statements which may be required pursuant to Section 3(o), the 30th day
following the date on which the Company first knows, or reasonably should have
known that such additional Registration Statement is required hereunder.
"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 158" means Rule 158 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.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to Holder, for which Holder
will be reimbursed by the Company pursuant to Section 5 of this Agreement and
Section 8.1 of the Purchase Agreement.
"Warrant Shares" shall have the meaning set forth in the Purchase
Agreement.
2. Registration. As soon as practicable, but in any event on or prior to the
Required Filing Date, the Company shall prepare and file with the Commission a
Registration Statement covering the resale of 150% of the Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3, in which
case such registration shall be on another appropriate form in accordance with
the Securities Act and the rules promulgated thereunder) and shall contain
(except if otherwise directed by the Purchasers) the "Plan of Distribution"
substantially in the form attached hereto as Exhibit A. The Company shall (i)
not permit any securities other than the Registrable Securities to be included
in the Registration Statement, (ii) use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act
(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 of the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that the Registration
Statement will not be "reviewed," or not be subject to further review) as soon
as possible after the filing thereof, but in any event prior to the
Effectiveness Date, and (iii) keep such Registration Statement continuously
effective under the Securities Act until all Registrable Securities covered by
such Registration Statement have been sold or may be sold 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").
3. Registration Procedures; Company's Obligations.
In connection with the registration of the Registrable Securities, the
Company shall:
(a) Prepare and file with the Commission on or prior to the Required Filing
Date, a Registration Statement on Form S-3 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate form in accordance with the
Securities Act and the Rules promulgated thereunder) in accordance with the
method or methods of distribution thereof as specified by the Holder (except if
otherwise directed by the Holder), and use its best efforts to cause the
Registration Statement to become effective and remain effective as provided
herein; provided, however, that not less than three (3) Business Days prior to
the filing of the Registration Statement or any related Prospectus or any
amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall (i) furnish to the Holder
and any Special Counsel, copies of all such documents proposed to be filed,
which documents (other than those incorporated by reference) will be subject to
the timely review of and comment by such Special Counsel, and (ii) at the
request of the Holder cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of such Special Counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holder or any Special Counsel shall reasonably
object in writing within three (3) Business Days of their receipt thereof.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period 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
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond promptly to any comments received from the Commission with respect
to the Registration Statement or any amendment thereto and promptly provide the
Holder true and complete copies of all correspondence from and to the Commission
relating to the Registration Statement; 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 during the applicable period in accordance with the intended methods
of disposition by the Holder set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
(c) Notify the Holder of Registrable Securities to be sold and any Special
Counsel promptly (and, in the case of (i)(A) below, not less than three (3)
Business Days prior to such filing and, in the case of (i)(C) below, no later
than the first Business Day following the date on which the Registration
Statement becomes effective) and (if requested by any such Person) confirm such
notice in writing no later than three (3) Business Days following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed, (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in the 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 the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The Company shall promptly furnish to the Special Counsel, without charge,
(i) any correspondence from the Commission or the Commission's staff to the
Company or its representatives relating to any Registration Statement, and (ii)
promptly after the same is prepared and filed with the Commission, a copy of any
written response to the correspondence received from the Commission.
(d) Use its best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of, (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any U.S. jurisdiction, at the earliest practicable moment.
(e) If requested by the Holder, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement such
information as the Company reasonably agrees should be included therein, and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(f) Furnish to the Holder and any Special Counsel, without charge, at least
one conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, 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.
(g) Promptly deliver to the Holder and any Special Counsel, without charge,
as many copies of the Registration Statement, Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by the selling
Holder in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto. Should the
Holder offer or sell the Registrable Securities, such Holder agrees to comply
with all applicable securities laws.
(h) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holder and any
Special Counsel 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 such
jurisdictions within the United States as the Holder reasonably 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 necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, 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 it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any tax
in any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to a Registration Statement and to enable such Registrable Securities to be in
such denominations and registered in such names as the Holder may request at
least two (2) Business Days prior to any sale of Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section 3(c)(v),
promptly prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement 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, neither the Registration Statement nor such 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 light
of the circumstances under which they were made, not misleading.
(k) Use its best efforts to cause all Registrable Securities relating to
such Registration Statement to be listed on any securities exchange, quotation
system, market or over-the-counter bulletin board, if any, on which the same
securities issued by the Company are then listed as and when required pursuant
to the Purchase Agreement.
(l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than forty-five (45) days after the end of
any twelve (12) month period (or ninety (90) days after the end of any twelve
(12) month period if such period is a fiscal year) commencing on the first day
of the first fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the requirements of
Rule 158.
(m) If (i) there is material non-public information regarding the Company
which the Company's Board of Directors (the "Board") reasonably determines not
to be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board reasonably determines not to be in the Company's best
interest to disclose and which the Company would be required to disclose under
the Registration Statement, then the Company may suspend effectiveness of a
Registration Statement and suspend the sale of Registrable Securities under a
Registration Statement one (1) time every three (3) months or three (3) times in
any twelve month period, provided that the Company may not suspend its
obligation for more than thirty (30) days in the aggregate in any twelve month
period if suspension is for any of the reasons listed above or sixty (60) days
in the aggregate in any twelve month period for any other reason (each, a
"Blackout Period"); provided, however, that no such suspension shall be
permitted for more than twenty (20) consecutive days, arising out of the same
set of facts, circumstances or transactions.
(n) Within two (2) Business Days after the Registration Statement which
includes the Registrable Securities is ordered effective by the Commission, 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 Holder
whose Registrable Securities are included in such Registration Statement)
confirmation that the Registration Statement has been declared effective by the
Commission in substantially the form attached hereto as Exhibit B.
(o) (i) Subject to clause (ii) below, if during the Effectiveness Period,
the number of Registrable Securities at any time exceeds 75% of the number of
shares of Common Stock then registered in a Registration Statement, then the
Company shall file as soon as reasonably practicable but in any case prior to
the applicable Required Filing Date, an additional Registration Statement
covering the resale by the Holders of not less than 150% of the number of such
Registrable Securities.
(ii) In addition, in the event that all Registrable Securities are not
included on the initial Registration Statement as contemplated by the last three
sentences of the definition of Registrable Securities above, then upon written
request of a majority in interest of the Holders, the Company shall file as soon
as reasonably practicable but in any case prior to the applicable Required
Filing Date, an additional Registration Statement covering the resale by the
Holders of not less than 150% of the number of such Registrable Securities, but
in no event shall such additional Registration Statement be filed less than 30
days after the date the initial Registration Statement filed hereunder is
declared effective by the Commission.
4. Registration Procedures; Holder's Obligations
In connection with the registration of the Registrable Securities, the
Holder shall:
(a) If the Registration Statement refers to the Holder by name or otherwise
as the holder of any securities of the Company, have the right to require (if
such reference to the Holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force) the deletion of the
reference to the Holder in any amendment or supplement to the Registration
Statement that will be filed or prepared subsequent to the time that such
reference ceases to be required.
(b) (i) not sell any Registrable Securities under the Registration
Statement until it has received copies of the Prospectus as then amended or
supplemented as contemplated in Section 3(g) and notice from the Company that
such Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c), (ii) 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 (iii) furnish to the Company information regarding such Holder
and the distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, and the Company may exclude from such
registration the Registrable Securities of the Holder if it fails to furnish
such information within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.
(c) upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or
3(m), forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until the Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(j), or until it is advised in writing 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.
5. Registration Expenses
All reasonable fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, the following: (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with each securities exchange or other market on which
Registrable Securities are required hereunder to be listed, (B) with respect to
filings required to be made with the Commission, and (C) in compliance with
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 requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement); (iii) messenger, telephone and delivery expenses of the Company;
(iv) fees and disbursements of counsel for the Company; and (v) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). 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.
6. Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Purchaser, its
permitted assignees, officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees, each Person who controls any such Purchaser or permitted assignee
(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, and the respective successors, assigns, estate and personal
representatives of each of the foregoing, to the fullest extent permitted by
applicable law, from and against any and all claims, losses, damages,
liabilities, penalties, judgments, costs (including, without limitation, costs
of investigation) and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "Losses"), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, as supplemented or
amended, if applicable, 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 the light of the circumstances under which they were
made) not misleading, except (i) to the extent, but only to the extent, that
such untrue statements or omissions are based solely upon information regarding
the Holder furnished in writing to the Company by the Holder expressly for use
therein, which information was reviewed and expressly approved by the Holder or
Special Counsel expressly for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto, or (ii) as
a result of the failure of the Holder to deliver a Prospectus, as amended or
supplemented, to a purchaser in connection with an offer or sale. The Company
shall notify the Holder 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 6(c) hereof) and shall survive the transfer of the
Registrable Securities by the Holder.
(b) Indemnification by Purchaser. Each Purchaser and its permitted
assignees shall, 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, and the respective successors, assigns, estate and
personal representatives of each of the foregoing, to the fullest extent
permitted by applicable law, from and against any and all Losses, as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus, as
supplemented or amended, if applicable, 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 the light of the circumstances under
which they were made) not misleading, to the extent, but only to the extent,
that (i) such untrue statement or omission is contained in or omitted from any
information so furnished in writing by the Holder or the Special Counsel to the
Company specifically for inclusion in the Registration Statement or such
Prospectus, and (ii) such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus or such form of
prospectus or, to the extent that such information relates to the Holder or the
Holder's proposed method of distribution of Registrable Securities, was reviewed
and expressly approved in writing by the Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus Supplement.
Notwithstanding anything to the contrary contained herein, the Holder shall be
liable under this Section 6(b) for only that amount as does not exceed the net
proceeds to the Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity pursuant to Section
6(a) or 6(b) hereunder (an "Indemnified Party"), such Indemnified Party promptly
shall 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 materially and adversely prejudiced the Indemnifying Party.
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: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) 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 (iii) 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). 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, conditioned or delayed. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, which consent shall not unreasonably be withheld, conditioned or delayed,
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 reasonable 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 ten (10) Business 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 or pursuant to applicable law).
(d) Contribution. If a claim for indemnification under Section 6(a) or 6(b)
is unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (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 6(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 under
Section 6(a) or 6(b) was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Holder shall be
liable or required to contribute under this Section 6(d) for only that amount as
does not exceed the net proceeds to the Holder as a result of the sale of
Registrable Securities pursuant to the Registration Statement.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(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.
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.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
7. Rule 144.
As long as the Holder owns Registrable Securities, the Company covenants to
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 the Holder owns Registrable Securities, 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 Holder 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 the Holder may reasonably request, all to the extent required from
time to time to enable the Holder to sell Conversion Shares 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
providing any legal opinions of counsel to the Company referred to in the
Purchase Agreement. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
8. Miscellaneous.
(a) Remedies. The remedies provided in this Agreement and the Purchase
Agreement are cumulative and not exclusive of any remedies provided by law. In
the event of a breach by the Company or by the Holder of any of their
obligations under this Agreement, the 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 the 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) No Inconsistent Agreements. Neither the Company nor any of its
Affiliates has as of the date hereof entered into, nor shall the Company or any
of its Affiliates, on or after the date of this Agreement, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holder in this Agreement or otherwise conflicts with the
provisions hereof. Without limiting the generality of the foregoing, without the
written consent of the Holder, the Company shall not grant to any Person the
right to request the Company to register any securities of the Company under the
Securities Act if the rights so granted are inconsistent with the rights granted
to the Holder set forth herein, or otherwise prevent the Company with complying
with all of its obligations hereunder. Except as set forth on Schedule 8(b),
neither the Company nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
(c) No Piggyback on Registrations. Except as set forth on Schedule 8(c)
attached hereto, neither the Company nor any of its security holders (other than
the Holders in such capacity pursuant hereto) may include securities of the
Company in the initial Registration Statement other than the Registrable
Securities. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company. The
Company shall not file any other registration statements until the initial
Registration Statement required hereunder is declared effective by the
Commission, provided that this Section 8(c) shall not prohibit the Company from
filing amendments to registration statements already filed.
9. Failure to File Registration Statement and Other Events.
(a) The Company and the Holder agree that the Holder will suffer damages if
the Registration Statement is not filed on or prior to the Required Filing Date
or is not declared effective by the Commission on or prior to the Effectiveness
Date and maintained in the manner contemplated herein during the Effectiveness
Period or if certain other events occur. The Company and the Holder further
agree that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if (i) the Registration Statement is not filed on or
prior to the Required Filing Date, or is not declared effective by the
Commission on or prior to the Effectiveness Date, or (ii) the Company fails to
file with the Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within five (5) Business Days of 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 subject
to further review, or (iii) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective or
available as to all Registrable Securities for 30 days during the Effectiveness
Period, without being succeeded within a reasonable period by a subsequent
Registration Statement filed with and declared effective by the Commission, or
(iv) the Company suspends the use of the Prospectus forming a part of such
Registration Statement for more than twenty (20) days in any period of 365
consecutive days, or (v) during the Effectiveness Period, trading in the Common
Stock shall be suspended for any reason for more than three (3) Business Days in
the aggregate, or (vi) the Company breaches in a material respect any covenant
or other material term or condition in the Transaction Documents (other than a
representation or warranty contained therein) or any other agreement, document,
certificate or other instrument delivered in connection with the transactions
contemplated hereby and thereby, and such breach continues for a period of
thirty (30) days after written notice thereof to the Company, or (vii) the
Company has breached Section 3(n) of this Agreement (any such failure or breach
being referred to as an "Event"), the Company shall pay as partial liquidated
damages for such failure or breach and not as a penalty (the "Liquidated
Damages") to the Holder (or to its assignees, as the case may be) an amount
equal to 2% of the purchase price of the Notes and Warrants paid by the initial
Holder pursuant to the Purchase Agreement for each thirty (30) day period, pro
rated for any period less than thirty (30) days, following the Event until the
applicable Event has been cured. Payments to be made pursuant to this Section
8(d) shall be due and payable in cash in arrears at the end of each thirty (30)
day period. The parties agree that the Liquidated Damages represent a reasonable
estimate on the part of the parties, as of the date of this Agreement, of the
amount of damages that may be incurred by the Holder if the Registration
Statement is not filed on or prior to the Required Filing Date or has not been
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if any other Event as described herein has occurred. If the Company fails to pay
any Liquidated Damages pursuant to this Section in full within seven days after
the date payable, the Company will pay interest thereon at a rate of 18% 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.
(b) Consent to Jurisdiction. The Company and each Purchaser (i) hereby
irrevocably submit to the exclusive jurisdiction of the United States District
Court for the Northern District of Texas and the courts of the State of Texas
located in Dallas County for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement or the Purchase Agreement, and (ii)
hereby waive, and agree not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. The Company and each
Purchaser consent to process being served in any such suit, action or proceeding
by mailing a copy thereof 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 in this Section 8(e)
shall affect or limit any right to serve process in any other manner permitted
by law.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the
Purchasers.
(d) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., Eastern Time, on a
Business Day, (ii) the first Business Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., Eastern Time, on any
date and earlier than 11:59 p.m., Eastern Time, on such date, (iii) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) actual receipt by the party to whom such notice is
required to be given.
(x) if to the Company:
Consolidated Energy, Inc.
00 Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, President
Telecopier: 859.757.0071
Telephone: 000.000.0000
with a copy to:
Xxxx X. Xxxxxxxx, Esq.
1371 East 0000 Xxxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(y) if to any Purchaser:
At the address of such Purchaser set forth
on its signature page to the Purchase Agreement.
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.
(e) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns and
shall inure to the benefit of the Holder and its successors and assigns. The
Company may not assign this Agreement or any of its respective rights or
obligations hereunder without the prior written consent of the Purchasers. Each
Purchaser may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.
(f) Assignment of Registration Rights. The rights of the Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be assignable
by each Holder to any transferee of the Holder of all or a portion of the shares
of Registrable Securities 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 (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) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws; (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement and shall be for no less than 10% of the Registrable
Securities. In addition, the Holder shall have the right to assign its rights
hereunder to any other Person with the prior written consent of the Company,
which consent shall not be unreasonably withheld, conditioned or delayed. The
rights to assignment shall apply to the Holder (and to subsequent) successors
and assigns. In the event of an assignment pursuant to this Section 8(i), the
Purchaser shall pay all incremental costs and expenses incurred by the Company
in connection with filing a Registration Statement (or an amendment to the
Registration Statement) to register the shares of Registrable Securities
assigned to any assignee or transferee of the Purchaser.
(g) 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.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to principles of
conflicts of law thereof. This Agreement shall not be interpreted or construed
with any presumption against the party causing this Agreement to be drafted.
(i) Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
(j) Termination. This Agreement shall terminate on the date on which all
remaining Registrable Securities may be sold without restriction pursuant to
Rule 144(k) of the Securities Act.
(k) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable in any respect,
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 herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
[Remainder of page intentionally left blank. Signature pages to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
CONSOLIDATED ENERGY, INC.
By:/s/ Xxxxx Xxxxxxx
----------------
Name: Xxxxx Xxxxxxx
Title: President
[Signatures of Purchasers to follow on next pages.]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Bushido Capital Master Fund, LP
Signature of Authorized
Signatory of Holder: /s/ Xxxxxxxxxxx Xxxxxxx
------------------------
Name of Authorized Signatory: Xxxxxxxxxxx Xxxxxxx
Title of Authorized Signatory: Managing Director, Bushido Capital
Partners, Ltd.
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Gryphon Master Fund, L.P.
Signature of Authorized Signatory of Holder: /s/ X.X. Xxxx XX
-----------------
Name of Authorized Signatory: X.X. Xxxx XX
Title of Authorized Signatory: Authorized Agent
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: GSSF Master Fund, LP
Signature of Authorized Signatory of Holder: /s/ X.X. Xxxx XX
-----------------
Name of Authorized Signatory: X.X. Xxxx XX
Title of Authorized Signatory: Authorized Agent
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Xxxxxxxx Partners, LP
----------------------
Signature of Authorized Signatory of Holder: /s/ Yedi Xxxx
---------------
Name of Authorized Signatory: Yedi Xxxx
----------
Title of Authorized Signatory: CFO
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
WS Opportunity Fund International, Ltd.
By: WS Ventures Management, L.P.,
as agent and attorney-in-fact
Name of Holder: By: WSV Management, L.L.C., General Parnter
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx Xxxxxx
-------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxx, Member
________________________
Title of Authorized Signatory:
_______________________
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
WS Opportunity Fund (QP), L.P.
By: WS Ventures Management, L.P.,
General Partner
Name of Holder: By: WSV Management, L.L.C., General Parnter
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx Xxxxxx
-------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxx, Member
______________________
Title of Authorized Signatory:
_______________________
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
WS Opportunity Fund, L.P.
By: WS Ventures Management, L.P.,
as agent and attorney-in-fact
Name of Holder: By: WSV Management, L.L.C., General Parnter
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx Xxxxxx
-------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxx, Member
_______________________
Title of Authorized Signatory:
_______________________
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: BFS US Special Opportunities Trust PLC
--------------------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx Xxxxxxxxx
----------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxxxxx
-----------------
Title of Authorized Signatory: President, XXXX Capital Group, Inc.,
Investment Advisor
------------------------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Renaissance US Growth Investment Trust PLC
-------------------------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx Xxxxxxxxx
----------------------
Name of Authorized Signatory: Xxxxxxx Xxxxxxxxx
------------------
Title of Authorized Signatory: President, XXXX Capital Group, Inc.,
Investment Advisor
------------------------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Whalehaven Capital Fund Limited
---------------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxx Xxxxxxxxxxx
----------------------
Name of Authorized Signatory: Xxxx Xxxxxxxxxxx
-----------------
Title of Authorized Signatory: Director
---------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Gamma Opportunity Capital Partners, LP
---------------------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxxxx X. Xxxxxx
-----------------------
Name of Authorized Signatory: Xxxxxxxx X. Xxxxxx
-------------------
Title of Authorized Signatory: President / Director
---------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: ABS SOS-Plus Partners, Ltd.
----------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name of Authorized Signatory: Xxxxxxxx X. Xxxxxx
-------------------
Title of Authorized Signatory: President / Director
---------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Regenmacher Holdings, Ltd.
---------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name of Authorized Signatory: Xxxxxxxx X. Xxxxxx
-------------------
Title of Authorized Signatory: President of Investment Manager, SIAM CM
-----------------------------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Iroquois Master Fund Ltd.
--------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxx Xxxxxxxxx
--------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxxxx
-----------------
Title of Authorized Signatory: Authorized Signatory
---------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Newgrange Partners LP
----------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Name of Authorized Signatory: Xxxxxxx X. Xxxxxxxx
--------------------
Title of Authorized Signatory: Managing Partner
-----------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: ENABLE GROWTH PARTNERS LP
-------------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx X'Xxxx
------------------
Name of Authorized Signatory: Xxxxxxx X'Xxxx
--------------
Title of Authorized Signatory: Principal & Portfolio Manager
-----------------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: ENABLE OPPORTUNITY PARTNERS LP
Signature of Authorized Signatory of Holder: /s/ Xxxxxxx X'Xxxx
-------------------
Name of Authorized Signatory: Xxxxxxx X'Xxxx
--------------
Title of Authorized Signatory: Principal & Portfolio Manager
-----------------------------
[SIGNATURE PAGES CONTINUE]
[SIGNATURE PAGE OF HOLDERS TO CEIW RRA]
Name of Holder: Cordillera Fund, L.P.
----------------------
Signature of Authorized Signatory of Holder: /s/ Xxxxx X. Xxxxxx
-------------------
Name of Authorized Signatory: Xxxxx X. Xxxxxx
----------------
Title of Authorized Signatory: Co-CEO of Xxxxxx Xxxxxx Capital, Inc.
--------------------------------------
General Partner of ACCF GenPar, L.P.
General Partner of the Cordillera Fund, L.P.
[SIGNATURE PAGES CONTINUE]
EXHIBIT A
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholders. The common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at prices related to
the prevailing market prices, at varying prices determined at the time of sale,
or at negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise; or
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.
In connection with the sale of the Common Stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the Common Stock short and deliver these
securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker~dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker~dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus. Each Selling
Stockholder has advised us that they have not entered into any written or oral
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the Common Stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the Common Stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name and address of Transfer Agent]
____________________
____________________
____________________
Attn: _____________
Re: Consolidated Energy, Inc.
Ladies and Gentlemen:
We are counsel to Consolidated Energy, Inc., a Wyoming corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Purchase Agreement"), dated as of January
13, 2006, by and among the Company and the purchasers (the "Purchasers" and the
"Holders") named therein pursuant to which the Company issued to the Purchasers
its 8% Senior Secured Convertible Notes Due 2008 and other securities. Pursuant
to the Purchase Agreement, the Company has also entered into a Registration
Rights Agreement with the Purchasers (the "Registration Rights Agreement"),
dated as of January 13, 2006, pursuant to which the Company agreed, among other
things, to register the Registrable Securities (as defined in the Registration
Rights Agreement), under the Securities Act of 1933, as amended (the "1933
Act"). In connection with the Company's obligations under the Registration
Rights Agreement, on _________ __, 2005, the Company filed a Registration
Statement on Form SB-2 (File No. 333-________) (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") relating to the resale
of the Registrable Securities which names the Holders as selling stockholders
thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and, accordingly, the
Registrable Securities are available for resale under the 1933 Act in the manner
specified in, and pursuant to the terms of, the Registration Statement.
Very truly yours,
By:
cc: [PURCHASERS]
