Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered into
as of February 24, 2005, by and among Consolidated Energy, Inc., a Wyoming
corporation (the "Company"), and the persons and entities listed on Exhibit A
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 6%
Senior Secured Convertible Notes Due 2008 (the "Notes"), Warrants to purchase
shares of its Common Stock, and AIRs; and
WHEREAS, to induce the Purchasers to execute and deliver the Purchase
Agreement and to purchase the Notes, the Warrants and the AIRs, the Company
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, with respect to the Conversion Shares, the Warrant Shares,
the Bridge Warrant Shares and the AIR 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.
"AIR Shares" shall have the meaning set forth in the definition of
"Registrable Securities."
"Blackout Period" shall have the meaning set forth in Section 3(m).
"Board" shall have the meaning set forth in Section 3(m).
"Bridge Warrant Shares" shall have the meaning set forth in the definition of
"Registrable Securities."
"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 Florida
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.
"Conversion Shares" shall have the meaning set forth in the definition of
"Registrable Securities."
"Effectiveness Date" means with respect to the Registration Statement the
earlier of (i) the 120th day following the Closing Date (or the 150th day
following the Closing Date in the event that the Registration Statement is
"reviewed" by the Commission), 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) the shares of Common Stock issued and
issuable pursuant to the conversion of the Notes, and upon any stock split,
stock dividend, recapitalization or similar event with respect to such shares
of Common Stock and any other securities issued in exchange of or replacement
of such shares of Common Stock (collectively, the "Conversion Shares"); until
in the case of any of the Conversion Shares (a) a Registration Statement
covering such Conversion Share has been declared effective by the Commission
and continues to be effective during the Effectiveness Period, or (b) such
Conversion Share is sold in compliance with Rule 144 or may be sold pursuant
to Rule 144(k), after which time such Conversion Share shall not be a
Registrable Security; (ii) the shares of Common Stock issued and issuable
pursuant to the exercise of the Warrants, and upon any stock split, stock
dividend, recapitalization or similar event with respect to such shares of
Common Stock and any other securities issued in exchange of or replacement of
such shares of Common Stock (collectively, the "Warrant Shares"); until in the
case of any of the Warrant Shares (a) a Registration Statement covering such
Warrant Share has been declared effective by the Commission and continues to
be effective during the Effectiveness Period, or (b) such Warrant Share is
sold in compliance with Rule 144 or may be sold pursuant to Rule 144(k), after
which time such Warrant Share shall not be a Registrable Security; (iii) the
shares of Common Stock issued and issuable pursuant to the exercise of that
certain Warrant for the Purchase of Shares of Common Stock dated January 11,
2005, executed by the Company for the benefit of Gryphon Master Fund, L.P. and
GSSF Master Fund, LP, and upon any stock split, stock dividend,
recapitalization or similar event with respect to such shares of Common Stock
and any other securities issued in exchange of or replacement of such shares
of Common Stock (collectively, the "Bridge Warrant Shares"); until in the case
of any of the Bridge Warrant Shares (a) a Registration Statement covering such
Bridge Warrant Share has been declared effective by the Commission and
continues to be effective during the Effectiveness Period, or (b) such Bridge
Warrant Share is sold in compliance with Rule 144 or may be sold pursuant to
Rule 144(k), after which time such Bridge Warrant Share shall not be a
Registrable Security; and (iv) the shares of Common Stock issued and issuable
pursuant to the exercise of the AIRs, and upon any stock split, stock
dividend, recapitalization or similar event with respect to such shares of
Common Stock and any other securities issued in exchange of or replacement of
such shares of Common Stock (collectively, the "AIR Shares"); until in the
case of any of the AIR Shares (a) a Registration Statement covering such AIR
Share has been declared effective by the Commission and continues to be
effective during the Effectiveness Period, or (b) such AIR Share is sold in
compliance with Rule 144 or may be sold pursuant to Rule 144(k), after which
time such AIR Share shall not be a Registrable Security.
"Registration Statement" means the registration statement, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such registration
statement, for the Conversion Shares, the Warrant Shares, the Bridge Warrant
Shares and the AIR Shares required to be filed by the Company with the
Commission pursuant to this Agreement.
"Required Filing Date" means the forty-fifth (45th) day immediately following
the Closing Date.
"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 definition of
"Registrable Securities."
2. Registration. On or prior to the Required Filing Date, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale 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 B. 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
12dl-2 promulgated under the Exchange 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 for a
period of two years from the Effectiveness Date (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) 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 the form attached hereto as Exhibit C.
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, Warrant Shares, Bridge Warrant Shares and AIR 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.
(c) No Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Holder in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement.
(d) Failure to File Registration Statement and Other Events. 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
12dl-2 promulgated under the Exchange 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 thirty (30) days in any
period of 365 consecutive days if the Company suspends in reliance on its
ability to do so due to the existence of a development that, in the good faith
discretion of the Board, makes it appropriate to so suspend or which renders
the Company unable to comply with the Commission requirements, or the Company
suspends the use of the Prospectus forming a part of such Registration
Statement for more than sixty (60) days in any period of 365 consecutive days
for any other reason, 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 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 two percent (2%) of the purchase price of
the Notes, Warrants and AIRs 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.
(e) Consent to Jurisdiction. The Company and each Purchaser (i) hereby
irrevocably submit to the non-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.
(f) 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.
(g) 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.
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx, President
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxx, LLC
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 Exhibit A to this 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(m) 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.
(n) 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.
(o) 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.]
PURCHASERS:
GRYPHON MASTER FUND, L.P.
By: Gryphon Partners, L.P., its General Partner
By: Gryphon Management Partners, L.P., its General Partner
By: Gryphon Advisors, L.L.C., its General Partner
By: /s/X.X. Xxxx, XX, Authorized Agent
GSSF MASTER FUND, LP
By: Gryphon Special Situations Fund, LP, its General Partner
By: GSSF Management Partners, LP, its General Partner
By: GSSF, LLC, its General Partner
By: /s/X.X. Xxxx, XX, Authorized Agent
XXXXXXXX PARTNERS, L.P.
By: Xxxxxxxx Capital Management, LLC, its General Partner
By: /s/Yedi Xxxx, CFO
WS OPPORTUNITY INTERNATIONAL FUND, LTD.
By: WS Ventures Management, L.P., as agent and attorney-in-fact
By: WSV Management, LLC, its General Partner
By: /s/Xxxx X. Xxxxxx, Member
WS OPPORTUNITY FUND (QP), L.P.
By: WS Ventures Management, L.P., its General Partner
By: WSV Management, LLC, its General Partner
By: /s/Xxxx X. Xxxxxx, Member
WS OPPORTUNITY FUND, L.P.
By: WS Ventures Management, L.P., its General Partner
By: WSV Management, LLC, its General Partner
By: /s/Xxxx X. Xxxxxx, Member
RENAISSANCE US GROWTH INVESTMENT TRUST PLC
By: /s/Xxxxxxx Xxxxxxxxx, Director
BFS US SPECIAL OPPORTUNITIES TRUST PLC
By: Xxxxxxx Xxxxxxxxx, Director
EXHIBIT A
PURCHASERS
Gryphon Master Fund, L.P.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
With a copy to:
Xxxxxx X. Garden, P.C.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxx X. Garden, Esq.
GSSF Master Fund, LP
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
With a copy to:
Xxxxxx X. Garden, P.C.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxx X. Garden, Esq.
Xxxxxxxx Partners, L.P.
c/o Xxxxxxxx Capital Management, LLC
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxx
With a copy to:
Xxxxxx Xxxxxx & Xxxxxxx LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxx Silver
WS Opportunity International Fund, Ltd.
WS Opportunity Fund (QP), L.P.
WS Opportunity Fund, L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxx Xxxxxxx
Renaissance US Growth Investment Trust PLC
BFS US Special Opportunities Trust PLC
c/o RENN Capital Group, Inc.
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000, XX-00
Xxxxxx, Xxxxx 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxxxx Xxxxxx
EXHIBIT B
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. These sales may be effected at various
times in one or more of the following transactions, or in other kinds of
transactions:
* transactions on any national securities exchange or U.S. inter-dealer system
of a registered national securities association on which the common stock may
be listed or quoted at the time of sale;
* in the over-the-counter market;
* in private transactions and transactions otherwise than on these exchanges
or systems or in the over-the-counter market;
* in connection with short sales of the shares after the date of this
prospectus;
* by pledge to secure or in payment of debt and other obligations;
* through the writing of options, whether the options are listed on an options
exchange or otherwise;
* in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options; or
* through a combination of any of the above transactions.
The selling stockholders and their successors, including their transferees,
pledgees or donees or their successors, may sell the common stock directly to
purchasers or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
In addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus.
We entered into a registration rights agreement for the benefit of the selling
stockholders to register the common stock under applicable federal and state
securities laws. The registration rights agreement provides for
cross-indemnification of the selling stockholders and us and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the common stock, including liabilities
under the Securities Act. We will pay substantially all of the expenses
incurred by the selling stockholders incident to the offering and sale of the
common stock.
Each selling stockholder has been advised, and has acknowledged to us, that
the Commission currently takes the position that coverage of short sales of
shares of our common stock "against the box" made prior to the effective date
of the registration statement of which this prospectus is a part with any
security covered by this prospectus is a violation of Section 5 of the
Securities Act, as set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated June 1997,
compiled by the Office of Chief Counsel, Division of Corporate Finance.
Accordingly, each selling stockholder has agreed (on behalf of itself or any
person over which it has direct control) not to use any of the securities
covered by this prospectus to cover any short sales, hedging or similar
transactions with the same economic effect as a short sale, made prior to the
effective date of the registration statement. In addition, each selling
stockholder has agreed to comply with Regulation M under the federal
securities laws.
EXHIBIT C
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 February
__, 2005, 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 6% 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 February __, 2005, 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,
