REGISTRATION RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT
(this
"Agreement"),
dated
as of March __, 2008, by and among TXCO Resources Inc., a Delaware corporation,
with headquarters located at 000
X.
Xxxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000 (the
"Company"),
and
the undersigned buyers (each, a "Buyer",
and
collectively, the "Buyers").
WHEREAS:
A. On
November 20, 2007, the Company and the Buyers entered into (i) that certain
Securities Purchase Agreement (the "Existing
Securities Purchase Agreement"),
pursuant to which the Company issued to the Existing Holders shares of the
Company's Series C Convertible Preferred Stock, par value $0.01 per share (the
"Existing
Preferred Shares")
convertible into the Company's common stock (the "Common
Stock"),
par
value $0.01 per share (the "Existing
Conversion Shares")
and
(y) that certain Registration Rights Agreement (the "Existing
Registration Rights Agreement"),
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Existing Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "1933
Act").
B. In
connection with the Securities Purchase Agreement by and among the parties
hereto, dated February 28, 2008 (the "Securities
Purchase Agreement"),
the
Company has agreed, upon the terms and subject to the conditions set forth
in
the Securities Purchase Agreement, (x) to exchange the Existing Preferred Shares
for shares of the Company's Series D Convertible Preferred Stock, par value
$0.01 per share (the "Series
D Preferred Shares"),
which
will, among other things, be convertible into a certain number of shares of
Common Stock (as converted, the "Series
D Conversion Shares")
in
accordance with the terms of the Certificate of Designations, Preferences and
Rights of Series D Convertible Preferred Stock, dated as of March __, 2008
(the
"Series
D Certificate of Designations").and
(y) to issue and sell to each Buyer shares of the Company's Series E Convertible
Preferred Stock, par value $0.01 per share (the "Series
E Preferred Shares",
and
together with the Series D Preferred Shares, the "Preferred
Shares"),
which
will, among other things, be convertible into a certain number of shares of
Common Stock (as converted, the "Series
E Conversion Shares"
and
together with the Series D Conversion Shares, the "Conversion
Shares")
in
accordance with the terms of the Certificate of Designations, Preferences and
Rights of Series E Convertible Preferred Stock, dated as of March __, 2008
(the
"Series
E Certificate of Designations"
and
together with the Series D Certificate of Designations, the "Certificates
of Designations").
B. The
Preferred Shares may be entitled to dividends, which at the option of the
Company, subject to certain conditions, may be paid in shares of Common Stock
(the "Dividend
Shares").
C. To
induce
the Buyers to execute and deliver the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act
of
1933, as amended, and the rules and regulations promulgated thereunder, or
any
similar successor statute (collectively, the "1933
Act"),
and
applicable state securities or "blue sky" laws and regulations.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
a. "Additional
Closing Date" shall
have the meaning set forth in the Securities Purchase Agreement.
b. "Additional
Effectiveness Date"
means
the date the Additional Registration Statement is declared effective by the
SEC.
c. "Additional
Effectiveness Deadline"
means
the earlier of the date which is (i) in the event that the Additional
Registration Statement is not subject to a full review by the SEC, ninety (90)
calendar days after the earlier of (x) the Additional Filing Date and (y) the
Additional Filing Deadline or (ii) in the event that the Additional Registration
Statement is subject to a full review by the SEC, one hundred and twenty (120)
calendar days after the earlier of (x) the Additional Filing Date and (y) the
Additional Filing Deadline.
d. "Additional
Filing Date"
means
the date on which any Additional Registration Statement is filed with the
SEC.
e. "Additional
Filing Deadline"
means
if Cutback Shares are required to be included in any Additional Registration
Statement, the later of (i) the date sixty (60) days after the date
substantially all of the Registrable Securities registered
under the immediately preceding Registration Statement are sold
and (ii)
the date six (6) months from the Initial Effective Date or the last Additional
Effective Date, as applicable.
f. "Additional
Registrable Securities"
means
any (i) any Cutback Shares not previously included on a Registration Statement
and (ii) any capital stock of the Company issued or issuable with respect to
the
Preferred Shares, the Conversion Shares, the Dividend Shares or Cutback Shares,
as applicable, as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversions of the Preferred Shares.
g. "Additional
Registration Statement"
means a
registration statement or registration statements of the Company filed under
the
1933 Act covering any Additional Registrable Securities.
h. "Additional
Required Registration Amount"
means
any Cutback Shares not previously included on a Registration Statement, all
subject to adjustment as provided in Section 2(f), without regard to any
limitations on conversions of Preferred Shares.
i. "Business
Day"
means
any day other than Saturday, Sunday or any other day on which commercial banks
in the City of New York are authorized or required by law to remain
closed.
j. "Closing
Date"
shall
mean either the Initial Closing Date or the Additional Closing Date, as
applicable.
k. "Cutback
Shares"
means
any of the Initial Required Registration Amount (without regard to clause (II)
in the definition thereof) of Registrable Securities not included in all
Registration Statements previously declared effective hereunder as a result
of
(x) a limitation on the maximum number of shares of Common Stock of the Company
permitted to be registered by the staff of the SEC pursuant to Rule 415 or
(y)
an election of an Investor in accordance with Section 2(h) hereof.
l. "Effective
Date"
means
the Initial Effective Date and the Additional Effective Date, as
applicable.
m. "Effectiveness
Deadline"
means
the Initial Effectiveness Deadline and the Additional Effectiveness Deadline,
as
applicable.
n. "Filing
Date"
means
the Initial Filing Date and the Additional Filing Date, as applicable.
o. "Filing
Deadline"
means
the Initial Filing Deadline and the Additional Filing Deadline, as
applicable.
p. "Initial
Closing Date"
shall
have the meaning set forth in the Securities Purchase Agreement.
q. "Initial
Effective Date"
means
the date the Initial Registration Statement has been declared effective by
the
SEC.
r. "Initial Effectiveness
Deadline"
means
the earlier of the date which is (i) in the event that the Initial Registration
Statement is not subject to a full review by the SEC, the earlier of (x) ninety
(90) calendar days after the Initial Filing Date and (y) one hundred five (105)
days after the Additional Closing Expiration Date or (ii) in the event that
the
Registration Statement is subject to a full review by the SEC, the earlier
of
(x) one hundred and twenty (120) calendar days after the Initial Filing Date
and
(y) one hundred thirty five (135) days after the Additional Closing Expiration
Date.
s. "Initial
Filing Date"
means
the date on which the Initial Registration Statement is filed with the
SEC.
t. "Initial
Filing Deadline"
means
the first Business Day on or after the earlier of (x) fifteen (15) calendar
days
immediately following the Additional Closing Expiration Date (as defined in
the
Securities Purchase Agreement) and (x) fifteen
(15) calendar
days
immediately
following such Additional Closing Date whereafter the Company shall have issued
the maximum amount of Additional Preferred Shares issuable pursuant to the
Securities Purchase Agreement.
u. "Initial
Registration Statement"
means
the registration statement of the Company filed under the 1933 Act covering
the
Initial Required Registration Amount.
v. "Initial
Required Registration Amount"
means
(I) the sum of (i) the number of Conversion Shares issued and issuable pursuant
to the Preferred Shares as of the Trading Day (as defined in the Certificate
of
Designations) immediately preceding the applicable date of determination and
(ii) the number of Dividend Shares issued or issuable with respect to the
Preferred Shares as of the Trading Day immediately preceding the applicable
date
of determination assuming that the Preferred Shares remain outstanding through
the third (3rd)
anniversary of the Initial Closing Date, each subject to adjustment as provided
in Section 2(f), without regard to any limitations on conversions or redemptions
of the Preferred Shares or (II) such other amount as may be required by the
staff of the SEC pursuant to Rule 415 with any cutback applied pro rata to
all
Registrable Securities; provided that each Investor may, by written notice
to
the Company, direct the application of such cutback among the Registrable
Securities of such Investor.
w. "Investor"
means a
Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights
as a holder of Registrable Securities under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section
9
and any transferee or assignee thereof to whom a transferee or assignee assigns
its rights as a holder of Registrable Securities under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9.
x. "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
y. "register,"
"registered,"
and
"registration"
refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to
Rule 415 and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
z. "Registrable
Securities"
means
the Securities; provided,
however,
that a
Security shall cease to be a Registrable Security upon the earliest to occur
of
the following: (i) a Registration Statement registering such Security under
the
1933 Act has been declared or becomes effective and such Security has been
sold
or otherwise transferred by the holder thereof pursuant to and in a manner
contemplated by such effective Registration Statement; (ii) such Security is
sold pursuant to Rule 144 under circumstances in which any legend borne by
such
Security relating to restrictions on transferability thereof, under the 1933
Act
or otherwise, is removed by the Company; (iii) such Security is eligible to
be
sold without the requirement to be in compliance with Rule 144(c)(1) and
otherwise without restriction or limitation pursuant to Rule 144; or (iv) such
Security shall cease to be outstanding.
aa. "Registration
Statement"
means
the Initial Registration Statement and the Additional Registration Statements,
as applicable.
bb. "Required
Holders"
means
Investors that hold at least two-thirds of the Registrable
Securities.
cc. "Securities"
means
(i) the Conversion Shares issued or issuable upon conversion of the Preferred
Shares, (ii) the Dividend Shares issued or issuable with respect to the
Preferred Shares and (iii) any capital stock of the Company issued or issuable
with respect to the Conversion Shares, the Preferred Shares and the Dividend
Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversions of the Preferred Shares.
dd. "Rule
415"
means
Rule 415 promulgated under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis.
ee. "SEC"
means
the United States Securities and Exchange Commission.
2. Registration.
a. Initial
Mandatory Registration.
The
Company shall prepare, and, as soon as practicable but in no event later than
the Initial Filing Deadline, file with the SEC the Initial Registration
Statement on Form S-3 covering the resale of at least the number of shares
of
Common Stock equal to the Initial Required Registration Amount determined as
of
date the Registration Statement is initially filed with the SEC. In the event
that Form S-3 is unavailable for such a registration, the Company shall use
such
other form as is available for such a registration on another form reasonably
acceptable to the Required Holders, subject to the provisions of Section 2(e).
The Initial Registration Statement prepared pursuant hereto shall register
for
resale that number of shares of Common Stock equal to the Initial Required
Registration Amount determined as of the date such Initial Registration
Statement is initially filed with the SEC. The Initial Registration Statement
shall contain (except if otherwise directed by the Required Holders) the
"Selling
Stockholders"
and
"Plan
of Distribution"
sections for the Investors in substantially the form attached hereto as
Exhibit
B.
The
Company shall use its reasonable best efforts to have the Initial Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the Initial Effectiveness Deadline. By 9:30 a.m., New York time,
on
the Business Day following the Initial Effective Date, the Company shall file
with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus
to be used in connection with sales pursuant to such Initial Registration
Statement.
b. Additional
Mandatory Registrations.
The
Company shall prepare, and, as soon as practicable but in no event later than
the Additional Filing Deadline, file with the SEC an Additional Registration
Statement on Form S-3 covering the resale of all of the Additional Registrable
Securities not previously registered on a Registration Statement hereunder.
To
the extent the staff of the SEC does not permit the Additional Required
Registration Amount to be registered on an Additional Registration Statement,
the Company shall file Additional Registration Statements successively trying
to
register on each such Additional Registration Statement the maximum number
of
remaining Additional Registrable Securities until the Additional Required
Registration Amount has been registered with the SEC. In the event that Form
S-3
is unavailable for such a registration, the Company shall use such other form
as
is available for such a registration on another form reasonably acceptable
to
the Required Holders, subject to the provisions of Section 2(e). Each Additional
Registration Statement prepared pursuant hereto shall register for resale that
number of shares of Common Stock equal to the Additional Required Registration
Amount determined as of the date such Additional Registration Statement is
initially filed with the SEC. Each Additional Registration Statement shall
contain (except if otherwise directed by the Required Holders) the "Selling
Stockholders"
and
"Plan
of Distribution"
sections in substantially the form attached hereto as Exhibit
B.
The
Company shall use its reasonable best efforts to have each Additional
Registration Statement declared effective by the SEC as soon as practicable,
but
in no event later than the Additional Effectiveness Deadline. By 9:30 am on
the
Business Day following the Additional Effective Date, the Company shall file
with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus
to be used in connection with sales pursuant to such Additional Registration
Statement.
c. Allocation
of Registrable Securities.
The
initial number of Registrable Securities included in any Registration Statement
and any increase or decrease in the number of Registrable Securities included
therein shall be allocated pro rata among the Investors based on the number
of
Registrable Securities held by each Investor at the time the Registration
Statement covering such initial number of Registrable Securities or increase
or
decrease thereof is declared effective by the SEC. In the event that an Investor
sells or otherwise transfers any of such Investor's Registrable Securities,
each
transferee shall be allocated a pro rata portion of the then remaining number
of
Registrable Securities included in such Registration Statement for such
transferor. Any shares of Common Stock included in a Registration Statement
and
which remain allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be allocated to the
remaining Investors, pro rata based on the number of Registrable Securities
then
held by such Investors which are covered by such Registration Statement. In
no
event shall the Company include any securities other than Registrable Securities
on any Registration Statement without the prior written consent of the Required
Holders; provided, however, that the Company shall be permitted to include
on
any Registration Statement securities issued pursuant to the transactions
described on Schedule 2(e) to the Securities Purchase Agreement; provided,
further, that any such securities issued to an Investor that are to be included
in a Registration Statement shall be included as Registrable Securities of
such
Investor for the purpose of allocating securities in such Registration Statement
pursuant to this Section 2(c).
d. Legal
Counsel.
Subject
to Section 5 hereof, the Required Holders shall have the right to select one
legal counsel to review and oversee any registration pursuant to this Section
2
("Legal
Counsel"),
which
shall be Xxxxxxx Xxxx & Xxxxx LLP or such other counsel as thereafter
designated by the Required Holders. The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company's obligations
under this Agreement.
e. Ineligibility
for Form S-3.
In the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale
of
the Registrable Securities on another form reasonably acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3
as
soon as the use of such form for such purpose is permitted, provided that the
Company shall maintain the effectiveness of the Registration Statement then
in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.
f. Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) or 2(b) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an
Investor's allocated portion of the Registrable Securities pursuant to Section
2(b), the Company shall, if the Registration Statement has not been declared
effective, amend the applicable Registration Statement, or, in all other cases,
file a new Registration Statement (on the short form available therefor, if
applicable), so as to cover at least the Initial Required Registration Amount
or
the Additional Required Registration Amount, as applicable, as of the Trading
Day immediately preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but in any event
not later than thirty (30) Business Days after the necessity therefor arises.
The Company shall use its reasonable best efforts to cause such amendment or
new
Registration Statement to become effective as soon as practicable following
the
filing thereof. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed "insufficient to cover
all of the Registrable Securities" if at any time the number of shares of Common
Stock available for resale under the Registration Statement is less than the
product determined by multiplying (i) the Initial Required Registration Amount
or Additional Required Registration Amount, as applicable, as of such time
by
(ii) 0.90. The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the conversion of the Preferred Shares
and
such calculation shall assume that the Preferred Shares are then convertible
into shares of Common Stock at the then prevailing Conversion Rate (as defined
in the Certificate of Designations).
g. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If (i)
a Registration Statement covering all of the Registrable Securities required
to
be covered thereby and required to be filed by the Company pursuant to this
Agreement is (A) not filed with the SEC on or before the respective Filing
Deadline (a "Filing
Failure")
or (B)
not declared effective by the SEC on or before the Effectiveness Deadline (an
"Effectiveness
Failure")
or
(ii) on any day after the Effective Date sales of all of the Registrable
Securities required to be included on such Registration Statement cannot be
made
(other than during an Allowable Grace Period (as defined in Section 3(q))
pursuant to such Registration Statement or otherwise (including, without
limitation, because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant
to
such Registration Statement or to register a sufficient number of shares of
Common Stock or to maintain the listing of the shares of Common Stock) (a
"Maintenance
Failure")
then,
as partial relief for the damages to any Investor by reason of any such delay
in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each Investor relating to such Registration
Statement an amount in cash equal to (A) one percent (1.0%) of the aggregate
Purchase Price (as such term is defined in the Securities Purchase Agreement)
of
such Investor's Registrable Securities included in such Registration Statement
on each of the following dates: (i) the day of a Filing Failure and on every
thirtieth day (pro rated for periods totaling less than thirty (30) days)
thereafter until the date such Filing Failure is cured; (ii) the day of an
Effectiveness Failure and on every thirtieth day (pro rated for periods totaling
less than thirty (30) days) thereafter until the date such Effectiveness Failure
is cured; and (iii) the initial day of a Maintenance Failure and on every
thirtieth day (pro rated for periods totaling less than thirty (30) days)
thereafter until the date such Maintenance Failure is cured. The payments to
which an Investor shall be entitled to pursuant to this Section 2(g) are
referred to herein "Registration
Delay Payments." Registration
Delay Payments shall be paid on the earlier of (I) the last day of the calendar
month during which such Registration Delay Payments are incurred and (II) the
third Business Day after the event or failure giving rise to the Registration
Delay Payments is cured. In the event the Company fails to make Registration
Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one percent (1.0%) per month (prorated for partial
months) until paid in full. The parties agree that the maximum aggregate
Registration Delay Payments payable to an Investor under this Agreement shall
be
10% of the aggregate purchase price paid by such Investor pursuant to the
Purchase Agreement.
h. Neither
the Company nor any Subsidiary (as defined in the Securities Purchase Agreement)
nor affiliate thereof shall identify any Buyer as an underwriter in any public
disclosure or filing with the SEC or any Principal Market (as defined in the
Securities Purchase Agreement) or any Trading Market (as defined in the
Securities Purchase Agreement) without the prior written consent of such
Investor. If the Company is required by law to identify an Investor as an
underwriter in any public disclosure or filing with the Commission or any
Trading Market, it must notify such Investor in writing in advance (the
"Identification
Notice")
and
such Investor shall have the option, in its sole discretion, to consent to
such
identification as an underwriter or to elect to have its Registrable Securities
be deemed Cutback Shares solely for the purposes of such Registration Statement
and removed from such Registration Statement. If the Investor does not make
such
election within five (5) Business Days of such Investor receipt of the
Identification Notice, such Investor shall be deemed to have elected to have
its
Registrable Securities be deemed to be Cutback Shares.
3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement with the
SEC
pursuant to Section 2(a), 2(b), 2(e), or 2(f) the Company will use its
reasonable best efforts to effect the registration of the Registrable Securities
in accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:
a. The
Company shall submit to the SEC, within two (2) Business Days after the Company
learns that no review of a particular Registration Statement will be made by
the
staff of the SEC or that the staff has no further comments on a particular
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request. The
Company shall keep each Registration Statement effective pursuant to Rule 415
at
all times until the earlier of (i) the date when the securities covered by
the
Registration Statement are no longer Registrable Securities as defined herein,
or (ii) the date on which the Investors shall have sold all of the Registrable
Securities covered by such Registration Statement (the "Registration
Period").
The
Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein, or necessary to make the statements therein (in the case
of
prospectuses, in the light of the circumstances in which they were made) not
misleading.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be
necessary to keep such Registration Statement effective at all times during
the
Registration Period, and, during such period, comply with the provisions of
the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth
in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-Q, Form 10-K or any analogous report under the Securities
Exchange Act of 1934, as amended (the "1934
Act"),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
c. The
Company shall furnish to Legal Counsel and each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy
of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference,
if
requested by an Investor, all exhibits and each preliminary prospectus (unless
such Registration Statement is available on XXXXX), (ii) upon the effectiveness
of any Registration Statement, ten (10) copies of the prospectus included in
such Registration Statement and all amendments and supplements thereto (unless
such amendments and supplements are available on XXXXX) and (iii) such other
documents, including copies of the foregoing (regardless of whether such
documents are available upon XXXXX) and any preliminary or final prospectus,
as
such Investor may reasonably request from time to time in order to facilitate
the disposition of the Registrable Securities owned by such
Investor.
d. The
Company shall use its reasonable best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale
by
Investors of the Registrable Securities covered by a Registration Statement
under such other securities or "blue sky" laws of all applicable jurisdictions
in the United States, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be reasonably necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent
to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of notice of the initiation or threatening of any proceeding
for
such purpose.
e. The
Company shall notify Legal Counsel and each Investor in writing of the happening
of any event, as promptly as practicable after becoming aware of such event,
as
a result of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(r), promptly prepare
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies
as
Legal Counsel or such Investor may reasonably request) (unless such supplements
or amendments are available on XXXXX). The Company shall also promptly notify
Legal Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when
a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and
each
Investor by facsimile no later than the next Business Day of such effectiveness
and by overnight mail), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
f. The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of notice of the initiation of any proceeding for such
purpose.
g. If
any
Investor is deemed to be, alleged to be or reasonably believes it may be deemed
or alleged to be, an underwriter or is required under applicable securities
law
to be described in the Registration Statement as an underwriter of Registrable
Securities, at the reasonable request of such Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is customarily given
by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Investors, and (ii) an opinion, dated as
of
such date, of counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors.
h. If
any
Investor is deemed to be, alleged to be or reasonably believes it may be deemed
or alleged to be, an underwriter or is required under applicable securities
law
to be described in the Registration Statement as an underwriter of Registrable
Securities, upon the request of such Investor, the Company shall make available
for inspection by (i) any Investor, (ii) Legal Counsel and (iii) one firm of
accountants or other agents retained by the Investors (collectively, the
"Inspectors"),
all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the "Records"),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree
to
hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors
are
so notified, unless (a) the disclosure of such Records is necessary to avoid
or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body
of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this
or any other Transaction Document. Each Investor agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and any Investor) shall be deemed
to limit the Investors' ability to sell Registrable Securities in a manner
which
is otherwise consistent with applicable laws and regulations.
i. The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws or
the
rules of any exchange or other market in which the Company's securities are
then
traded, listed or quoted, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other
final, non-appealable order from a court or governmental body of competent
jurisdiction or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement, any other
agreement to which the Company is a party, or, to the Company's knowledge,
any
other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
j. The
Company shall use its reasonable best efforts either to (i) cause all of the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange on which securities of the same class or series issued
by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all of the Registrable Securities covered by a
Registration Statement on The NASDAQ Capital Market or (iii) if, despite the
Company's reasonable best efforts to satisfy, the preceding clauses (i) and
(ii)
the Company is unsuccessful in satisfying the preceding clauses (i) and (ii),
to
secure the inclusion for quotation on the The New York Stock Exchange, The
NASDAQ Global Market or the American Stock Exchange for such Registrable
Securities and, without limiting the generality of the foregoing, to use its
reasonable best efforts to arrange for at least two market makers to register
with the Financial Industry Regulatory Authority as such with respect to such
Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(k).
k. The
Company shall cooperate with the Investors who hold Registrable Securities
being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case
may
be, as the Investors may reasonably request and registered in such names as
the
Investors may request.
l. If
reasonably requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as an Investor reasonably requests to be included in the Plan
of Distribution or Selling Stockholder sections relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as
soon
as practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) as soon
as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Investor holding any Registrable
Securities.
m. The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
n. The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering
a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration Statement.
o. The
Company shall otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
p. Within
five (5) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall
cause legal counsel for the Company (which may be the General Counsel of the
Company) to deliver, to the transfer agent for such Registrable Securities
(with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the SEC in the form attached hereto as Exhibit
A.
q. Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company, in the best interest of the
Company otherwise required or otherwise render the Registration Statement
unavailable for sales to be effected thereunder (a "Grace
Period");
provided, that the Company shall promptly (i) notify the Investors in writing
of
the existence of material, non-public information giving rise to a Grace Period
(provided that in each notice the Company will not disclose the content of
such
material, non-public information to the Investors) and the date on which the
Grace Period will begin on the first day that the effectiveness of the
Registration Statement is suspended, and (ii) notify the Investors in writing
of
the date on which the Grace Period ends; and, provided further, that no Grace
Period shall exceed twenty-five (25) consecutive days and during any three
hundred sixty five (365) day period such Grace Periods shall not exceed an
aggregate of sixty (60) days and the first day of any Grace Period must be
at
least five (5) Trading Days after the last day of any prior Grace Period (each,
an "Allowable
Grace Period").
For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Investors receive the notice referred
to
in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to in such
notice. The provisions of Section 3(g) hereof shall not be applicable during
the
period of any Allowable Grace Period. Upon expiration of the Grace Period,
the
Company shall again be bound by the first sentence of Section 3(f) with respect
to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary,
the Company shall cause its transfer agent to deliver unlegended shares of
Common Stock to a transferee of an Investor in accordance with the terms of
the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the applicable
Registration Statement (unless an exemption from such prospectus delivery
requirement exists), prior to the Investor's receipt of the notice of a Grace
Period and for which the Investor has not yet settled.
r. If
NASDR
Rule 2710 requires any broker-dealer to make a filing prior to executing a
sale
by a Holder, the Company shall (i) make an Issuer Filing with the NASDR, Inc.
Corporate Financing Department pursuant to proposed NASDR Rule
2710(b)(10)(A)(i), (ii) respond within five Trading Days to any comments
received from NASDR in connection therewith, and (iii) pay the filing fee
required in connection therewith.
4. Obligations
of the Investors.
a. At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of
the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor's Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations
of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect and maintain
the effectiveness of the registration of such Registrable Securities within
five
(5) Business Days and such Investor shall execute such documents in connection
with such registration as the Company may reasonably request.
b. Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees
to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor's election
to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
c. Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of Section 3(f), such Investor will immediately discontinue disposition
of Registrable Securities pursuant to any Registration Statement(s) covering
such Registrable Securities until such Investor's receipt of the copies of
the
supplemented or amended prospectus contemplated by Section 3(g) or the first
sentence of Section 3(f) or receipt of notice that no supplement or amendment
is
required. Notwithstanding anything to the contrary, the Company shall cause
its
transfer agent to deliver unlegended shares of Common Stock to a transferee
of
an Investor in accordance with the terms of the Securities Purchase Agreement
in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt
of
a notice from the Company of the happening of any event of the kind described
in
Section 3(g) or the first sentence of Section 3(f) and for which the Investor
has not yet settled.
d. Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom
in
connection with sales of Registrable
Securities pursuant to the Registration Statement.
5. Expenses
of Registration.
All
reasonable expenses, other than underwriting discounts and commissions incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements
of
counsel for the Company, shall be paid by the Company.
6. Indemnification.
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
a. To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an "Indemnified
Person"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several, (collectively, "Claims")
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified
Damages"),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction
in
which Registrable Securities are offered ("Blue
Sky Filing"),
or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any breach by the
Company of a representation, warranty or covenant contained in this Agreement
(the matters in the foregoing clauses (i) through (iv) being, collectively,
"Violations").
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs (A) in reliance
upon and in conformity with information furnished in writing to the Company
by
such Indemnified Person expressly for use in connection with the preparation
of
the Registration Statement (including any amendment thereto, any related
prospectus, or any prospectus supplement) (which information provided by the
Investors includes Exhibits B and C to this Agreement), (B) failure by the
Investor to comply with prospectus delivery requirements, if such prospectus,
or
any such amendment thereof or supplement thereto, was timely made available
by
the Company pursuant to Section 3(d), or (C) the use by such Investor of an
outdated or defective prospectus after the Company has notified such Investor
in
writing that the prospectus is outdated or defective and prior to the receipt
by
such Investor of an amended or supplemented prospectus, and (ii) shall not
apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force
and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.
b. In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls
the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
"Indemnified
Party"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation arises from the
circumstances described in clauses (A) through (C) of Section 6(a) above; and,
subject to Section 6(c), such Investor shall reimburse the Indemnified Party,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by it in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld
or
delayed; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as
does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made
by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, who
shall not, except with the consent of the Indemnifying Party, be counsel to
the
Indemnified Person as the case may be; and after notice from the indemnifying
party of its election to assume the defense thereof, the indemnifying party
shall not be liable to the Indemnified party or Indemnified Person for any
legal
expenses of other counsel or other expenses incurred in connection with the
defense thereof; provided,
however,
that an
Indemnified Person or Indemnified Party shall have the right to retain its
own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party,
the
representation by such counsel of the Indemnified Person or Indemnified Party
and the Indemnifying Party would likely represent a conflict of interest that
would legally preclude such representation. In the case of an Indemnified
Person, legal counsel referred to in the immediately preceding sentence shall
be
selected by the Investors holding at least 80% in
interest of the Registrable Securities included in the Registration Statement
to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided,
however,
that
the indemnifying party shall not unreasonably withhold, delay or condition
its
consent. No indemnifying party shall, without the prior written consent of
the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include
any
admission as to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter
for
which indemnification has been made. The failure to deliver written notice
to
the indemnifying party within a reasonable time of the commencement of any
such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
d. The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. Contribution.
To
the
extent any indemnification by an Indemnified Party is prohibited or limited
by
law, the indemnifying party agrees, in lieu of providing such indemnification,
to contribute to the amount paid or payable by such Indemnified Party or
Indemnifying Person as a result of such Claims or Indemnified Damages, in such
proportion as is appropriate to reflect the relative fault of the Company,
on
the one hand, and the Investors, on the other hand, in connection with the
statements or omissions which resulted in such Claims or Indemnified Damages,
as
well as any other relevant equitable considerations; provided,
however,
that
(i) no Person involved in the sale of Registrable Securities which is guilty
of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) in connection with such sale shall be entitled to contribution from any
Person who was not guilty of fraudulent misrepresentation and (ii) contribution
by any seller of Registrable Securities shall be limited in amount of net
proceeds received by such seller from the sale of such Registrable Securities
subject to the Claim. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or the Investors, on
the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Investors agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if
the
Investors were treated as one entity for such purpose) or by any other method
of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The amount paid or payable by an indemnified party
as a result of the Claims or Indemnified Damages referred to above in this
Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. The Investors' obligations in this Section 7 to
contribute are several in proportion to their respective underwriting
obligations and not joint.
8. Reports
Under the 1934 Act.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the public
without registration ("Rule
144"),
the
Company agrees to:
a. make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
b. file
with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and
c. furnish
to each Investor so long as such Investor owns Registrable Securities, as soon
as reasonably practicable upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting requirements of Rule 144,
the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. Assignment
of Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor 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) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws; (iv) at
or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements
of
the Securities Purchase Agreement.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall
be
effective to the extent that it applies to less than all of the Investors.
No
consideration shall be offered or paid to any Person to amend or consent to
a
waiver or modification of any provision of any of this Agreement unless the
same
consideration also is offered to all of the parties to this
Agreement.
11. Miscellaneous.
a. For
the
purposes of this Agreement, a Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the such record owner of such Registrable
Securities.
b. Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile or electronic mail (provided confirmation of
transmission is mechanically or electronically generated and kept on file by
the
sending party); or (iii) one (1) Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If
to the
Company:
TXCO
Resources, Inc.
000 X. Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: M. Xxxxx Xxxxxxx, Vice President and General Counsel
000 X. Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: M. Xxxxx Xxxxxxx, Vice President and General Counsel
Copy
to:
Fulbright
& Xxxxxxxx L.L.P.
Convent Street, Suite 2200
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Xx.
Convent Street, Suite 2200
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Xx.
If
to
Legal Counsel:
|
Xxxxxxx
Xxxx & Xxxxx LLP
|
|
000
Xxxxx Xxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Telephone: (000)
000-0000
|
|
Facsimile: (000)
000-0000
|
|
Attention: Xxxxxxx
X. Xxxxx, Esq.
|
If
to a
Buyer, to its address and facsimile number or electronic mail set forth on
the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of Buyers, or to such other address and/or
facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days
prior to the effectiveness of such change. Written confirmation of receipt
(A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
d. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
e. This
Agreement, the other Transaction Documents and the instruments referenced herein
and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to
herein and therein. This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. If
any
provision of this Agreement is prohibited by law or otherwise determined to
be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does
not
substantially impair the respective expectations or reciprocal obligations
of
the parties or the practical realization of the benefits that would otherwise
be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).
g. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit
of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
h. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
i. This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
j. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
k. All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
l. The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
m. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
n. The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other Investor.
Nothing contained herein, and no action taken by any Investor pursuant hereto,
shall be deemed to constitute the Investors as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated herein.
*
* * * *
*
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
||
|
CAPITAL
VENTURES INTERNATIONAL
BY: HEIGHTS CAPITAL MANAGEMENT, INC., its authorized agent |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
||
|
UBS
X'XXXXXX LLC F/B/O: X'XXXXXX
PIPES CORPORATE STRATEGIES MASTER LTD |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
UBS
X'XXXXXX LLC F/B/O: X'XXXXXX
GLOBAL CONVERTIBLE ARBITRAGE MASTER LTD |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
UBS
X'XXXXXX LLC F/B/O: X'XXXXXX
GLOBAL CONVERTIBLE ARBITRAGE II MASTER LTD |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
RADCLIFFE
SPC, LTD. FOR AND ON
BEHALF OF THE CLASS A SEGREGATED PORTFOLIO |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
WHITEBOX
CONVERTIBLE ARBITRAGE
PARTNERS, LP |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
GUGGENHEIM
PORTFOLIO COMPANY
XXXI, LLC |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
WHITEBOX
INTERMARKET PARTNERS, LP
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
WHITEBOX
SPECIAL OPPORTUNITIES
PARTNERS, SERIES B, LP |
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
SCHEDULE
OF BUYERS
|
Buyer
|
Buyer's Address
and Facsimile Number
|
Buyer's Representative's Address
and Facsimile Number
|
||
|
Capital
Ventures International
|
c/o
Heights Capital Management, Inc.
000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
Attention:
Xxxxxx Xxxxxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
Residence:
Cayman Islands
|
Xxxxxxx
Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
||
|
Whitebox
Convertible Arbitrage Partners, LP
|
c/o
Whitebox Advisors, LLC
0000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxxx Xxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
British Virgin Islands
|
N/A
|
||
|
Guggenheim
Portfolio Company XXXI, LLC
|
c/o
Whitebox Advisors, LLC
0000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxxx Xxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
British Virgin Islands
|
N/A
|
||
|
Whitebox
Intermarket Partners, LP
|
c/o
Whitebox Advisors, LLC
0000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxxx Xxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
British Virgin Islands
|
N/A
|
||
|
Whitebox
Special Opportunities Partners, Series B, LP
|
c/o
Whitebox Advisors, LLC
0000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxxx Xxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
British Virgin Islands
|
N/A
|
||
|
Radcliffe
SPC, Ltd. For and on behalf of the Class A Convertible Crossover
Segregated Portfolio
|
c/o
RG Capital Management, LP
0
Xxxx Xxxxx-Xxxx, Xxxxx 000
Xxxx
Xxxxxx, XX 00000
Attention:
Xxxxxx X. Xxxxxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
Cayman Islands
|
N/A
|
||
|
UBS
X’Xxxxxx LLC fbo X’Xxxxxx Global Convertible Arbitrage Master
Limited
|
UBS
X’Xxxxxx LLC
Xxx
Xxxxx Xxxxxx Xx., 00xx Xxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
Cayman Islands
|
N/A
|
||
|
UBS
X’Xxxxxx LLC fbo X’Xxxxxx Global Convertible Arbitrage II Master
Limited
|
UBS
X’Xxxxxx LLC
Xxx
Xxxxx Xxxxxx Xx., 00xx Xxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
Cayman Islands
|
N/A
|
||
|
UBS
X’Xxxxxx LLC fbo X’Xxxxxx Pipes Corporate Strategies Master
Limited
|
UBS
X’Xxxxxx LLC
Xxx
Xxxxx Xxxxxx Xx. , 00xx Xxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Residence:
Cayman Islands
|
N/A
|
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
OF REGISTRATION STATEMENT
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx
Xxxxx, Vice President
Re: TXCO
Resources Inc.
Ladies
and Gentlemen:
[We
are][I am] counsel to TXCO Resources Inc., a Delaware corporation, (the
"Company"),
and
have represented the Company in connection with that certain Securities Purchase
Agreement (the "Securities
Purchase Agreement")
entered into by and among the Company and the buyers named therein
(collectively, the "Holders")
pursuant to which the Company issued to the Holders Series C Convertible
Preferred Stock (the "Preferred
Shares")
convertible into the Company's common stock, $0.01 par value per share
(the "Common
Stock").
Pursuant to the Securities Purchase Agreement, the Company also has entered
into
a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement")
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement),
including the shares of Common Stock issuable upon conversion of the Preferred
Shares, under the Securities Act of 1933, as amended (the "1933
Act").
In
connection with the Company's obligations under the Registration Rights
Agreement, on [ ], the Company filed a Registration Statement on Form S-3 (File
No. 333-_____________) (the "Registration
Statement")
with
the Securities and Exchange Commission (the "SEC")
relating to the Registrable Securities which names each of the Holders as a
selling stockholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC's
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at
[ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and
[we][I] have no knowledge, after telephonic inquiry of a member of the SEC's
staff, that any stop order suspending its effectiveness has been issued or
that
any proceedings for that purpose are pending before, or threatened by, the
SEC
and the Registrable Securities are available for resale under the 1933 Act
pursuant to the Registration Statement.
This
letter shall serve as our standing instruction to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Holders
as
contemplated by the Company's Irrevocable Transfer Agent Instructions dated
March
__,
2008,
provided at the time of such reissuance, the Company has not otherwise notified
you that the Registration Statement is unavailable for the resale of the
Registrable Securities.
|
Very
truly yours,
|
|
|
[ISSUER'S
COUNSEL]
|
|
|
By:_____________________
|
|
|
CC: [LIST
NAMES OF HOLDERS]
|
EXHIBIT
B
SELLING
STOCKHOLDERS
The
shares of Common Stock being offered by the selling stockholders are issuable
upon conversion of the convertible Preferred Shares and in payment of interest
on the convertible Preferred Shares. For additional information regarding the
issuance of those convertible Preferred Shares, see "Private Placement of
Convertible Preferred Shares" above. We are registering the shares of Common
Stock in order to permit the selling stockholders to offer the shares for resale
from time to time. Except for the ownership of the convertible Preferred Shares
issued pursuant to the Securities Purchase Agreement, the selling stockholders
have not had any material relationship with us within the past three
years.
The
table
below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of Common Stock by each of the selling
stockholders. The second column lists the number of shares of Common Stock
beneficially owned by each selling stockholder, based on its ownership of the
convertible Preferred Shares, as of ________, 200_, assuming conversion of
all
convertible Preferred Shares held by the selling stockholders on that date,
without regard to any limitations on conversions.
The
third
column lists the shares of Common Stock being offered by this prospectus by
each
selling stockholder.
In
accordance with the terms of a registration rights agreement among the Company
and the selling stockholders, this prospectus generally covers the resale of
at
least 110% of the sum of the aggregate number of shares of Common Stock issued
or issuable (i) upon conversion of the convertible Preferred Shares as of the
trading day immediately preceding the date the registration statement is
initially filed with the SEC and (ii) as Dividend Shares pursuant to the terms
of the Preferred Shares as of the trading day immediately preceding the date
the
registration statement is initially filed with the SEC.
Because
the conversion price of the convertible Preferred Shares may be adjusted, the
number of shares that will actually be issued may be more or less than the
number of shares being offered by this prospectus. The fourth column assumes
the
sale of all of the shares offered by the selling stockholders pursuant to this
prospectus.
Under
the
terms of the convertible Preferred Shares, a selling stockholder may not convert
the convertible Preferred Shares to the extent such conversion would cause
such
selling stockholder, together with its affiliates, to beneficially own a number
of shares of Common Stock which would exceed 4.99% of our then outstanding
shares of Common Stock following such conversion, excluding for purposes of
such
determination shares of Common Stock issuable upon conversion of the convertible
Preferred Shares which have not been converted. The number of shares in the
second column does not reflect this limitation. The selling stockholders may
sell all, some or none of their shares in this offering. See "Plan of
Distribution."
|
Name of Selling Stockholder
|
Number of Shares
Owned Prior to
Offering
|
Maximum Number of
Shares to be Sold
Pursuant to this
Prospectus
|
Number of Shares
Owned After
Offering
|
|||
|
(1)
Capital
Ventures International
|
0
|
(1) Heights
Capital Management, Inc., the authorized agent of Capital Ventures
International, has discretionary authority to vote and dispose of the shares
held by Capital Ventures International and may be deemed to be the beneficial
owner of these shares. Capital Ventures International
is
affiliated with one or more registered broker-dealers. Capital
Ventures International
purchased the shares being registered hereunder in the ordinary course of
business and at the time of purchase, had no agreements or understandings,
directly or indirectly, with any other person to distribute such
shares.
Exhibit
C
PLAN
OF DISTRIBUTION
We
are
registering the shares of Common Stock issuable upon conversion of the
convertible Preferred Shares and as interest on the convertible Preferred Shares
to permit the resale of these shares of Common Stock by the holders of the
convertible Preferred Shares from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by the selling
stockholders of the shares of Common Stock. We will bear all fees and expenses
incident to our obligation to register the shares of Common Stock.
The
selling stockholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
Common Stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for paying any underwriting discounts or
commissions or agent's commissions. The shares of Common Stock may be sold
in
one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at
negotiated prices or any combination of the foregoing. These sales may be
effected in transactions, which may involve:
| · |
crosses
or block transactions or other
transaction
|
| · |
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
| · |
transactions
in the over-the-counter market;
|
| · |
transactions
otherwise than on these exchanges or systems or in the over-the-counter
market;
|
| · |
the
writing of options, whether such options are listed on an options
exchange
or otherwise;
|
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
short
sales;
|
| · |
sales
pursuant to Rule 144;
|
| · |
transactions
where broker-dealers may agree with the selling securityholders to
sell a
specified number of such shares at a stipulated price per
share;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
If
the
selling stockholders effect such transactions by selling shares of Common Stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of Common Stock for whom they may act as agent or
to
whom they may sell as principal (which discounts, concessions or commissions
as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales
of
the shares of Common Stock or otherwise, the selling stockholders may enter
into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of Common Stock in the course of hedging in positions they
assume. The selling stockholders may also sell shares of Common Stock short
and
deliver shares of Common Stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales.
The
selling stockholders may also loan or pledge shares of Common Stock to
broker-dealers that in turn may sell such shares.
The
selling stockholders may pledge or grant a security interest in some or all
of
the convertible Preferred Shares or shares of Common Stock owned by them and,
if
they default in the performance of their secured obligations, the pledgees
or
secured parties may offer and sell the shares of Common Stock from time to
time
pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933, as
amended, amending, if necessary, the list of selling stockholders to include
the
pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. The selling stockholders also may transfer and donate
the
shares of Common Stock in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus, subject to any requirement of the SEC
that we amend this prospectus to include the name of such transferee, donee,
pledge or other successor-in-interest in this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of Common Stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of Common Stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of Common Stock
being offered and the terms of the offering, including the name or names of
any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
C-2
Under
the
securities laws of some states, the shares of Common Stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of Common Stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of Common Stock registered pursuant to the registration statement, of which
this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the 1934 Act and the rules and
regulations thereunder, including, without limitation, Regulation M of the
1934
Act, which may limit the timing of purchases and sales of any of the shares
of
Common Stock by the selling stockholders and any other participating person.
Regulation M may also restrict the ability of any person engaged in the
distribution of the shares of Common Stock to engage in market-making activities
with respect to the shares of Common Stock. All of the foregoing may affect
the
marketability of the shares of Common Stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
Common Stock.
We
will
pay all expenses of the registration of the shares of Common Stock pursuant
to
the registration rights agreement, estimated to be $[ ] in total, including,
without limitation, SEC filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that a selling stockholder
will pay all underwriting discounts and selling commissions, if any. We will
indemnify the selling stockholders against liabilities, including some
liabilities under the Securities Act, in accordance with the registration rights
agreements, or the selling stockholders will be entitled to contribution. We
may
be indemnified by the selling stockholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling stockholder specifically for use
in
this prospectus, in accordance with the related registration rights agreement,
or we may be entitled to contribution.
Once
sold
under the registration statement, of which this prospectus forms a part, the
shares of Common Stock will be freely tradable in the hands of persons other
than our affiliates.
C-3
