REGISTRATION RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT
(this
"Agreement"),
dated
as of December 21, 2006, by and among Rancher Energy Corp., a Nevada
corporation,
with
headquarters located at 999-18th
Street,
Suite 1740, Xxxxxx, Xxxxxxxx 00000
(the "Company"),
and
the undersigned buyers (each, a "Buyer",
and
collectively, the "Buyers").
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities
Purchase Agreement"),
the
Company has agreed, upon the terms and subject to the conditions set forth
in
the Securities Purchase Agreement, to issue and sell to each Buyer (i)
convertible notes of the Company (the "Notes")
which
will, among other things, be convertible into shares of the Company's common
stock, par value $.00001 value per share (the "Common
Stock")
(as
converted, the "Conversion
Shares")
in
accordance with the terms of the Notes, (ii) shares (the "Common
Shares")
of
Common Stock and (iii) warrants (the "Warrants")
which
will be exercisable to purchase shares of Common Stock (as exercised
collectively, the "Warrant
Shares").
B. 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 thereunder, or any similar
successor statute (collectively, the "1933
Act"),
and
applicable state securities laws.
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
Effectiveness Date"
means
the date the Additional Registration Statement is declared effective by the
SEC.
b. "Additional
Effectiveness Deadline"
means
the earlier to occur of (i) the date which is five (5) days after the Company
learns that no review of the Additional Registration Statement will be made
by
the staff of the SEC or that the staff has no further comments on the Additional
Registration Statement, and (ii) the date which is one hundred and twenty (120)
days after the Additional Filing Date (as defined below), or if there is a
full
review of the Additional Registration Statement by the SEC, one hundred and
fifty (150) days after the Additional Filing Date.
c. "Additional
Filing Date"
means
the date on which the Additional Registration Statement (as defined below)
is
filed with the SEC.
d. "Additional
Filing Deadline"
means
(i) if the Stockholder Approval (as defined in the Securities Purchase
Agreement) is not obtained by the Initial Filing Deadline and no Cutback Shares
are required to be included in the Additional Registration Statement, the date
five (5) days after the Stockholder Approval is obtained or (ii) if Cutback
Shares are required to be included in the Additional Registration Statement,
the
date six (6) months from the Initial Filing Date.
e. "Additional
Registrable Securities"
means,
(i) if the Stockholder Approval is not obtained by the Initial Filing Deadline,
(x) the Conversion Shares issuable upon conversion or redemption of the Notes
and (y) any Warrant Shares issued or issuable upon exercise of the Warrants
not
previously included on a Registration Statement, (ii) any Cutback Shares not
previously included on a Registration Statement and (iii) any share capital
of
the Company issued or issuable with respect to the Notes, the Conversion Shares,
the Warrants, the Warrant 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 Notes or
exercises of the Warrants.
f. "Additional
Registration Statement"
means a
registration statement or registration statements of the Company filed under
the
1933 Act covering any Additional Registrable Securities.
g. "Additional
Required Registration Amount"
means
the sum of 130% of (i) if the Stockholder Approval is not obtained by the
Initial Filing Deadline, (x) the number of Conversion Shares issuable pursuant
to the Notes as of the trading day immediately preceding the applicable date
of
determination, and (y) the number of Warrant Shares issued and issuable pursuant
to the Warrants as of the trading day immediately preceding the applicable
date
of determination not previously included on a Registration Statement and (ii)
any Cutback Shares not previously included on a Registration Statement, all
subject to adjustment as provided in Section 2(e), without regard to any
limitations on conversions of the Notes or exercises of the
Warrants.
h. "Business
Day"
means
any day other than Saturday, Sunday or any other day on which commercial banks
in the City of New York or the City of Denver are authorized or required by
law
to remain closed.
i. "Closing
Date"
shall
mean the initial Closing Date, as set forth in the Securities Purchase
Agreement.
j. "Effective
Date"
means
the Initial Effective Date and the Additional Effective Date, as
applicable.
k. "Effectiveness
Deadline"
means
the Initial Effectiveness Deadline (as defined below) and the Additional
Effectiveness Deadline (as defined below), as applicable.
l. "Equity
Conditions"
means
each of the following conditions on each applicable date of determination:
(i)
the Common
Stock
is
designated for quotation on the Principal Market or any applicable Eligible
Market (each as defined in the Securities Purchase Agreement) and shall not
have
been suspended from trading on such exchange or market (other than suspensions
of not more than two (2) days and occurring prior to the applicable date of
determination due to business announcements by the Company) nor shall delisting
or suspension by such exchange or market been threatened or pending either
(A)
in writing by such exchange or market or (B) by falling below the then effective
minimum listing maintenance requirements of such exchange or market; (ii) the
Company shall have delivered Conversion Shares upon conversion of the Notes
and
Warrant Shares upon exercise of the Warrants to the holders on a timely basis
as
set forth in Section 2(c)(ii) of the Notes and Sections 2(a) of the Warrants;
(iii) any applicable shares of Common
Stock to
be
issued in connection with the event requiring determination may be issued in
full without violating the rules or regulations of the exchange or market upon
which the Company's Common Stock is then listed or quoted; (iv) the Company
shall not have failed to timely make any payments within five (5) Business
Days
of when such payment is due pursuant to any Transaction Document (as defined
in
the Securities Purchase Agreement; (v) there shall not have occurred either
(A)
the public announcement of a pending, proposed or intended Fundamental
Transaction (as defined in the Notes) which has not been abandoned, terminated
or consummated, or (B) an
Event
of Default (as defined in the Notes) or (C) an event that with the passage
of
time or giving of notice would constitute an Event of Default; and (vi)
the
Company otherwise shall have been in material compliance with and shall not
have
materially breached any provision, covenant, representation or warranty of
any
Transaction Document.
m. "Equity
Conditions Failure"
means
that on any day during the period commencing ten (10) Trading Days prior to
the
applicable Registration Delay Payments Payment Date through the applicable
Registration Delay Payments Payment Date, the Equity Conditions have not been
satisfied (or waived in writing by the applicable holder of Registrable
Securities).
n. "Filing
Deadline"
means
the Initial Filing Deadline (as defined below) and the Additional Filing
Deadline, as applicable.
o. "Initial
Effective Date"
means
the date the Initial Registration Statement is declared effective by the
SEC.
p. "Initial
Effectiveness Deadline"
means
the earlier to occur of (i) the date which is five (5) days after the Company
learns that no review of the Initial Registration Statement will be made by
the
staff of the SEC or that the staff has no further comments on the Initial
Registration Statement, (ii) the date which is one hundred and twenty (120)
days
after the Closing Date, or if there is a full review of the Initial Registration
Statement by the SEC, one hundred and fifty (150) days after the Closing
Date.
q. "Initial
Filing Date"
means
the date on which the Initial Registration Statement (as defined below) is
filed
with the SEC.
r. "Initial
Filing Deadline"
means
the date seventy-five (75) days after the Closing Date.
s. "Initial
Registrable Securities"
means
(A) if the Stockholder Approval is obtained by the Initial Filing Deadline,
(i)
the Conversion Shares issued or issuable upon conversion or redemption of the
Notes, (ii) the Common Shares, (iii) the Warrant Shares issued or issuable
upon
exercise of the Warrants and (iv) any share capital of the Company issued or
issuable with respect to the Common Shares, the Warrant Shares or the Warrants,
the Conversion Shares and the Notes, 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 Notes or exercises of the
Warrants and (B) if the Stockholder Approval is not obtained by the Initial
Filing Deadline, the Common Shares.
t. "Initial
Required Registration Amount"
means
(I) (A) if the Stockholder Approval is obtained by the Initial Filing Deadline,
130% of the sum of (i), the number of Conversion Shares issued or issuable
pursuant to the Notes as of the trading day immediately preceding the applicable
date of determination, (ii) the number of Common Shares issued and (iii) the
number of Warrant Shares issued and issuable pursuant to the Warrants as of
the
trading day immediately preceding the applicable date of determination, all
subject to adjustment as provided in Section 2(e), without regard to any
limitations on conversions of the Notes or exercises of the Warrants, and (B)
if
the Stockholder Approval is not obtained by the Initial Filing Deadline, the
number of Common Shares issued or (II) such other amount as may be required
by
the staff of the SEC. Any shares included under clause (I) of the immediately
preceding sentence but excluded from the definition of Initial Required
Registration Amount because of clause (II), are referred to herein as the
"Cutback
Shares".
u. "Initial
Registration Statement"
means a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Initial Registrable Securities.
v. "Investor"
means a
Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 and any transferee or assignee thereof
to
whom a transferee or assignee assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9.
w. "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.
x. "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.
y. "Registrable
Securities"
means
the Initial Registrable Securities and the Additional Registrable
Securities.
z. "Registration
Delay Payments Conversion Price"
means,
with respect to any Registration Delay Payments Payment Date, that
price which shall be the price
computed as 90% of the arithmetic average of the Weighted Average Price (as
defined in the Notes) of the Common Stock on each of the ten (10) consecutive
Trading Days ending on the Trading Day immediately preceding the applicable
Registration Delay Payments Payment Date (each, a "Registration
Delay Payments Measuring Period").
All
such determinations to be appropriately adjusted for any stock split, stock
dividend, stock combination or other similar transaction during such
Registration Delay Payments Measuring Period.
aa. "Registration
Statement"
means a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
bb. "Required
Holders"
means
the holders of at least a majority of the Registrable Securities.
cc. "Rule
415"
means
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.
dd. "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 all of the Initial Registrable
Securities. 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 appropriate 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 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. The Initial
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 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 am on the date 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
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 an Additional Registration Statement
hereunder. To the extent the staff of the SEC does not permit the Additional
Required Registration Amount to be registered on the Additional Registration
Statement, which are Cutback Shares hereunder, 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 appropriate 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 at least that number of
shares of Common Stock equal to the Additional Required Registration Amount
as
of date the 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 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 date
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
Registration Statement.
c. Allocation
of Registrable Securities.
The
initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein shall
be allocated pro rata among the 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 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 filed with the SEC during the 12-month period following
the Closing Date without the prior written consent of the Required Holders
except for those shares of Common Stock and warrants to purchase shares of
Common Stock identified on Schedule
2(c)(i)
attached
hereto (which shall exclude any securities for which the Company has obtained
waivers pursuant to Section 7(xiv) of the Securities Purchase Agreement). In
no
event shall the Company include any securities other than Registrable Securities
on any Registration Statement filed with the SEC after the 12-month period
following the Closing Date without the prior written consent of the Required
Holders except for up to 3,500,000 shares of Common Stock issuable by the
Company upon exercise of warrants issued by the Company to Knight Capital
Markets, LLC, and the Company's other placement agents on the Closing Date,
no
more than 5,000,000 shares of Common Stock issuable by the Company upon exercise
of warrants to be issued by the Company to the Company's secured lenders and
those shares of Common Stock and warrants to purchase shares of Common Stock
identified on Schedule
2(c)(ii)
attached
hereto. If the SEC requires that the Company register less than the amount
of
shares of Common Stock originally included on any Registration Statement at
the
time it was filed, the Registrable Securities on such registration statement
and
any other securities allowed to be registered on such Registration Statement
(as
set forth below) shall be decreased on a pro rata basis.
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 appropriate form reasonably acceptable
to
the Required Holders and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the SEC.
f. Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an
Investor's allocated portion of the Registrable Securities pursuant to Section
2(b), the Company shall amend the applicable Registration Statement, or file
a
new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least the Required Registration Amount
as of the trading day immediately preceding the date of the filing of such
amendment or new Registration Statement, in each case, as soon as practicable,
but in any event not later than fifteen (15) days after the necessity therefor
arises. The Company shall use its best efforts to cause such amendment and/or
new Registration Statement to become effective as soon as practicable following
the filing thereof. For purposes of the foregoing provision, the number of
shares available under a Registration Statement shall be deemed "insufficient
to
cover all of the Registrable Securities" if at any time the number of shares
of
Common Stock available for resale under the Registration Statement is less
than
the product determined by multiplying (i) the Required Registration Amount
as of
such time by (ii) 0.90. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on the conversion of the Notes
or the exercise of the Warrants and such calculation shall assume that the
Notes
are then convertible into shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Notes) and that the Warrants are then
exercisable for shares of Common Stock at the then prevailing Exercise Price
(as
defined in the Warrants).
g. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
(a) 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 respective 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(r))
pursuant to such Registration Statement or otherwise (including, without
limitation, because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant
to
such Registration Statement, to register a sufficient number of shares of Common
Stock or to maintain the listing of the shares of Common Stock) (a "Maintenance
Failure")
then,
as liquidated damages and not as a penalty to any holder by reason of any such
delay in or reduction of its ability to sell the underlying shares of Common
Stock (which remedy shall be the exclusive economic remedy available with
respect to Filing Failures, Effectiveness Failures and Maintenance Failures),
the Company shall pay to each holder of Registrable Securities relating to
such
Registration Statement an amount equal to 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 days) thereafter
until 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 days)
thereafter until such Effectiveness Failure is cured; (iii) the initial day
of a
Maintenance Failure and on every thirtieth day (pro rated for periods totaling
less than thirty days) thereafter until such Maintenance Failure is cured.
If
all of the Cutback Shares, if any, have not been registered on a Registration
Statement which has been declared effective by the SEC on or before the six
(6)
month anniversary of the Closing Date (a "Cutback
Failure")
then,
as liquidated damages and not as a penalty to any holder by reason of any such
delay in or reduction of its ability to sell any Cutback Shares (which remedy
shall be the exclusive economic remedy available with respect to Cutback
Failures), the Company shall pay to each holder of Cutback Shares relating
to
such Registration Statement an amount equal to one half of a percent (0.5%)
of
the aggregate Purchase Price (as such term is defined in the Securities Purchase
Agreement) of such Investor's Cutback Shares included in such Registration
Statement on the day of a Cutback Failure and on every thirtieth day (pro rated
for periods totaling less than thirty days) thereafter until such Cutback
Failure is cured. The payments to which a holder shall be entitled pursuant
to
this Section 2(g) are referred to herein as "Registration
Delay Payments."
Registration Delay Payments shall be paid on the day of the Filing Failure,
Effectiveness Failure, Cutback Failure or the initial day of Maintenance
Failure, as applicable, and thereafter on the earlier of (I) on the thirtieth
day after the event or failure giving rise to the 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. The date such Registration
Delay Payments are due shall be referred to herein as a "Registration
Delay Payments Payment Date."
In the
event the Company fails to make Registration Delay Payments in a timely manner,
such Registration Delay Payments shall bear interest at the rate of one and
one-half percent (1.5%) per month (prorated for partial months) until paid
in
full. Notwithstanding anything herein or in the Securities Purchase Agreement
to
the contrary, in no event shall the aggregate amount of Registration Delay
Payments (other than Registration Delay Payments payable pursuant to events
that
are within the control of the Company) exceed, in the aggregate, 24% of the
aggregate Purchase Price.
(b) Registration
Delay Payments shall be payable on each Registration Delay Payments Payment
Date, to each holder of Registrable Securities relating to such Registration
Statement, in shares of Common Stock ("Registration
Delay Payments Shares")
so
long as there is no Equity Conditions Failure; provided however, that the
Company, at its option following notice to the holder of Registrable Securities,
may pay Registration Delay Payments on any Registration Delay Payments Payment
Date in cash ("Cash
Registration Delay Payments")
or in
a combination of Cash Registration Delay Payments and Registration Delay
Payments Shares. The Company shall deliver a written notice (each, an
"Registration
Delay Payments Election Notice")
to
each holder of Registrable Securities relating to such Registration Statement
on
or prior to the Registration Delay Payments Payment Date (the date such notice
is delivered to all of the holders, the "Registration
Delay Payments Notice Date")
which
notice (i) either (A) confirms that Registration Delay Payments to be paid
on
such Registration Delay Payments Payment Date shall be paid entirely in
Registration Delay Payments Shares or (B) elects to pay Registration Delay
Payments as Cash Registration Delay Payments or a combination of Cash
Registration Delay Payments and Registration Delay Payments Shares and specifies
the amount of Registration Delay Payments that shall be paid as Cash
Registration Delay Payments and the amount of Registration Delay Payments,
if
any, that shall be paid in Registration Delay Payments Shares and (ii) certifies
that there is no Equity Conditions Failure. If the Equity Conditions are not
satisfied as of the Registration Delay Payments Notice Date, then unless the
Company has elected to pay such Registration Delay Payments as Cash Registration
Delay Payments, the Registration Delay Payments Election Notice shall indicate
that unless the holder waives the Equity Conditions, the Registration Delay
Payment shall be paid as Cash Registration Delay Payments. If the Equity
Conditions were satisfied as of the Registration Delay Payments Notice Date
but
the Equity Conditions are no longer satisfied at any time prior to the
Registration Delay Payments Payment Date, the Company shall provide the holder
a
subsequent notice to that effect indicating that unless the holder waives the
Equity Conditions, the Registration Delay Payments shall be paid as Cash
Registration Delay Payments. Registration Delay Payments to be paid on an
Registration Delay Payments Payment Date in Registration Delay Payments Shares
shall be paid in a number of fully paid and nonassessable shares (rounded to
the
nearest whole share in accordance) of Common Stock equal to the quotient of
(1)
the amount of Registration Delay Payments payable on such Registration Delay
Payments Payment Date less any Cash Registration Delay Payments paid and (2)
the
Registration Delay Payments Conversion Price in effect on the applicable
Registration Delay Payments Payment Date. Notwithstanding the foregoing, if
the
Company elects to pay any Registration Delay Payments in Registration Delay
Payment Shares and the Stockholder Approval (as defined in the Securities
Purchase Agreement) has not been obtained by the applicable Registration Delay
Payments Payment Date, the Company may not pay such Registration Delay Payments
in Registration Delay Payments Shares but instead shall issue to each holder
of
Registrable Securities relating to such Registration Statement a convertible
note with an original principal amount equal to the amount of such Registration
Delay Payments in the form attached hereto as Exhibit
A
to the
Securities Purchase Agreement; provided however that the conversion price of
such convertible note shall be equal to the applicable Registration Delay
Payments Conversion Price.
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(d) or 2(e), the Company will use its best efforts
to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
a. The
Company shall submit to the SEC, within two (2) Business Days after the Company
learns that no review of a particular Registration Statement will be made by
the
staff of the SEC or that the staff has no further comments on a particular
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request. The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
under
the 1933 Act 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-QSB, Form 10-KSB or any analogous report under the Securities
Exchange Act of 1934, as amended (the "1934
Act"),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
c. The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing
with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-KSB, and Reports on Form 10-QSB and any
similar or successor reports) within a reasonable number of days prior to their
filing with the SEC, and (B) not file any Registration Statement or amendment
or
supplement thereto in a form to which Legal Counsel reasonably objects. The
Company shall not submit a request for acceleration of the effectiveness of
a
Registration Statement or any amendment or supplement thereto without the prior
approval of Legal Counsel, which consent shall not be unreasonably withheld.
The
Company shall furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after
the
same is prepared and filed with the SEC, one copy of any Registration Statement
and any amendment(s) thereto, including financial statements and schedules,
all
documents incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of any Registration Statement,
one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate
with
Legal Counsel in performing the Company's obligations pursuant to this Section
3.
d. The
Company shall furnish to 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, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of 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.
e. The
Company shall use its 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 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 actual notice of the
initiation or threatening of any proceeding for such purpose.
f. 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). 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 on the same day of such effectiveness
and
by overnight mail), (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
g. The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and
to
notify Legal Counsel and each Investor who holds Registrable Securities being
sold of the issuance of such order and the resolution thereof or its receipt
of
actual notice of the initiation or threat of any proceeding for such
purpose.
h. If
any
Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, 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.
i. Upon
the
request of any Investor in connection with such Investor's due diligence
requirements, if any, 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 agreement of which the Inspector has knowledge. 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.
j. 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, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning 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.
k. The
Company shall use its best efforts either to (i) cause all of the Registrable
Securities covered by a Registration Statement to be listed on the Principal
Market or 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.
The
Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(k).
l. The
Company shall cooperate with the 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.
m. If
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 therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) as soon as practicable make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters
to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) as soon as practicable, supplement or make amendments to any Registration
Statement if reasonably requested by an Investor holding any Registrable
Securities.
n. The
Company shall use its best efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
o. The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering
a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration
Statement.
p. The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
q. Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the 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.
r. Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a "Grace
Period");
provided, that the Company shall promptly (i) notify the 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, 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 fifteen (15) consecutive days and during any three hundred sixty five
(365) day period such Grace Periods shall not exceed an aggregate of forty
(40)
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
requirements exists), prior to the Investor's receipt of the notice of a Grace
Period and for which the Investor has not yet settled.
s. The
Company shall make any filing as may be required by NASD Rule 2710 in connection
with the offering under any Registration Statement of the applicable Registrable
Securities and shall make any such filing concurrently with its initial filing
of such Registration Statement with the SEC.
t. Until
the
twelve month anniversary of the later to occur of (i) the Initial Effective
Date
and (ii) the Additional Effective Date, the Company shall not enter into any
Subsequent Placement (as defined in the Securities Purchase Agreement) where
such Subsequent Placement provides for registration rights (including piggy-back
registration right) to any one or more of the investors in such Subsequent
Placement, without the prior written consent of the Required
Holders.
u. From
the
date hereof until the date that is ninety (90) days following the later to
occur
of (i) the Initial Effective Date and (ii) the Additional Effective Date, the
Company will not, directly or indirectly, file any registration statement (other
than on Form S-8 or the filing of any post-effective amendments filed solely
for
the purpose of updating financial or other information in any registration
statement of the Company that has been declared effective by the SEC prior
to
the date of this Agreement) with the SEC other than the Registration Statement.
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 the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request.
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 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 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 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. The Company shall also
reimburse the Investors for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections
2 and
3 of this Agreement which amount shall be limited to $20,000.
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 violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations").
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant
to
Section 3(d) and (ii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, including a corrected prospectus,
if
such prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d); and (iii) 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 occurs in reliance
upon and in conformity with written information furnished to the Company by
such
Investor expressly for use in connection with such Registration Statement;
and,
subject to Section 6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such 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, as
the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not
more than one counsel for such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. In the case of an Indemnified Person, legal counsel
referred to in the immediately preceding sentence shall be selected by the
Investors holding at least a majority 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 indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no Person involved
in the sale of Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) in
connection with such sale shall be entitled to contribution from any Person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities pursuant to such Registration
Statement.
8. Reports
Under the 1934 Act.
With
a
view to making available to the 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, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the
1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the 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 and applicable state securities laws; (iv) at
or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements
of
the 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 holders of
the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of
this
Agreement unless the same consideration also is offered to all of the parties
to
this Agreement.
11. Miscellaneous.
a. A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities. 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 (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
999-18th
Street,
Suite 1740
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
Attention:
Xxxx
Works, President and CEO
With
a
copy to:
Xxxxxx
Xxxxx LLP
0000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx Xxxxxxx, Esq. and Xxxx Xxxxxxxxxxx, Esq.
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 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.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
e. This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement) and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein.
This
Agreement, the other Transaction Documents and the instruments referenced herein
and therein supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
f. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit
of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
g. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h. This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j. All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
k. The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
l. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
m. The
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: | /s/ Xxxx Works | |
|
Name: Xxxx Works |
||
|
Title:
President and Chief Executive
Officer
|
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
|
_______________________
|
|
By:
______________________________
Name:
Title:
|
|
Address:
________________________________________
________________________________________
________________________________________
|
SCHEDULE
OF BUYERS
|
Buyer
|
Buyer’s
Address and
Facsimile
Number
|
Buyer’s
Legal Representative's Address and Facsimile
Number
|
|
LP
Rancher Ltd
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
|
Latigo
Fund X.X.
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
|
Old
Westbury Real Return Fund
|
||
|
Bank
xxx. Xxxxxxxxx
|
||
|
Millennium
Global Natural Resources Fund Limited
|
||
|
Millennium
Global Natural Resources Fund Limited
|
||
|
Xxxxxx
Xxxxxxx Co. for a/c Persistency
|
||
|
Tenor
Opportunity Master Fund Ltd.
|
||
|
VR
Global Partners L.P.
|
||
|
Affaires
Financieres SA
|
||
|
Spartan
Arbitrage Fund LP
|
||
|
MMCap
International Inc.
|
||
|
NBCN
INC. ITF Xxxx Day
|
||
|
NBCN
INC. ITF Purling Holdings
|
||
|
NBCN
INC. ITF Xxxxx Xxxxxxxx
|
||
|
NBCN
INC. ITF Xxx Xxxxx
|
||
|
NBCN
INC. ITF Don XxXxxxxxx
|
||
|
Xxxx
Piranha Master Fund LTD
|
||
|
Passport
Global Master
|
||
|
Hound
Partners Offshore Fund
|
||
|
Hound
Partners, L.P.
|
||
|
Xxxxxxxx
Wisden
|
||
|
Xxxxxx
X Xxxxxx
|
||
|
Xxxxx
Xxxxxx
|
||
|
Xxxxxxxx
X Xxxx
|
||
|
Xxxxxxx
Xxxxxxx 25 Xxxxx
|
||
|
Xxxxx
I XxXxxxxx
|
||
|
Xxxxxx
N E
|
||
|
Xx
Xxxxxxxxx Xxxx Xxxxxx
|
||
|
Xxxxxxx
Xxxxxxxx
|
||
|
Xx.
X.X. Xxxxx
|
||
|
Louvre
RE Fitzwilliam
|
||
|
Legent
Clearing, LLC
|
|
Buyer
|
Buyer’s
Address and
Facsimile
Number
|
Buyer’s
Legal Representative's Address and Facsimile
Number
|
|
Brewin
Dolphin
|
||
|
Abbey
National
|
||
|
Xxxxx
Xxxxxxxxxx
|
||
|
Mrs.
S M Wild
|
||
|
Legent
Clearing, LLC
|
||
|
Xx
Xxxx X. Xxxxxx
|
||
|
Xxxxxxxxxx
Xxxxxxxx Tst
|
||
|
Legent
Clearing, LLC
|
||
|
Xxxxxx
Xxx
|
||
|
Xxxxxx
Xxxxxx
|
||
|
Direct
Currency Exchange PLC
|
||
|
Xxxx
Xxxxxxx Xxxxxxx, Esq.
|
||
|
Legent
Clearing, LLC
|
||
|
Resolute
Investment Holdings
|
||
|
Xxxxx
X XxXxxxxx
|
||
|
Picon
Consultants Ltd
|
||
|
Xxxxxx
X Xxxxxxxxx
|
||
|
RBC
Trust Company
|
||
|
Mr
A S Xxxxx
|
||
|
Legent
Clearing, LLC
|
||
|
Xxxxxxxx
X Xxxx
|
||
|
Xx
Xxxx Xxxxxxx Xxxx Xxxxxxxxx
|
||
|
Xxxxxxxxxx
Xxxxxxxx Tst
|
||
|
Richmond
Restaurants Limited
|
||
|
Rensburg
Sheppards Investment Manag
|
||
|
Xxxxxx
A Xxxxxx
|
||
|
Xxxxx
Xxxxxxxx Xxxxxx
|
||
|
X
X
Xxxxxx-Carnac
|
||
|
XX
Xxxxxx
|
||
|
Xxx
Xxxxxxx, Esq.
|
||
|
Tyrolese
Trust Co Ltd X X Xxxx as T Tees of the ABN
|
||
|
Xxxxxxx
Xxxx Xxxxxx /or Xxxxxxxxx
|
||
|
Xxxxxx
Xxxxxx Xxxxx
|
||
|
Xxxxxx
Xxxxxxx
|
||
|
Legent
Clearing, LLC
|
||
|
Legent
Clearing, LLC
|
||
|
T
G
Graveney
|
||
|
Legent
Clearing, LLC
|
||
|
Xxxx
Xxxxxxx
|
||
|
Xxxxxx
X Xxxxxxx
|
||
|
Monsieur
Xxxx Xxxxxx
|
||
|
CSTDN
for Xxxxx Xxxxxxx Xxxxxx Inc.
|
||
|
PFP
Group Limited
|
||
|
Legent
Clearing, LLC
|
|
Buyer
|
Buyer’s
Address and
Facsimile
Number
|
Buyer’s
Legal Representative's Address and Facsimile
Number
|
|
Legent
Clearing, LLC
|
||
|
Xxxxxxx,
Xxxx Xxxxxxx (Mr.)
|
||
|
Xxxx
X. X. Xxxxxx
|
||
|
Barclays
Bank PLC
|
||
|
Miss
H Pearson
|
||
|
Xx
Xxxx X. Xxxxxx
|
||
|
Xx.
X. Xxxxxx
|
||
|
Xxxxxx
Xxxxx
|
||
|
Xxxxx
Xxxxxxx
|
||
|
Xx.
Xxxxx Xxxxx
|
||
|
Van
Moer Xxxxxxxx ET BLD DU Souverain
|
||
|
Legent
Clearing, LLC
|
||
|
X.
Xxxxxxxxxxx Johannes Ingi
|
||
|
Xxxxx
Adelhag
|
||
|
M.
Et MME Whalley
|
||
|
Mr.
T.E.E. Xxxxxx
|
||
|
Purbeck
Pension
|
||
|
Direct
Currency Exchange PLC
|
||
|
X
X
Xxxxxxx
|
||
|
Monsieur
Xxxx Xxxxxx Van Den Broeck
|
||
|
Xxxxxx
X Xxxxxxxxx
|
||
|
Pelttari
Xxxxx
|
||
|
Xxxxxx
D J
|
||
|
Xx.
Xxxxx Xxxx Xxxxxxxxxxx
|
||
|
Xx
Xxxx X. Xxxxxxx
|
||
|
Xxxx
Xxxxxx
|
||
|
Xx.
Xxxxx W. E. Xxxxx
|
||
|
IR
Xxxxxxx
|
||
|
Xx
Xxxx M.D. Maclure
|
||
|
Xxx.
X.X. Xxxxxxx
|
||
|
Xxxxx
Xxxxx Bank Romford
|
||
|
NJ
& XX Xxxxxxx
|
||
|
HR
X X Xxxxx
|
||
|
Alliance
Trust Pensions LTD
|
||
|
The
DirectorsMDL Manx Limited
|
||
|
Xxxxxxxxx
M.
|
||
|
Legent
Clearing, LLC
|
||
|
PPE
LTD
|
||
|
PPE
LTD
|
||
|
Xxxxxxx
Xxxxxxx Xxxxxxxxx
|
||
|
Farrant
|
||
|
Legent
Clearing, LLC
|
||
|
Xxxxxx
X. Xxxxx
|
||
|
Xxxx
Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxx
|
||
|
Xxxxxxx
Financial Management
|
||
|
Xxxxx
Lawsonbrown
|
||
|
Xxxxxx
Xxxxxx
|
|
Buyer
|
Buyer’s
Address and
Facsimile
Number
|
Buyer’s
Legal Representative's Address and Facsimile
Number
|
|
Xx.
Xxxx Xxxxxxx Xxxx Xxxxxxxxx
|
||
|
Alliance
Trust Pensions LTD
|
||
|
Xx.
Xxxx Xxxxx
|
||
|
Xxxxxxx
A M
|
||
|
Maypole
Contracts LTD
|
||
|
Xx.
Xxxxxx Xxxxxxx
|
||
|
Xxxxxxxx
Wisden
|
||
|
Resolute
Investment Holdings
|
||
|
Legent
Clearing, LLC
|
||
|
Xxxxxx
X Xxxxxx
|
||
|
X.
X. Xxxxxx
|
||
|
Xxxxx
M. Xxxxxxx
|
||
|
Xxxxxxx
Xxxxxxx
|
||
|
Xxxxxxxx
Sports, LTD
|
||
|
Xxx
X. Xxxxxxxxxx, Esq.
|
||
|
Xxxxx
Xx Xxxx
|
||
|
Xxxxxxx
Xxxxxx Xxxxxx
|
||
|
Xxxxxx
C T Gomarsall, Esq.
|
||
|
Xxx
X. Xxxxxxxx
|
||
|
Xxx
Xxxxxxx, Esq.
|
||
|
HSBC
Private Bank (Suisse) S.A.
|
||
|
Private
Pension
|
||
|
Xxxxxxx,
Xxxx Xxxxxxx (Mr.)
|
||
|
Xxxxx
Xxxxxx
|
||
|
Monsieur
Xxxx Xxxxxx
|
||
|
Xxxxx
Xxxxx
|
||
|
Cat
All LTD Re Xxxxx Xxxxx Priv Bk
|
||
|
Mr.
Xxxxxxx Xxxxxx
|
||
|
Xxxx
XxXxxxx
|
||
|
X
X
Xxxxxxx
|
||
|
Xxxxx
Xxxxxx, Esq.
|
||
|
Monsieur
Xxxx Xxxxxx Van Den Xxxxxx
|
||
|
Xxxxxxxxxx
Xxxxxxxx
|
||
|
Xx
Xxxx M.D. Xxxxxxx
|
||
|
Wueger
Andreas/Chiaran
|
||
|
Xxxx
Xxxxxxx Wueger
|
||
|
Xxxxx
Xxxxxx
|
||
|
Xxxxxxx
Xxxxxx-Carnac
|
||
|
X
X
Xxxxxxx
|
||
|
Legent
Clearing, LLC
|
||
|
Xx
Xxxxxx Xxxxxx
|
||
|
De
Xxxx X. X. Bosch
|
||
|
Xx.
X X Xxxxxx
|
||
|
Xxxxxx
Xxx
|
||
|
Xx.
Xxxxxxxxx X. Xxxx
|
||
|
PFP
Group Limited
|
|
Buyer
|
Buyer’s
Address and
Facsimile
Number
|
Buyer’s
Legal Representative's Address and Facsimile
Number
|
|
Legent
Clearing, LLC
|
||
|
Xxxxxxxxxxx
Xxxxxxx
|
||
|
Parasol
FX Client A/C
|
||
|
Osiris
Tsts Re X Xxxxxx Life 1
|
||
|
Xxxxxxxxxx
Xxxxxxxx
|
||
|
Xx
Xxxxx Xxxxxxx
|
||
|
Torben
Maersk
|
||
|
PFP
Group Limited
|
||
|
Legent
Clearing, LLC
|
||
|
Xxxx
X. Xxxxxxx
|
||
|
Xxxxxx
Xxxxx
|
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
[Transfer
Agent]
[Address]
Attention:
Ladies
and Gentlemen:
[We
are][I am] counsel to Rancher Energy Corp., a Nevada 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 (i) senior convertible
notes
(the "Notes")
convertible into the Company's common stock, par value $0.00001 per share
(the "Common
Stock), (ii)
shares (the "Common
Shares")
of
Common Stock and (iii) warrants exercisable for shares of Common Stock (the
"Warrants").
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 Common Shares, the shares of Common Stock issuable upon conversion
of the Notes and the shares of Common Stock issuable upon exercise of the
Warrants, under the Securities Act of 1933, as amended (the "1933
Act").
In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form SB-2 (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 Transfer Agent Instructions dated December __,
2006.
1
|
Very
truly yours,
[ISSUER'S
COUNSEL]
By:__________________________
|
| CC: |
[LIST
NAMES OF HOLDERS]
|
2
EXHIBIT
B
SELLING
STOCKHOLDERS
The
shares of Common Stock being offered by the selling stockholders are common
stock previously issued and shares of common stock issuable upon conversion
of
the convertible notes and upon exercise of the warrants. For additional
information regarding the issuance of those convertible notes and warrants,
see
"Private Placement of Convertible Notes Common Shares and Warrants" above.
We
are registering the shares of Common Stock in order to permit the selling
stockholders to offer the shares for resale from time to time. Except for the
ownership of the Common Shares, Convertible Notes and Warrants 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
shares of common stock previously, the convertible notes and warrants, as of
________, 200_, assuming conversion of all convertible notes and exercise of
the
warrants held by the selling stockholders on that date, without regard to any
limitations on conversions or exercise.
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 130% of the sum of (i) the number of shares of Common Stock issuable
upon
conversion of the convertible notes as of the trading day immediately preceding
the date the registration statement is initially filed with the SEC, (ii) the
shares of common stock previously issued and (iii) the number of shares of
Common Stock issuable upon exercise of the related warrants 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 notes and the exercise price of the
warrants 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 notes and the warrants, a selling stockholder may
not
convert the convertible notes or exercise the warrants to the extent such
conversion or exercise would cause such selling stockholder, together with
its
affiliates, to beneficially own a number of shares of Common Stock which would
exceed [9.99][4.99]% of our then outstanding shares of Common Stock following
such conversion or exercise, excluding for purposes of such determination shares
of Common Stock issuable upon conversion of the convertible notes which have
not
been converted and upon exercise of the warrants which have not been exercised.
The number of shares in the second column does not reflect this limitation.
The
selling stockholders may sell all, some or none of their shares in this
offering. See "Plan of Distribution."
1
|
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)
|
0
|
(1)
2
PLAN
OF DISTRIBUTION
We
are
registering the shares of Common Stock previously issued and the shares of
common stock issuable upon conversion of the convertible notes and upon exercise
of the warrants to permit the resale of these shares of Common Stock by the
holders of the shares of common stock, the convertible notes and warrants from
time to time after the date of this prospectus. We will not receive any of
the
proceeds from the sale by the selling stockholders of the shares of Common
Stock. We will bear all fees and expenses incident to our obligation to register
the shares of Common Stock.
The
selling stockholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
Common Stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions
or
agent's commissions. The shares of Common Stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions,
| · |
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
| · |
in
the over-the-counter market;
|
| · |
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
| · |
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
short
sales;
|
| · |
sales
pursuant to Rule 144;
|
1
| · |
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 shares of common stock, convertible notes or warrants or shares of Common
Stock owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell the shares
of
Common Stock from time to time pursuant to this prospectus or any amendment
to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933, as amended, amending, if necessary, the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also
may
transfer and donate the shares of Common Stock in other circumstances in which
case the transferees, donees, pledgees or other successors in interest will
be
the selling beneficial owners for purposes of this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of Common Stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of Common Stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of Common Stock
being offered and the terms of the offering, including the name or names of
any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
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 Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of Common Stock by the selling
stockholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of Common
Stock to engage in market-making activities with respect to the shares of Common
Stock. All of the foregoing may affect the marketability of the shares of Common
Stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of Common Stock.
We
will
pay all expenses of the registration of the shares of Common Stock pursuant
to
the registration rights agreement, estimated to be
$[ ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or "blue sky" laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions, if
any.
We will indemnify the selling stockholders against liabilities, including some
liabilities under the Securities Act, in accordance with the registration rights
agreements, or the selling stockholders will be entitled to contribution. We
may
be indemnified by the selling stockholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling stockholder specifically for use
in
this prospectus, in accordance with the related registration rights 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.
3
