Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of October 23, 2003, by and among SureBeam Corporation, a
Delaware corporation (the "Company"), and the purchasers identified on the
signature pages hereto (each, a "Purchaser" and collectively, the "Purchasers")
in connection with the execution of that certain Securities Purchase Agreement
dated as of the date hereof among the Company and the Purchasers (the "Purchase
Agreement").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Purchasers agree as
follows:
1. Definitions. In addition to the terms defined elsewhere in this Agreement,
any capitalized terms set forth herein shall have the meaning set forth on
EXHIBIT A hereto.
2. Registration.
2.1 Registration Statement.
(a) On or prior to a Filing Date, if any, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. Each Registration Statement shall be on Form S-1
(except if the Company is eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration may be on Form S-3) and
shall contain the "Plan of Distribution" attached hereto as EXHIBIT B or such
other "Plan of Distribution" language approved by Holders. The Company shall
cause such Registration Statement to remain effective as provided herein. The
Company shall use commercially reasonable efforts to file the initial
Registration Statement as soon as practicable after the Closing Date, and will
use its best efforts to cause each Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date, and
shall use its best efforts to keep each Registration Statement continuously
effective under the Securities Act until the date which is two (2) years after
the date that such Registration Statement is declared effective by the
Commission or such earlier date when all Registrable Securities covered by such
Registration Statement have been sold or may be sold without volume restrictions
pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to
a written opinion letter to such effect, addressed and reasonably acceptable to
the Company's transfer agent and the affected Holders (the "Effectiveness
Period").
(b) If any Registration Statement shall not be declared
effective by the Commission on or prior to the applicable Effectiveness Date (an
"Event", and the date being the "Event Date") then, in addition to any other
rights available to the Holders: (x) on each Event Date, the Company shall pay
to each Holder an amount in cash, as liquidated damages and not as a
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penalty, equal to 1% of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement; and (y) on each monthly anniversary of each
such Event Date thereof (if the applicable Event shall not have been cured by
such date) until the applicable Event is cured, the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a penalty, equal to
1% of the aggregate purchase price paid by such Holder pursuant to the Purchase
Agreement. If the Company fails to pay any liquidated damages pursuant to this
Section in full within seven (7) days after the date payable, the Company will
pay interest thereon at a rate of 18% per annum (or such lesser maximum amount
that is permitted to be paid by applicable law) to the Holder, accruing daily
from the date such liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full.
2.2 Additional Registration Statements. If the number of Registrable
Securities at any time after the Effectiveness Date exceeds 85% of the number of
shares of Common Stock then registered in a Registration Statement, then the
Company shall file an additional Registration Statement covering the resale of
such additional shares or Registrable Securities (as applicable) in accordance
with this Agreement.
3. Registration Procedures.
3.1 Obligations of the Company. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Furnish to the Holders prior to the filing of the
Registration Statement copies of those portions of the Registration Statement
which refer to the Holder;
(b) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities;
(c) Cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424;
(d) Respond to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto;
(e) Notify the Holders of Registrable Securities to be sold
(i) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities; and (iii) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction;
(f) Use its commercially reasonable best efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment;
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(g) Furnish to each Holder, without charge, at least one (1)
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission;
(h) Promptly deliver to each Holder, without charge, as many
copies of the Prospectus or Prospectuses (including each form of prospectus) and
each amendment or supplement thereto as such Persons may reasonably request;
(i) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder requests in writing, to keep each such registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or subject the Company to any material tax in any such jurisdiction
where it is not then so subject; and
(j) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement.
3.2 Obligations of the Holders. The Company may require each selling
Holder to furnish to the Company a certified statement as to the number of
shares of Common Stock beneficially owned by such Holder and, if requested by
the Commission, the controlling person thereof.
4. Registration Expenses. All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement.
5. Indemnification
5.1 Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, brokers, investment advisors and employees of each
of them, each Person who controls any such Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys
fees) and expenses (collectively, "Losses"), arising out of or relating to any
untrue statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto,
or arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements
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therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, except to the extent that (i) such untrue statements or omissions
are based upon information regarding such Holder furnished to the Company by
such Holder, or to the extent that such information relates to such Holder or
such Holder's proposed method of distribution of Registrable Securities and
approved by such Holder for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Exhibit B hereto for this purpose) or
(ii) the use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated or
defective.
5.2 Indemnification by the Holders. Each Holder shall, severally and
not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or based upon: (i) such Holder's failure to comply with
the prospectus delivery requirements of the Securities Act or (ii) any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus, or in any amendment or supplement thereto,
or arising out of or based upon any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished by such Holder to the Company or to
the extent that (A) such untrue statements or omissions are based upon
information regarding such Holder furnished in writing to the Company by such
Holder, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and approved by such Holder for use in the Registration Statement (it
being understood that the Holder has approved Exhibit B hereto for this
purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (B) the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective. In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
5.3 Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
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5.4 Separate Counsel. An Indemnified Party shall have the right to
employ separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed
in writing to pay such fees and expenses; (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding affected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
5.5 Right of Contribution. If a claim for indemnification under Section
5.1 or 5.2 is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5.3, any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms. The parties hereto agree that it would
not be just and equitable if contribution pursuant to Section 5.5 were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in such section.
6. Miscellaneous
6.1 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Holders and the Company will be entitled to specific performance under this
Agreement. Monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the
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foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
6.2 Prospectus Delivery Compliance. Each Holder covenants and agrees
that it will comply with the prospectus delivery requirements of the Securities
Act as applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
6.3 Discontinued Disposition. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3.1(f), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
6.4 Piggyback Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans or pursuant to that certain Registration Rights Agreement dated
December 2, 2002 between the Company and the investors listed therein, then the
Company shall send to each Holder written notice of such determination and, if
within one (1) day after receipt of such notice, any such Holder shall so
request in writing, the Company shall include in such Registration Statement
such Registrable Securities such holder requests to be included, subject to pro
rata underwriter cutbacks applicable to all holders of registrable securities.
6.5 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Holders or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of certain holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates, provided, that the provisions of this sentence may
not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay
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or omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.
6.6 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Agreement prior to 6:30 p.m. (Pacific Standard time) on a
Trading Day; (ii) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 6:30
p.m. (Pacific Standard time) on any Trading Day; (iii) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service; or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:
If to the Company: SureBeam Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Fax No.: (000) 000-0000
If to a Purchaser : To the address set forth under such
Purchaser's name on the signature
page to the Purchase Agreement
If to any other Person who is To the address of such Holder as it
then the registered Holder: appears in the stock transfer books
of the Company
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
6.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Holders. Each Purchaser or Holder may
assign its respective rights hereunder in the manner and to the Persons, as
permitted under the Purchase Agreement.
6.8 Execution. This Agreement may be executed in counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof
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6.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
California, without regard to the principles of conflicts of law thereof. All
legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of San Diego, California. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of San Diego, California for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of the any
of the Transaction Documents), 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 improper. Each party hereto (including its affiliates, agents,
officers, directors and employees) hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
6.10 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
6.11 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 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. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
SUREBEAM CORPORATION
By:
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Name:
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Title:
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EXHIBIT A
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
RAM TRADING LTD.
By:
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Name:
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Title:
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RAM TRADING LTD.
By:
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Name:
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Title:
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EXHIBIT A
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
FLYLINE HOLDINGS LTD.
By:
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Name:
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Title:
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EXHIBIT A
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DURANGO INVESTMENTS, LP
By:
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Name:
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Title:
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EXHIBIT A
EXHIBIT A
DEFINITIONS
"Effectiveness Date" means, with respect to the initial Registration
Statement required to be filed hereunder, the date which is six months after the
Closing Date.
"Effectiveness Period" shall have the meaning set forth in Section 2.1.
"Filing Date" means, with respect to the initial Registration Statement
required to be filed hereunder, the day on which such Registration Statement is
filed, and, with respect to any additional Registration Statements that may be
required pursuant to Section 2.2, the 30th day following the date on which the
Company first knows, or reasonably should have known that such additional
Registration Statement is required under such Section.
"Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5.3.
"Indemnifying Party" shall have the meaning set forth in Section 5.3.
"Losses" shall have the meaning set forth in Section 5.1.
"New Warrants" shall have the meaning set forth in the Warrant.
"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means the Shares.
"Registration Statement" means the registration statement required to
be filed hereunder including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may he amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
EXHIBIT A
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Shares" means the shares of Common Stock issued to Purchaser upon
exercise of the Warrant and conversion of Convertible Preferred Stock of the
Company, $.001 par value issued to the Purchasers pursuant to the Purchase
Agreement.
"Warrant" means (i) the Warrant issued under the Purchase Agreement,
and (ii) the New Warrants.
EXHIBIT A
EXHIBIT B
PLAN OF DISTRIBUTION
The common stock covered by this prospectus may be offered and sold at
various times by the selling stockholders. As used herein, "selling
stockholders" includes the selling stockholders named in the table above and
pledgees, donees, transferees or other successors-in-interest selling shares
received from a named selling stockholder as a gift, partnership distribution or
other non-sale-related transfer after the date of this prospectus. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. The common stock may be sold by or for
the account of the selling stockholders in transactions on the Nasdaq National
Market, the over-the-counter market, or otherwise. The sales may be made at
fixed prices, at market prices prevailing at the time, or at privately
negotiated prices. The selling stockholders may sell the common stock by means
of one or more of the following methods:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- a block trade in which the broker-dealer so engaged will attempt to sell
the common stock as agent, but may position and resell a portion of the
block as a principal to facilitate the transaction;
- purchases by brokers, dealers or underwriters as principal and resale
by those purchasers for their own accounts under this prospectus;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales;
- in connection with the writing of non-traded and exchanged-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter option;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate in the
resales. Brokers, dealers or agents may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders or from the
purchasers, or from both. The selling stockholders do not expect these
EXHIBIT B
discounts, concessions or commissions to exceed what is customary in the
applicable types of transactions.
The selling stockholders and any participating brokers or dealers may
be deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commission, discount or
concession these "underwriters" receive may be deemed to be underwriting
compensation. In addition, because selling stockholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, the
selling stockholders will be subject to the prospectus delivery requirements of
the Securities Act. In addition, any shares of a selling stockholder covered by
this prospectus which qualify for sale pursuant to Rule 144 promulgated under
the Securities Act may be sold under Rule 144 rather than pursuant to this
prospectus. The selling stockholders informed us that they do not have any
agreement or understanding, directly or indirectly, with any person to
distribute the common stock.
The selling stockholders have been advised that while they are engaged
in a distribution of the common stock included in this prospectus, they may be
required to comply with the anti-manipulative provisions of Regulation M as
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). With certain exceptions, Regulation M precludes the selling stockholders,
any affiliated purchasers, and any broker-dealer or other person who
participates in such distribution from bidding for or purchasing, or attempting
to induce any person to bid for or purchase any security which is the subject of
the distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security. Regulation M's
prohibition on purchases may include purchases to cover short positions by the
selling stockholders, and a selling stockholder's failure to cover a short
position at a lender's request and subsequent purchases of shares by the lender
in the open market to cover such short positions, may constitute an inducement
to buy shares which is prohibited by Regulation M. Broker-dealers engaged by the
Selling Stockholders ay arrange for other broker-dealers to participate in
sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for Purchaser of shares,
from Purchaser ) in amounts to be negotiated. The Selling Stockholders do not
expect these commissions and discounts to exceed what is customary in the types
of transactions involved.
The selling stockholder may from time to time pledge or grant a
security interest in some or all of the Shares or Common Stock or Warrant 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 under this prospectus, or under an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933 amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholder under this
prospectus.
The selling stockholders also may transfer the shares of Common Stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
EXHIBIT B
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders have
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
EXHIBIT B
