REGISTRATION RIGHTS AGREEMENT
EXHIBIT 10.2
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the [ ]th day of [ ], 2012, by and between FlatWorld Acquisition Corp., a British Virgin Islands business company organized with limited liability (the “Company”), and Bimini Capital Management, Inc., a Maryland corporation (the “Shareholder”).
WHEREAS, at the Effective Time, the Company shall issue the Preferred Shares to the Shareholder; and
1.
|
DEFINITIONS. The following capitalized terms used herein have the following meanings:
|
“Code” means the Internal Revenue Code of 1986, as amended.
“Commission” means the U.S. Securities and Exchange Commission, or any successor agency.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
1
“Register,” “Registered” and “Registration” mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and such registration statement becoming effective.
“Registrable Securities” means (i) the Preferred Shares (and the ordinary shares, no par value, of the Company (the “Ordinary Shares”) into which they are convertible) and (ii) any other equity security of the Company issued or issuable with respect to any such Preferred Shares or Ordinary Shares by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, amalgamation, consolidation or reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding; or (d) the entire amount of the Registrable Securities held by any holder may be sold in a single sale, in the opinion of counsel reasonably satisfactory to the Company without any limitation as to volume or manner of sale pursuant to Rule 144 (or any successor rule or regulation) under the Securities Act.
“Registration Statement” means a registration statement filed by the Company with the Commission in compliance with the Securities Act for a public offering and sale of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities (other than a registration statement on Form X-0, X-0, X-0 or S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity).
“Release Date” means the date on which the Preferred Shares are released from their lockup restrictions pursuant to the Lockup Agreement between the Shareholder and FWAC Holdings, dated as of the date hereof.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.
2.1.1 Request for Registration. At any time and from time to time on or after the Release Date with respect to the Preferred Shares (or Ordinary Shares into which they are convertible), the holders of a majority-in-interest of the Preferred Shares (or
2
Ordinary Shares into which they are convertible), as a class, may make a written demand for registration under the Securities Act of all or part of such Registrable Securities (a “Demand Registration”). Any demand for a Demand Registration shall specify the type and number of such Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company will then notify all holders of Registrable Securities of the demand, and each holder of Registrable Securities who wishes to include all or a portion of such holder’s Registrable Securities in the Demand Registration (each such holder including shares of Registrable Securities in such registration, a “Demanding Holder”) shall notify the Company of the number and type of Registrable Securities for which registration is requested within fifteen (15) calendar days of the receipt by the holder of such notice from the Company. Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to Section 2.1.4 and the provisos set forth in Section 3.1.1. The Company shall not be obligated to effect more than three (3) Demand Registrations with respect to the Preferred Shares (or Ordinary Shares into which they are convertible) under this Section 2.1.1.
3
shares of Registrable Securities which the Demanding Holders desire to sell, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable, the “Maximum Number of Shares”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with the number of shares held by each such Person, regardless of the number of shares that each such Person has requested be included in such registration (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares.
4
Registrable Securities as soon as practicable but in no event less than twenty (20) days before the first anticipated filing date of the Registration Statement with the Commission, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within ten (10) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall use its best efforts to cause such Registrable Securities to be included in such registration and shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in a form reasonably acceptable to the Underwriter or Underwriters selected for such Piggy-Back Registration.
(a) If the registration is undertaken for the Company’s account: (i) first, the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), collectively, the Ordinary Shares or other securities, if any, comprised of Registrable Securities and the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such persons, Pro Rata, and that can be sold without exceeding the Maximum Number of Shares;
(b) If the registration is a “demand” registration undertaken at the demand of persons other than the holders of Registrable Securities, (i) first, the Ordinary Shares or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the Ordinary Shares or other securities that the Company
5
desires to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), collectively, the Ordinary Shares or other securities comprised of Registrable Securities and the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back arrangements with such persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares.
6
7
all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the holders of Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the Commission a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to the holders of Registrable Securities included in such Registration Statement and to the legal counsel for any such holders, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such holders or their legal counsel shall object.
8
that such holder has furnished in writing expressly for inclusion in such Registration Statement.
9
10
11
meaning of the Securities Act, against any expenses, losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such expenses, losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or the alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling holder expressly for use therein, and shall promptly reimburse the Company, its directors and officers, and each other selling holder or controlling person for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss, claim, damage, liability or action. Each selling holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling holder.
12
pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.
4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such 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 loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
4.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section 4.4.1.
4.4.3 The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, the reasonable and documented legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
4.5.1 In the event that a selling holder of Registrable Securities (the “Indemnifying Holder”) is obligated to pay an amount to the Company during a year that the Company qualifies as a “real estate investment trust” under Sections 856 through 860 of the Code(a “REIT”) pursuant to Section 4.2 (the “Indemnification Amount”), the Indemnifying Holder or its affiliates, as applicable, shall pay to the Company, from
13
the Indemnification Amount deposited into escrow in accordance with Section 4.5.2, an amount equal to the lesser of (I) the Indemnification Amount and (II) the sum of (x) the maximum amount that can be paid to the Company without causing the Company to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code determined as if the payment of such amount did not constitute income described in Sections 856(c)(2) or 856(c)(3) of the Code (“Qualifying Income”), as determined by the Company independent certified public accountants, plus (y) in the event the Company receives either (1) a ruling from the Internal Revenue Service described in Section 4.5.3 or (2) an opinion from the Company’s outside counsel as described in Section 4.5.3, an amount equal to the Indemnification Amount, less the amount payable under clause (x) above.
4.5.2 To secure the Indemnifying Holder’s obligation to pay these amounts, the Indemnifying Holder shall deposit into escrow an amount in cash equal to the Indemnification Amount with an escrow agent selected by the Indemnifying Holder and on such customary terms (subject to Section 4.5.3) as shall be mutually acceptable to each of the Company, the Indemnifying Holder and the escrow agent. The payment or deposit into escrow of the Indemnification Amount, pursuant to this Section 4.5, shall be made at the time that the payment of the Indemnification Amount would otherwise be due without regard to this Section 4.5.
4.5.3 The escrow agreement for the escrow described in Section 4.5.2 shall provide that the Indemnification Amount in escrow or any portion thereof shall not be released to the Company unless the escrow agent receives any one or combination of the following:
(a) a letter from the Company’s independent certified public accountants indicating the maximum amount that can be paid by the escrow agent to the Company without causing the Company to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code determined as if the payment of such amount did not constitute Qualifying Income or a subsequent letter from the Company’s accountants revising or updating that amount (whether to correct an error or to reflect the passage of time or otherwise), in which case the escrow agent shall release such amount or, in the case of a revised or updated letter, such additional amount to the Company, or
(b) a letter from the Company’s counsel indicating that the Company received a ruling from the Internal Revenue Service holding that the receipt by the Company of the Indemnification Amount would either constitute Qualifying Income or would be excluded from gross income within the meaning of Sections 856(c)(2) and (3) of the Code (or alternatively, the Company’s outside counsel has rendered a legal opinion to the effect that the receipt by the Company of the Indemnification Amount would either constitute Qualifying Income or would be excluded from gross income within the meaning of Sections 856(c)(2) and (3) of the Code), in which case the escrow agent shall release the remainder of the Indemnification Amount to the Company. The escrow agreement shall also provide that any portion of the Indemnification Amount held in escrow for five (5) years shall be released by the escrow agent to the Indemnifying Holder.
14
4.5.4 The Indemnifying Holder agrees to amend this Section 4.5 at the reasonable request of the Company in order to (x) maximize the portion of the Indemnification Amount that may be distributed to the Company hereunder without causing the Company to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code, (y) improve the Company’s chances of securing a favorable ruling described in Section 4.5.3 or (z) assist the Company in obtaining a favorable legal opinion from its outside counsel as described in Section 4.5.3.
4.5.5 In the event that the Shareholder is entitled to any payments under this Section 4, principles analogous to Section 4.5 shall apply to such payments.
6.1 Other Registration Rights. The Company represents and warrants that as of the date hereof, no person, other than (i) a holder of the Registrable Securities issued in connection with the Merger, (ii) FWAC Holdings, pursuant to that Amended and Restated Registration Rights Agreement entered into as of [___________], 2012, between FWAC Holdings and the Company or (iii) Xxxxxx & Xxxxxxx, LLC (“Xxxxxx & Xxxxxxx”) or its designees pursuant to that certain Unit Purchase Option granted in connection with the Company’s initial public offering on December 9, 2010 (the “UPO”), has any right to require the Company to register any Ordinary Shares for sale or to include Ordinary Shares in any registration statement filed by the Company for the sale of Ordinary Shares for its own account or for the account of any other person.
15
To the Company:
FlatWorld Acquisition Corp.
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
To Shareholder, to:
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
and in either case, with a copy to (which shall not constitute notice):
Hunton & Xxxxxxxx LLP
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. XxXxx
16
6.11 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereby: (i) agree that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced exclusively in any state or federal court located in New York County, New York, (ii) irrevocably submit to the jurisdiction of any New York State or federal court, which jurisdiction shall be exclusive and (iii) waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
17
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.
FLATWORLD ACQUISITION CORP.
By:__________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
By: __________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive
19