REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this "Agreement")
is
made and entered into as of October 14, 2008, by and between China Bio Energy
Holding Group Co., Ltd. (the “Company”),
and
the Purchasers listed on Schedule
I
hereto
(the "Purchasers").
This
Agreement is being entered into pursuant to (i) the Warrant Exercise Agreement,
dated as of the date hereof(the "Warrant
Exercise Agreements"),
by
and between (x) the Company and Vision Opportunity Master Fund,
Ltd.(“VOMF”),
and
(y) the Company and Vision Capital Advantage Fund, L.P. (“VCAF”),
and
(ii) the Securities Purchase Agreement, dated as of the date hereof, between
the
Company and Vision Opportunity China LP (“VOC”),
(the
“Purchase
Agreement,
and
together with the Warrant Exercise Agreements, the “Master
Agreements”).
The
Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Master Agreements, as applicable. As used in this Agreement, the
following terms shall have the following meanings:
“2008
Delivery Date” means
the
date on which the Make Good Shares are required to be delivered to VOC pursuant
to the Escrow Agreement.
"Advice"
shall
have meaning set forth in Section 3(m).
"Affiliate"
means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For
the
purposes of this definition, "control,"
when
used with respect to any Person, means the possession, direct or indirect,
of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or
otherwise; and the terms of "affiliated,"
"controlling"
and
"controlled"
have
meanings correlative to the foregoing.
"Board"
shall
have meaning set forth in Section 3(n).
"Business
Day"
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the State of New York generally are
authorized or required by law or other government actions to close.
"Commission"
means
the Securities and Exchange Commission.
"Common
Stock"
means
the Company's common stock, par value $0.0001 per share.
“Conversion
Shares”
means
the shares of Common Stock issuable upon conversion of the Company’s Series B
Preferred Stock, par value $0.001.
"Effectiveness
Date"
means,
(a)
with
respect to the initial Registration Statement to be filed under Section 2(a),
the earlier of (A) the one hundred and fifth (105th)
day
following the Filing Date (or in the event the Registration Statement receives
a
“full review” by the Commission, the one hundred thirty fifth (135th)
day
following the Filing Date) and (B) the date which is within three (3) Business
Days after the date on which the Commission informs the Company (i) that the
Commission will not review the Registration Statement or (ii) that
the
Company may request the acceleration of the effectiveness of the Registration
Statement (the “Acceleration
Dates”);
(b)
with respect to the Registration Statement to be filed pursuant to Section
2(b),
the earlier of (A) the ninetieth (90th)
day
following the Restricted Period (or in the event the Registration Statement
receives a “full review” by the Commission, the one hundred twentieth
(120th)
day
following the Filing Date) and (B) the Acceleration Dates; and (c) with respect
to the Registration Statement to be filed pursuant to Section 2(c), the earlier
of (A) the one hundred and fifth (105th)
following the 2008 Delivery Date (or in the event the Registration Statement
receives a “full review” by the Commission, the one hundred thirty fifth
(135th)
day
following the Filing Date), and (B) the Acceleration Dates; provided that,
if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall
be a
legal holiday or a day on which the Commission is authorized or required by
law
or other government actions to close, the Effectiveness Date shall be the
following Business Day.
"Effectiveness
Period"
shall
have the meaning set forth in Section 2(a).
“Escrow
Agreement”
means
that certain securities escrow agreement, dated as of the date hereof, by and
between the Company and Vision Opportunity China LP.
"Event"
shall
have the meaning set forth in Section 7(e).
"Event
Date"
shall
have the meaning set forth in Section 7(e).
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
"Filing
Date"
means
(a) with respect to the initial Registration Statement required to be filed
pursuant to Section 2(a), the date that is the 30th
day
following receipt of a Demand Notice; and (b) if the Make Good Shares are not
included on the initial Registration Statement, with respect to the Registration
Statement required to be filed under Section 2(c), the 45th
day
following the 2008 Delivery Date; provided that,
if the
Filing Date falls on a Saturday, Sunday or any other day which shall be a legal
holiday or a day on which the Commission is authorized or required by law or
other government actions to close, the Filing Date shall be the following
Business Day.
"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(c).
"Indemnifying
Party"
shall
have the meaning set forth in Section 5(c).
"Losses"
shall
have the meaning set forth in Section 5(a).
“Make
Good Shares”
means
the 2,465,753 shares of Common Stock of the Company deposited in an escrow
account pursuant to the terms of the Escrow Agreement.
"Person"
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Proceeding"
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
"Prospectus"
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
“Purchase
Price”
means
the amount paid by (i) VOMF and/or VCAF upon exercise of their respective Series
A-1 Warrant, and/or (ii) VOCF to purchase the Debenture, as the case may
be.
"Registrable
Securities”
means
(i) up to 1,704,546 shares of Common Stock issued in the aggregate to VOMF
and
VCAF upon the partial exercise of their respective Series A-1 Warrants; (ii)
the
Conversion Shares; (iii) the Make Good Shares; provided,
however
that the
Make Good Shares shall be part of the Registrable Securities only if at the
time
of inclusion on the Registration Statement they have been released to the Holder
or Holders pursuant to the terms of the Escrow Agreement; (iv) any additional
shares issuable in connection with any anti-dilution provisions associated
with
the Preferred Shares (in each case, without giving effect to any limitations
on
conversion set forth in the Certificate of Designation); and (v) any securities
issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing.
"Registration
Statement"
means
the registration statements and any additional registration statements
contemplated by Section 2, including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus, including pre-
and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
"Rule
144"
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Rule
158"
means
Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Rule
415"
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
416”
means
Rule 416 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.
"Securities
Act"
means
the Securities Act of 1933, as amended.
“Series
A-1 Warrant”
means
the Series A-1 Warrants issued to the Holders as of October 23, 2007.
2. Resale
Registration.
(a) At
any
time a Purchaser or the Purchasers, or a Holder or Holders owning more than
25%
of Registrable Securities (the “Initiating
Holders”)
may
demand that the Company file a Registration Statement providing for the resale
of all Registrable Securities (other than the Make Good Shares, if at such
time
the Make Good Shares have not been delivered to the Holder or Holders) then
held
by the Initiating Holders by giving written notice (a “Demand
Notice”)
to the
Company, in which case all Holders of Registrable Securities may have all of
their Registrable Securities included on such Registration Statement, by
providing written notice of acceptance to the Company. The Demand Notice shall
describe the number of Registrable Securities intended to be disposed of and
the
intended method of disposition. The Company shall then prepare and file with
the
Commission on or prior to the Filing Date, a “resale” Registration Statement
providing for the resale of all Registrable Securities included in the Demand
Notice for an offering to be made on a continuous basis pursuant to Rule 415.
Any such Registration Statements shall be on Form S-1 (except if the Company
is
not then eligible to register for resale such Registrable Securities on Form
S-1, in which case such registrations shall be on another appropriate form
in
accordance herewith and the Securities Act and the rules promulgated
thereunder). The Company shall (i) not permit any securities other than the
Registrable Securities to be included in any such Registration Statement and
(ii) use its reasonable best efforts to cause any such Registration Statement
to
be declared effective under the Securities Act as promptly as possible after
the
filing thereof, but in any event prior to the applicable Effectiveness Date,
and
to keep any such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold
or
(y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144 as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company’s transfer agent
to such effect (the “Effectiveness
Period”).
The
Company shall request that the effective time of any such Registration Statement
is 5:00 p.m. Eastern Time on the applicable Effectiveness Date.
(b) In
the
event that the Company is unable to register for resale under Rule 415 all
of
the Registrable Securities on the initial Registration Statement that it has
agreed to file pursuant to the first sentence of Section 2(a) due to limits
imposed by the Commission’s interpretation of Rule 415 of Regulation C, the
Company will file an additional Registration Statement under the Securities
Act
with the Commission covering the resale by the Purchasers of such lesser amount
of the Registrable Securities as the Company is able to register pursuant to
the
Commission’s interpretation of Rule 415 and use its reasonable best efforts to
have such Registration Statement become effective as promptly as possible,
and,
when permitted to do so by the Commission, to file subsequent registration
statement(s) under the Securities Act with the Commission covering the resale
of
any Registrable Securities that were omitted from its prior Registration
Statements filed with the Commission pursuant to this Section 2(b) and use
its
reasonable best efforts to have such registration declared effective as promptly
as possible. In furtherance of the Company’s obligations set forth in the
preceding sentence, the parties hereby agree that in the event that any Holder
shall deliver to the Company a written notice at any time after the later of
(x)
the date which is six months after the Effectiveness Date of the latest
Registration Statement filed pursuant to Section 2(a) or 2(b) hereof, as
applicable, or (y) the date on which all Registrable Securities registered
on
all of the prior Registration Statements filed pursuant to Section 2(a) and
2(b)
hereof are sold (the “Restricted
Period”),
that
the Company shall file, within 30 days following the date of receipt of such
written notice, an additional Registration Statement registering any Registrable
Securities that were the subject of the applicable Demand Notice, but were
omitted from such prior Registration Statements.
(c) On
or
prior to the Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering the resale of the Make Good Shares on Form
S-1
(except if the Company is not then eligible to register for resale such
Registrable Securities on Form S-1, in which case such registrations shall
be on
another appropriate form in accordance herewith and the Securities Act and
the
rules promulgated thereunder). The Company shall (i) not permit any securities
other than the Make Good Shares to be included in any such Registration
Statement and (ii) use its reasonable best efforts to cause any such
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event on or prior
to
the applicable Effectiveness Date, and to keep any such Registration Statement
continuously effective under the Securities Act until such date as is the
earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the Registrable
Securities may be sold without any restriction pursuant to Rule 144 as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company’s transfer agent to such effect. The Company shall
request that the effective time of any such Registration Statement is 5:00
p.m.
Eastern Time on the Effectiveness Date.
3. Registration
Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a)
Prepare
and file with the Commission, on or prior to the Filing Date, a Registration
Statement on Form S-1 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-1 such registration shall be on
another appropriate form in accordance herewith and the Securities Act and
the
rules promulgated thereunder) in accordance with the plan of distribution as
set
forth on Exhibit
A
hereto
and in accordance with applicable law, and cause the Registration Statement
to
become effective and remain effective as provided herein; provided,
however,
that
not less than five (5) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto,
the
Company shall (i) furnish to the Holders, copies of all such documents proposed
to be filed, which documents will be subject to the review of such Holders,
and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of counsel, to conduct a reasonable review of such documents.
The Company shall not file the Registration Statement or any such Prospectus
or
any amendments or supplements thereto to which the Purchasers shall reasonably
object in writing within three (3) Business Days of their receipt
thereof.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements as necessary in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule
424
(or any similar provisions then in force) promulgated under the Securities
Act;
(iii) respond as promptly as possible, but in no event later than ten (10)
Business Days, to any comments received from the Commission with respect to
the
Registration Statement or any amendment thereto and as promptly as possible
provide the Holders true and complete copies of all correspondence from and
to
the Commission relating to the Registration Statement; (iv) file the final
prospectus pursuant to Rule 424 of the Securities Act no later than two (2)
Business Days following the date the Registration Statement is declared
effective by the Commission; and (v) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the Effectiveness Period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement
as so
amended or in such Prospectus as so supplemented.
(c) Notify
the Holders of Registrable Securities as promptly as possible (and, in the
case
of (i)(A) below, not less than three (3) Business Days prior to such filing,
and
in the case of (iii) below, on the same day of receipt by the Company of such
notice from the Commission) and (if requested by any such Person) confirm such
notice in writing no later than one (1) Business Day following the day: (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment
to
the Registration Statement is filed; (B) when the Commission notifies the
Company whether there will be a "review" of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement
and
(C) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or
any
other Federal or state governmental authority for amendments or supplements
to
the Registration Statement or Prospectus or for additional information; (iii)
of
the issuance by the Commission of any stop order suspending the effectiveness
of
the Registration Statement covering any or all of the Registrable Securities
or
the initiation or threatening of any Proceedings for that purpose; (iv) of
the
receipt by the Company of any notification with respect to the suspension of
the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any
Proceeding for such purpose; (v) if at any time any representation or warranty
of the Company contained in any agreement contemplated hereby ceases to be
true
and correct in all material respects; and (vi) of the occurrence of any event
that makes any statement made in the Registration Statement or Prospectus or
any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(d) Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of,
as promptly as possible, (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.
(e) If
requested by the Holders of a majority in interest of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as
the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to
be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) If
requested by any Holder, furnish to such Holder , without charge, at least
one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the
Commission.
(g) Promptly
deliver to 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; and subject to the
provisions of Sections 3(m) and 3(n), the Company hereby consents to the use
of
such Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) 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
any
and all other acts or things necessary or advisable to enable the disposition
in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided,
however,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by the
Purchase Agreement, if applicable, and applicable federal and state securities
laws, shall be free of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
Holder may request in connection with any sale of Registrable
Securities.
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(vi), as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(k) Use
its
best efforts to cause all Registrable Securities relating to the Registration
Statement to be listed on the NASDAQ or any other securities exchange, quotation
system or market, if any, on which similar securities issued by the Company
are
then listed or traded.
(l) Comply
in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders all documents
filed or required to be filed with the Commission, including, but not limited,
to, earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(m) The
Company may require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as
is
required by law to be disclosed in the Registration Statement, Prospectus,
or
any amendment or supplement thereto, and the Company may exclude from such
registration the Registrable Securities of any such Holder who unreasonably
fails to furnish such information within a reasonable time after receiving
such
request.
If
the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the deletion
of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each
Holder covenants and agrees that it will not sell any Registrable Securities
under the Registration Statement until the Company has electronically filed
the
Prospectus as then amended or supplemented as contemplated in Section 3(g)
and
notice from the Company that the Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(c).
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(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
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
contemplated by Section 3(j), 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.
(n) If
(i)
there is material non-public information regarding the Company which the
Company's Board of Directors (the "Board")
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board determines not to be in the Company's best interest
to disclose, or (iii) the Company is required to file a post-effective amendment
to the Registration Statement to incorporate the Company’s quarterly and annual
reports and audited financial statements on Forms 10-Q and 10-K, then the
Company may (x) postpone or suspend filing of a registration statement for
a
period not to exceed thirty (30) consecutive days or (y) postpone or suspend
effectiveness of a registration statement for a period not to exceed twenty
(20)
consecutive days; provided that the Company may not postpone or suspend
effectiveness of a registration statement under this Section 3(n) for more
than
forty-five (45) days in the aggregate during any three hundred sixty (360)
day
period; provided,
however,
that no
such postponement or suspension shall be permitted for consecutive twenty (20)
day periods arising out of the same set of facts, circumstances or
transactions.
4. Registration
Expenses.
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in this Section 4, shall
be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in
the
foregoing sentence shall include, without limitation, (i) all registration
and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the NASDAQ and
each
other securities exchange or market on which Registrable Securities are required
hereunder to be listed, if any (B) with respect to filing fees required to
be
paid to the National Association of Securities Dealers, Inc. and the NASD
Regulation, Inc. (including, without limitation, pursuant to NASD Rule 2710)
and
(C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Holders in connection
with
Blue Sky qualifications of the Registrable Securities and determination of
the
eligibility of the Registrable Securities for investment under the laws of
such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses
of
printing certificates for Registrable Securities and of printing prospectuses
if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) reasonable and itemized fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company's independent public accountants (including the expenses
of any comfort letters or costs associated with the delivery by independent
public accountants of a comfort letter or comfort letters). In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense
of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange if required hereunder.
The Company shall not be responsible for any discounts, commissions, transfer
taxes or other similar fees incurred by the Holders in connection with the
sale
of the Registrable Securities.
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, managers, partners, members,
shareholders, 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, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, "Losses"),
as
incurred, arising out of or relating to any violation of securities laws or
untrue or alleged 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 in any preliminary prospectus, or arising
out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case
of
any Prospectus or form of prospectus or supplement thereto, in the light of
the
circumstances under which they were made) not misleading; provided,
however,
that
(i) the Company will not be liable in any case to the extent that any such
Losses arise out of, or are based upon, any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished to the Company in writing by or
on
behalf of any such Holder for inclusion therein and (ii) the Company will
not be liable to any indemnified party under this Section 5(a) with respect
to
any Registration Statement or Prospectus to the extent that any Losses of such
indemnified party result solely from the indemnified party’s failure, at or
prior to the written confirmation of a sale, to send or give an amended or
supplemented Registration Statement or Prospectus (if delivery of a prospectus
is required by the Securities Act and was not so made), which was delivered
to
such indemnified party before the sale in question to correct an untrue
statement of a material fact contained in, or the omission of a material fact
from, the Registration Statement or Prospectus. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding
of
which the Company is aware in connection with the transactions contemplated
by
this Agreement.
(b) Indemnification
by 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 and employees
of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, arising solely out of or based solely
upon 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 solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing
by
such Holder or other Indemnifying Party to the Company specifically for
inclusion in the Registration Statement or such Prospectus. Notwithstanding
anything to the contrary contained herein, each Holder shall be liable under
this Section 5(b) only for the lesser of (a) the actual damages incurred or
(b)
that amount as does not exceed the gross proceeds to such Holder as a result
of
the sale of his/her/its Registrable Securities pursuant to such Registration
Statement.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified
Party"),
such
Indemnified Party promptly shall promptly notify the Person from whom indemnity
is sought (the "Indemnifying
Party”)
in
writing, and the Indemnifying Party shall be entitled to 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.
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: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) 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 (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such parties shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which any Indemnified Party is a party
and
indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
indemnifiable fees and expenses of the Indemnified Party (including reasonable
fees and expenses incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section) shall
be
paid to the Indemnified Party, as incurred, within ten (10) Business Days of
written notice thereof to the Indemnifying Party (regardless of whether it
is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided,
that the Indemnified Party shall reimburse all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable
to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other from the exercise
of the Series A-1 Warrants, or the offering of the Debenture, as applicable.
If,
but only if, the allocation provided by the foregoing sentence is not permitted
by applicable law, the allocation of contribution shall be made in such
proportion as is appropriate to reflect not only the relative benefits referred
to in the foregoing sentence but also the relative fault, as applicable, 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(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section was available
to
such party in accordance with its terms. In no event shall any selling Holder
be
required to contribute an amount under this Section 5(d) in excess of the gross
proceeds received by such Holder upon sale of such Holder’s Registrable
Securities pursuant to the Registration Statement giving rise to such
contribution obligation.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties pursuant to the law.
6. Rule
144.
As
long
as any Holder owns Registrable Securities, the Company covenants to timely
file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder
owns Registrable Securities, if the Company is not required to file reports
pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and
furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent reasonably
required from time to time to enable such Person to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
providing any legal opinions relating to such sale pursuant to Rule 144. Upon
the request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
7. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, such Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not
provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No
Inconsistent Agreements.
The
Company has not, as of the date hereof entered into and currently in effect,
nor
shall the Company or any of its subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in
Schedule
II
hereto,
the Company has not previously entered into any agreement currently in effect
granting any registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request
the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights
in
full of the Holders set forth herein, and are not otherwise in conflict with
the
provisions of this Agreement.
(c) No
Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto or as disclosed in Schedule
II
hereto)
may include securities of the Company in the Registration Statement, and the
Company shall not after the date hereof enter into any agreement providing
such
right to any of its security holders, unless the right so granted is subject
in
all respects to the prior rights in full of the Holders set forth herein, and
is
not otherwise in conflict with the provisions of this Agreement.
(d) Piggy-Back
Registrations.
If at
any time when there is not an effective Registration Statement covering
Registrable Securities, 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, the Company shall send to each holder of Registrable Securities
written notice of such determination and, if within thirty (30) days after
receipt of such notice, or within such shorter period of time as may be
specified by the Company in such written notice as may be necessary for the
Company to comply with its obligations with respect to the timing of the filing
of such registration statement, any such holder shall so request in writing
(which request shall specify the Registrable Securities intended to be disposed
of by the Purchasers), the Company will cause the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that
if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may,
at
its election, give written notice of such determination to such holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with
such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided,
however,
that
the Company shall not be required to register any Registrable Securities
pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144
of
the Securities Act. In the case of an underwritten public offering, if the
managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then
if
the Company after consultation with the managing underwriter should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement,
and
based on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration
statement shall be reduced pro-rata among such Holders (based
upon the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided,
however,
that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction
of
the number of Registrable Securities intended to be offered by the Holders
than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).
(e) Failure
to File Registration Statement and Other Events.
The
Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date
and
maintained in the manner contemplated herein during the Effectiveness Period
or
if certain other events occur. The Company and the Holders further agree that
it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (A) the Registration Statement is not filed on or prior to
the
Filing Date, or (B) the Registration Statement is not declared effective by
the
Commission on or prior to the Effectiveness Date, or (C) the Company fails
to
file with the Commission a request for acceleration in accordance with Rule
461
promulgated under the Securities Act within three (3) Business Days of the
date
that the Company is notified (orally or in writing, whichever is earlier) by
the
Commission that a Registration Statement will not be "reviewed," or not subject
to further review, or (D) the Registration Statement is filed with and declared
effective by the Commission but thereafter ceases to be effective as to all
Registrable Securities at any time prior to the expiration of the Effectiveness
Period, without being succeeded immediately by a subsequent Registration
Statement filed with and declared effective by the Commission in accordance
with
Section 2(a) hereof, or (E) the Company has breached Section 3(n) of this
Agreement, or (F) trading in the Common Stock shall be suspended or if the
Common Stock is no longer quoted on the OTCBB, or is delisted from the NASDAQ
(or other principal exchange on which the Common Stock is traded), as
applicable, for any reason for more than three (3) Business Days in the
aggregate (any such failure or breach being referred to as an "Event,"
and
for purposes of clauses (A) and (B) the date on which such Event occurs, or
for
purposes of clauses (C) and (F) the date on which such three (3) Business Day
period is exceeded, or for purposes of clause (D) after more than fifteen (15)
Business Days, being referred to as "Event
Date"),
the
Company shall pay an amount in cash as liquidated damages to each Holder equal
to one percent (1%) of the Purchase Price: (1) on the Event Date; and (2) for
each calendar month or portion thereof thereafter from the Event Date until
the
applicable Event is cured; provided,
however,
that in
no event shall the amount of liquidated damages payable at any time and from
time to time to any Holder pursuant to this Section 7(e) exceed an aggregate
of
ten percent (10%) of the Purchase Price; and
provided,
further,
that in
the event the Commission does not permit all of the Registrable Securities
to be
included in the Registration Statement because of its application of Rule 415,
liquidated damages payable pursuant to this Section shall be payable by the
Company based on one percent (1%) of the portion of the Purchase Price that
corresponds to the number of such Holder’s Registrable Securities permitted to
be registered by the Commission in such Registration Statement pursuant to
Rule
415, but are not so registered due to one or more of the events specified above
in (A) though (F). For further clarification, the parties understand that no
liquidated damages shall be payable pursuant to this Section with respect to
any
Registrable Securities that the Company is not permitted to include on such
Registration Statement due to the Commission’s application of Rule 415.
Notwithstanding anything to the contrary in this paragraph (e), if (a) any
of
the Events described in clauses (A), (B), (C), (D) or (F) shall have occurred,
(b) on or prior to the applicable Event Date, the Company shall have exercised
its rights under Section 3(n) hereof and (c) the postponement or suspension
permitted pursuant to such Section 3(n) shall remain effective as of such
applicable Event Date, then the applicable Event Date shall be deemed instead
to
occur on the second Business Day following the termination of such postponement
or suspension. Liquidated damages payable by the Company pursuant to this
Section 7(d) shall be payable on the Event Date and the first (1st)
Business Day of each thirty (30) day period following the Event Date.
Notwithstanding anything to the contrary contained herein, in no event shall
any
liquidated damages be payable with respect to any issued Additional Share
Issuances.
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by (i) the Company, (ii) the Purchasers, provided that the Purchasers
hold Registrable Securities at such time, and (iii) the Holders of 25% the
Registrable Securities, of which the Purchasers’ ownership of Registrable
Securities shall be part.
(g) Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses
for
such communications shall be:
|
If
to the Company:
|
c/o
Xi'an Baorun Industrial Development Co. Ltd.
Dongxin
Century Square, 7th Floor
Xi'an
East Xxxx Xxxx-Tech Industrial Development Park
Shaanxi
Province, P.R. China
Attn:
Xx. Xxx Xincheng
Tel:
00 00 00000000
Fax:
00 00 00000000
|
|
with
copies to (which shall not constitute notice):
|
Loeb
& Loeb
000
Xxxx Xxxxxx
Xxx
Xxxx, XX00000
Attn:
Xxxxxxxx X. Xxxxxxxx
Tel:
000.000.0000
Fax:
212.407-4990
|
|
If
to any Purchaser:
|
At
the address of such Purchaser set forth on Schedule
I
to this Agreement
|
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
(h) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Holder and its successors and assigns. The Company may not assign this Agreement
or any of its rights or obligations hereunder without the prior written consent
of each Holder.
(i) Assignment
of Registration Rights.
The
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of
this
Agreement, shall be automatically assignable by each Holder to any Person who
acquires all or a portion of
the
Registrable Securities if: (i) the Holder agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished
to
the Company within a reasonable time after such assignment, (ii) the Company
is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws unless such
securities are registered in a Registration Statement under this Agreement
(in
which case the Company shall be obligated to amend such Registration Statement
to reflect such transfer or assignment) or are otherwise exempt from
registration, and (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this Section, the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions of
this
Agreement. The rights to assignment shall apply to the Holders (and to
subsequent) successors and assigns.
(j) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or
on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(k) Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts
of
law principles which would result in the application of the substantive law
of
another jurisdiction. This Agreement shall not be interpreted or construed
with
any presumption against the party causing this Agreement to be drafted. The
Company and the Holders agree that venue for any dispute arising under this
Agreement will lie exclusively in the state or federal courts located in New
York County, New York, and the parties irrevocably waive any right to raise
forum
non conveniens
or any
other argument that New York is not the proper venue. The Company and the
Holders irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York. The Company and the Holders consent to process
being served in any such suit, action or proceeding by mailing a copy thereof
to
such party at the address in effect for notices to it under this Agreement
and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this Section 7(k) shall affect or limit any
right
to serve process in any other manner permitted by law. The Company and the
Holders hereby agree that the prevailing party in any suit, action or proceeding
arising out of or relating to this Agreement or the Warrant Exercise Agreement,
shall be entitled to reimbursement for reasonable legal fees from the
non-prevailing party. The parties hereby waive all rights to a trial by
jury.
(l) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(m) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to
be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(n) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(o) Shares
Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the
Company or its Affiliates (other than any Holder or transferees or successors
or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason
of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
|
By:
|
/s/ Gao Xincheng | |
|
Name:
Xx. Xxx Xincheng
|
||
|
Title:
CEO
|
||
|
PURCHASERS:
|
||
|
VISION
OPPORTUNITY MASTER FUND, LTD.
|
||
|
|
||
|
By:
|
/s/ Xxxx Xxxxxxxx | |
|
Name:
Xxxx Xxxxxxxx
|
||
|
Title:
Director
|
||
|
VISION
CAPITAL ADVANTAGE FUND, L.P.
|
||
|
|
||
|
By:
|
/s/ Xxxx Xxxxxxxx | |
|
Name:
Xxxx Xxxxxxxx
|
||
|
Title:
Managing Member, VCAF GP, LLC
|
||
|
VISION
OPPORTUNITY CHINA LP
|
||
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By:
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/s/ Xxxx Xxxxxxxx | |
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Name:
Xxxx Xxxxxxxx
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Title:
Authorized Signatory
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[Signature
Page to Registration Rights Agreement]
Schedule
I
Purchasers
Name
and Address of Purchasers
Vision
Opportunity Master Fund, Ltd.
00
Xxxx
00xx Xxxxxx
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxx
Xxxxxxx
Vision
Capital Advantage Fund, L.P.
00
Xxxx
00xx Xxxxxx
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxx
Xxxxxxx
Vision
Opportunity China LP
00
Xxxx
00xx Xxxxxx
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxx
Xxxxxxx
Schedule
II
Other
Securities to be Included on the Registration Statement
None
Exhibit
A
Plan
of Distribution
The
selling security holders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock being offered under this prospectus on any stock exchange,
market or trading facility on which shares of our common stock are traded or
in
private transactions. These sales may be at fixed or negotiated prices. The
selling security holders may use any one or more of the following methods when
disposing of shares:
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·
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits a Purchaser;
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·
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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;
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·
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purchases
by a broker-dealer as principal and resales by the broker-dealer
for its
account;
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·
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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·
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privately
negotiated transactions;
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·
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to
cover short sales made after the date that the registration statement
of
which this prospectus is a part is declared effective by the
Commission;
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·
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broker-dealers
may agree with the selling security holders to sell a specified number
of
such shares at a stipulated price per
share;
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·
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a
combination of any of these methods of sale;
and
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·
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any
other method permitted pursuant to applicable
law.
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The
shares may also be sold under Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), if available, rather than under this prospectus. The
selling security holders have the sole and absolute discretion not to accept
any
purchase offer or make any sale of shares if they deem the purchase price to
be
unsatisfactory at any particular time.
The
selling security holders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling security holder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers
engaged by the selling security holders may arrange for other broker-dealers
to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling security holders (or, if any broker-dealer acts as agent for a
purchaser of shares, from a purchaser) in amounts to be negotiated, which
commissions as to a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.
If
sales
of shares offered under this prospectus are made to broker-dealers as
principals, we would be required to file a post-effective amendment to the
registration statement of which this prospectus is a part. In the post-effective
amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such
sales.
The
selling security holders and any broker-dealers or agents that are involved
in
selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
sales. Commissions received by these 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. Any broker-dealers or agents
that are deemed to be underwriters may not sell shares offered under this
prospectus unless and until we set forth the names of the underwriters and
the
material details of their underwriting arrangements in a supplement to this
prospectus or, if required, in a replacement prospectus included in a
post-effective amendment to the registration statement of which this prospectus
is a part.
The
selling security holders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M. These provisions may restrict activities
of,
and limit the timing of purchases and sales of any of the shares by, the selling
security holders or any other person. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to those securities
for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may
affect the marketability of the shares.
If
any of
the shares of common stock offered for sale pursuant to this prospectus are
transferred other than pursuant to a sale under this prospectus, then subsequent
holders could not use this prospectus until a post-effective amendment or
prospectus supplement is filed, naming such holders. We offer no assurance
as to
whether any of the selling security holders will sell all or any portion of
the
shares offered under this prospectus.
We
have
agreed to pay all fees and expenses we incur incident to the registration of
the
shares being offered under this prospectus. However, each selling security
holder and purchaser is responsible for paying any discounts, commissions and
similar selling expenses they incur.
We
and
the selling security holders have agreed to indemnify one another against
certain losses, damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.
