REGISTRATION RIGHTS AGREEMENT
Exhibit
10.17
EXECUTION
COPY
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of June 29, 2007, by and among XA, Inc., a Nevada
corporation (the “Company”),
the
Holder of the Notes and Warrants issued by the Company pursuant to a Securities
Purchase Agreement, dated as of the date hereof, by and among the Investor
and
the Company (the “SPA”).
The
Underlying Shares and the Prior Underlying Shares held by the Investor (and
any
Holder that is a permitted assignee of the Investor) shall have the registration
rights as set forth herein.
The
Company and the Investor hereby agree as follows (for the avoidance of doubt,
the Investors other than the Investor (each as defined herein) are subject
to
other Registration Rights Agreements):
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined
in the
SPA shall have the meanings given such terms in the SPA. As used in this
Agreement, the following terms shall have the following meanings:
“Additional
Effectiveness Date” shall
have the meaning set forth in Section 2(b).
“Additional
Filing Date”
shall
have the meaning set forth in Section 2(b).
“Additional
Notice”
shall
have the meaning set forth in Section 2(b).
“Additional
Registration Statement”
shall
mean any Registration Statement necessary to register shares of the Registrable
Securities which at any time after the Initial Effectiveness Date and for any
reason are not covered by an effective Registration Statement.
“Closing
Date”
shall
mean June 29, 2007.
“Commission”
means
the United States Securities and Exchange Commission.
“Common
Stock”
means
the Company’s common stock par value $0.001 per share.
“Conversion
Shares” means
all
shares of Common Stock issuable upon conversion of the Notes.
“Effectiveness
Period”
shall
mean from the date hereof until the earlier to occur of the date when all
Registrable Securities covered by a Registration Statement either (a) have
been
sold pursuant to a Registration Statement or an exemption from the registration
requirements of the Securities Act, and (b) pursuant to a written opinion of
Company counsel acceptable to the Company’s transfer agent and the legal counsel
for the Holders, may be sold pursuant to Rule 144(k).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities (including any permitted assignee).
“Indemnified
Party”
shall
have the meaning set forth in Section 5.
1
“Indemnifying
Party”
shall
have the meaning set forth in Section 5.
“Investor”
shall
mean
Vision
Opportunity Master Fund, Ltd.
“Investors”
shall
mean, collectively, (i) the Investor, and (ii) the other investors in the
offering the Notes and Warrants issued pursuant to the Purchase Agreements.
“Losses”
shall
have the meaning set forth in Section 5(a).
“Initial
Effectiveness Date”
means,
with respect to the Initial Registration Statement required to be filed pursuant
to Section
2(a)
of this
Agreement.
“Initial
Filing Date”
shall
have the meaning set forth in Section 2(a).
“Initial
Registration Date”
shall
mean the date that is one hundred and eighty (180) days from the date hereof;
provided
that, in
the event that a Private Offering has been consummated during such 180 day
period, such date shall refer to the date of the closing of such Private
Offering.
“Initial
Registration Statement”
shall
have the meaning set forth in Section 2(a).
“Notes”
means
the Senior Secured Convertible Promissory Notes issued pursuant the Purchase
Agreements between the Company and the applicable Investors.
“Pari
Passu Registration Rights Holders”
shall
have the meaning set forth in Section 2(f).
“Person”
shall
mean an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Prior
Closings”
shall
mean the August 8, 2006, September 26, 2006, and October 23, 2006 closing of
the
sale of an aggregate of $2,700,000 in 11% Senior Subordinated Secured
Convertible Promissory Notes by the Company.
“Private
Offering”
shall
mean a private placement of the Company’s securities in which the Company
receives gross proceeds of no less than three million dollars
($3,000,000).
“Private
Offering Investors”
shall
mean each of the purchasers of securities of the Company in a Private
Offering.
“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 Conversion Registrable Securities or Exchange Registrable
Securities covered by the Registration Statement, and all other amendments
and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference
in
such Prospectus.
2
“Purchase
Agreements”
shall
mean those certain Securities Purchase Agreements, dated on or around the date
hereof (including the SPA).
“Registrable
Securities”
means
(i) the Underlying Shares and the Prior Underlying Shares, in each case,
held
by
the Investor (and any Holder that is a permitted assignee of the Investor.
“Registration
Statement”
means
any registration statement required to be filed hereunder (which, at the
Company’s option, may be an existing registration statement of the Company
previously filed with the Commission, but not declared effective), including
(in
each case) the Prospectus, amendments and supplements to the registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in the 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 415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar Rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
“Rule 424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar Rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Trading
Day”
means
(a) a day on which the Common Stock is traded on a Trading Market, or
(b) if the Common Stock is not quoted on a Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding to its functions of reporting price); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (a), and
(b) hereof, then Trading Day shall mean a Business Day;
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the OTC Bulletin Board, the American Stock
Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq
SmallCap Market.
“Underlying
Shares” means
collectively, all Conversion Shares and the Warrant Shares.
“Warrant
Shares” means
all
shares of Common Stock issuable upon exercise of the Warrants.
“Warrants”
means
the Common Stock purchase warrants issued pursuant to the Purchase Agreements
between the Company and the applicable Investors.
3
2. Registration.
(a)
Initial
Registration.
No later
than forty-five (45) days from the Initial Registration Date (the “Initial
Filing Date”)
the
Company shall file with the Commission a Registration Statement (the
“Initial
Registration Statement”),
covering the resale of all of the Registrable Securities for an offering to
be
made on a continuous basis pursuant to Rule 415. The Initial Registration
Statement required hereunder shall be on Form S-1, Form SB-2 or Form S-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-1, Form SB-2 or Form S-3, in which case the Initial
Registration Statement shall be on another appropriate form in accordance
herewith). The Initial Registration Statement required hereunder shall contain
the Plan of Distribution, attached hereto as Annex
A
(which
may be modified to respond to comments, if any, received by the Commission).
The
Company shall cause the Initial Registration Statement to become effective,
no
later than ninety (90) days after the Initial Filing Date (the “Initial
Effectiveness Date”)
and
remain effective as provided herein. The Company shall use its best efforts
to
cause the Initial Registration Statement to be declared effective under the
Securities Act and shall use its best efforts to keep the Initial Registration
Statement continuously effective under the Securities Act until the expiration
of the Effectiveness Period.
(b)
Additional
Registration.
(i)
If
at any
time and for any reason, an Additional Registration Statement is required to
be
filed because at such time the actual number of shares of Registrable Securities
exceeds the number of shares of Registrable Securities remaining under the
Initial Registration Statement, the Company shall have thirty (30) days to
file
such Additional Registration Statement, and the Company shall use its best
efforts to cause such Additional Registration Statement to be declared effective
by the Commission as soon as possible, but in no event later than ninety
(90) days
after filing (the
“Additional
Effectiveness Date”).
(ii)
Notwithstanding anything to the contrary set forth in this Section
2,
in the
event that the Commission does not permit the Company to register all of the
Registrable Securities in the Initial Registration Statement because of the
Commission’s application of Rule 415, the Company shall use its best efforts to
file Additional Registration Statements to register the Registrable Securities
that were not registered in the Initial Registration Statement as promptly
as
possible and in a manner permitted by the Commission. For purposes of this
Section
2(b)(ii),
“Additional
Filing Date”
means
with respect to each Additional Registration Statement filed pursuant hereto,
the later of (i) sixty (60) days following the sale of substantially all of
the
Registrable Securities included in the Initial Registration Statement or any
Additional Registration Statement and (ii) six (6) months following the
effective date of the Initial Registration Statement or any Additional
Registration Statement, as applicable, or such earlier date as permitted by
the
Commission.
(iii)
Each Additional Registration Statement required under this Section
2(b)
shall
contain the Plan of Distribution, attached hereto as Annex
A
(which
may be modified to respond to comments, if any, received by the Commission).
The
Company shall keep the Additional Registration Statement continuously effective
under the Securities Act until the expiration of the Effectiveness
Period.
(c)
Filing
Default Damages.
If an
Initial Registration Statement or Additional Registration Statement (as the
case
may be) is not filed on or prior to the Additional Filing Date or Initial Filing
Date (as the case may be), then the Company shall pay to the Holders of the
Registrable Securities, for each thirty (30) day period (or pro rata portion
thereof) of such failure and until the date an Initial Registration Statement
or
Additional Registration Statement (as the case
may
be) is filed and/or the Registrable Securities may be sold pursuant to Rule
144(k), as the case may be, as partial liquidated damages and not as a penalty,
an amount in cash equal to two (2%) percent of the aggregate gross proceeds
paid
by
the Holders for the Notes.
If the
Company fails to pay any partial liquidated damages pursuant to this
Section
2
in full
within five (5) days of the date payable, the Company shall pay interest thereon
at a rate of 18% per annum (or such lesser maximum amount that is permitted
to
be paid by applicable law) to the Holders, accruing daily from the date such
partial liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full.
4
(d)
Effectiveness,
Etc. Default Damages.
If an
Initial Registration Statement or Additional Registration Statement (as the
case
may be) is not declared effective by the Commission on or prior to the Initial
Effectiveness Date or the Additional Effectiveness Date (as the case may be),
or
the Commission declared any such Registration Statement effective, but the
Holders of Registrable Securities cannot sell such Registrable Securities
thereunder, for any reason or no reason, then the Company shall pay to the
Holder, for each thirty (30) day period until the Registration Statement is
declared effective (or the Holders of Registrable Securities can sell
thereunder, as the case may be), an amount in cash equal to two (2%) percent
of
the aggregate gross proceeds paid by the Holders for the Notes in the Financing.
Notwithstanding
anything to the contrary set forth herein, in
the
event the Commission does not permit all of the Registrable Securities to be
included in the Initial Registration Statement (or any subsequent Additional
Registration Statements) because of its application of Rule 415, no liquidated
damages shall be payable pursuant to this Section
2(d)
shall be
payable by the Company to the extent that such delay shall be attributable
to
the Commission’s application of Rule 415.
(e)
Piggyback
Registrations.
If, at
any time following the date hereof, there is not an effective Registration
Statement covering the Registrable Securities and the Company shall determine
to
prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities
Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then the Company shall send to each Holder
a
written notice of such determination at least twenty (20) days prior to the
filing of any such registration statement and shall automatically include in
such registration statement all Registrable Securities; provided,
however,
that
(i) if, at any time after giving written notice of is intention to register
any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company determines for any reason
not
to proceed with such registration, the Company will be relieved of its
obligation to register any Registrable Securities in connection with such
registration, and (ii) in case of a determination by the Company to delay
registration of its securities, the Company will be permitted to delay the
registration of Registrable Securities for the same period as the delay in
registering such other securities.
(f)
Ranking
of Registration Rights.
For
the
avoidance of doubt, the registration rights relating to (i) the Underlying
Shares and the Prior Underlying Shares, (ii) those shares of Common Stock
underlying the securities held by (x) the Private Offering Investors (if any)
and (y) Mastodon Ventures, Inc. or its permitted assigns (collectively, the
“Pari
Passu Registrable Securities”),
shall
rank pari
passu
to each
other, to the extent that the Company has granted registration rights applicable
to such securities (the holders of such securities, from time to time, the
“Pari
Passu Registration Rights Holders”).
In
the event that the Commission does not permit all of the Pari Passu Registrable
Securities to be included in the Initial Registration Statement or any
subsequent Additional Registration Statements because of its application of
Rule
415, the Pari Passu Registration
Rights Holders shall allocate amongst themselves the shares of Common Stock
that
are permitted to be so registered, pro
rata,
in
accordance with the total number of Pari Passu Registrable Securities held
by
each such holder, as a percentage of the aggregate shares held by all such
holders. However, neither the Company nor any of its other security holders
(other than the Pari Passu Registration Rights Holders) may include securities
of the Company in the Initial Registration Statement or any Additional
Registration Statements, and the Company shall not after the date hereof enter
into any agreement providing such right to any of its security holders (except
to the Private Offering Investors), unless the right so granted is subject
in
all respects to the prior rights in full of the Pari Passu Registration Rights
Holders set forth herein, and is not otherwise in conflict with such
rights.
5
3. Registration
Procedures.
In
connection with the Company’s registration obligations hereunder, and during the
Effectiveness Period, the Company shall:
(a)
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
furnish to Holders, a draft of the Registration Statement, or any related
Prospectus or any amendment or supplement thereto.
(b)
(i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period; (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; and (iii) respond to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto.
(c)
Notify
as
promptly as reasonably possible, but no later than three (3) business days,
each
Holder of Registrable Securities included in the Registration Statement: (i)
(A)
when a Prospectus or any Prospectus supplement or post-effective amendment
to
the Registration Statement has been filed; (B) when the Commission notifies
the
Company whether there will be a “review” of the Registration Statement and
whenever the Commission comments in writing on the Registration Statement;
and
(C) when the Registration Statement or any post-effective amendment has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement covering any
or
all of the Registrable Securities or the initiation 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
of
any Proceeding for such purpose; and (v) of the occurrence of any event or
passage of time that makes the financial statements included in the Registration
Statement ineligible for inclusion therein or 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 light of the circumstances under which they
were
made, not misleading.
6
(d)
Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of
(i) any order suspending the effectiveness of the Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification)
of
any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(e)
Promptly
deliver to each Holder no later than three (3) business days after the
Effectiveness Date, without charge, two (2) copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto (and, upon the request of the Holder such additional copies
as such Persons may reasonably request in connection with resales by the Holder
of Registrable Securities). The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by the Holder in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto, except after the giving
of
any notice pursuant to Section 3.
(f)
Prior
to
any resale of Registrable Securities by a Holder, use its best efforts to
register or qualify or cooperate with the selling Holders in connection with
the
registration or qualification (or exemption from the registration or
qualification) of such Registrable Securities for the resale by the Holder
under
the securities or Blue Sky laws of such jurisdictions within the United States
as any Holder reasonably requests in writing, to keep such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things reasonably necessary to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the
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, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file
a
general consent to service of process in any such jurisdiction.
(g)
Upon
the
occurrence of any event contemplated by Section 3(c)(v),
as
promptly as reasonably 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 light of the circumstances under which they were made, not
misleading.
(h)
Use
its
best efforts to comply with all applicable rules and regulations of the
Commission relating to the registration of the Registrable Securities pursuant
to the Registration Statement or otherwise.
(i)
The
Company agrees that the Selling Shareholder Questionnaire attached hereto as
Exhibit
A
satisfies all of the information required to be provided by each Holder in
connection with the Registration Statement. The Company shall not be required
to
include any Holder that does not complete, date and execute a Selling
Shareholder Questionnaire.
(j)
The
Company shall either (a) cause all the Registrable Securities covered by a
Registration Statement to be listed on each securities exchange on which
securities of the same class or series issued by the Company are then listed,
if
any, if the listing of such Registrable Securities is then permitted under
the
rules of such exchange, or (b) secure designation and quotation of all the
Registrable Securities covered by the Registration Statement on the Nasdaq
National Market or the Nasdaq SmallCap Market, or, (c) if the Company is
unsuccessful in satisfying the preceding clauses (a) or (b), the Company
shall secure the inclusion for quotation all the Registrable Securities covered
by the Registration Statement on The American Stock Exchange,
Inc. or if it is unable to do so, on the NASD Bulletin Board and, without
limiting the generality of the foregoing, to arrange for at least two (2) market
makers to register with the National Association of Securities Dealers, Inc.
(“NASD”)
as
such with respect to such Registrable Securities. The Company shall pay all
fees
and expenses in connection with satisfying its obligation under this
Section 3(j).
7
(k)
The
Company covenants that it shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder so long as the Holder owns any Registrable
Securities, but in no event longer than two (2) years; provided,
however,
the
Company may delay any such filing but only pursuant to Rule 12b-25 under
the Exchange Act, and the Company shall take such further reasonable action
as
the Holder may reasonably request (including, without limitation, promptly
obtaining any required legal opinions from Company counsel necessary to effect
the sale of Registrable Securities under Rule 144 and paying the related
fees and expenses of such counsel), all to the extent required from time to
time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder of Registrable
Securities, the Company will deliver to such Holder a written statement as
to
whether it has complied with such requirements.
4.
Registration
Expenses.
All fees
and expenses incident to the performance of or compliance with this Agreement by
the Company shall be borne by the Company whether or not any Registrable
Securities are sold pursuant to the Registration Statement, other than fees
and
expenses of counsel or any other advisor retained by the Holders and discounts
and commissions with respect to the sale of any Registrable Securities by the
Holders. 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 Trading Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky
laws), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses
if
the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements
of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, (vi) fees and disbursements in the amount of $20,000
to counsel to the Investor, Sadis & Xxxxxxxx LLP; and (vii) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement.
5.
Indemnification.
(a)
Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless the Holder, the officers, directors, agents and employees of
it,
each Person who controls the 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, reasonable
attorneys’ fees) and expenses (including the cost (including without limitation,
reasonable attorneys’ fees) and expenses relating to an Indemnified Party’s
actions to enforce the provisions of this Section
5)
(collectively, “Losses”),
as
incurred, to the extent arising out of or relating to any 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 light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished (or in the case of an omission, not furnished)
in writing to the Company by or on behalf of such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use
in
the Registration Statement, such Prospectus or such form of Prospectus or in
any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose), (2) in the case of an occurrence
of
an event of the type specified in Section 3(c)(ii)-(v),
the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and
prior to the receipt by such Holder of notice that such event is no longer
applicable, or (3) the failure of the Holder to deliver a prospectus prior
to
the confirmation of a sale. 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.
8
(b)
Indemnification
by Holder.
The
Holder shall indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all
Losses, as incurred, to the extent arising out of or based upon: (x) the
Holder’s failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue or alleged untrue statement of a material
fact
contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto or 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 not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished (or in the case of an omission, not furnished) in writing by or on
behalf of such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus or (ii) to the extent that (1) such
untrue statements or omissions are based solely upon information regarding
such
Holder furnished (or in the case of an omission, not furnished) in writing
to
the Company by or on behalf of such Holder expressly for use therein, or to
the
extent that such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto, or (2) in the case
of
an occurrence of an event of the type specified in Section 3(c)(ii)-(v),
the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and
prior to the receipt by such Holder of notice that such event is no longer
applicable, or (3) the failure of the Holder to deliver a Prospectus prior
to
the confirmation of a sale. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the subscription
amount paid by the Holder in the SPA (or other purchase agreement to which
the
Holder acquired securities convertible or exercisable into the Registrable
Securities).
(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 shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall have the right 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 such failure shall have materially
prejudiced the Indemnifying Party.
9
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; (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 Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and the reasonable fees and expenses of one separate counsel for all Indemnified
Parties in any matters related on a factual basis shall be at the expense of
the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding affected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of
any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability on claims that are the subject matter of such
Proceeding.
All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees
and expenses to the extent 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)
Trading Days of written notice thereof to the Indemnifying Party; provided
that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined
based
upon the relative faults of the parties.
(d) Contribution.
If a
claim for indemnification under Section 5(a)
or
Section
5(b)
is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying Party or Indemnified Party, and the parties’’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(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.
10
(e)
Rule
144.
As long
as any Holder owns any Notes, Warrants or 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 any Notes, Warrants or 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 required from time to time to enable
such
person to sell Conversion Shares and Warrant Shares 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, if such person is deemed by the
Company’s counsel to be in compliance with the rules and regulations set forth
in 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.
6.
Miscellaneous.
(a)
Compliance.
The
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(b)
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 the Company and each Holder of the then outstanding Registrable
Securities. No
consideration shall be offered or paid to any Holders of the
Registrable Securities
to amend
or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration also is offered to all
of
the parties to the Transaction Documents or Holders of the Registrable
Securities, as the case may be. The Company has not, directly or indirectly,
made any agreements with any Investors relating to the terms or conditions
of
the transactions contemplated by the Transaction Documents except as set forth
in the Transaction Documents. Without limiting the foregoing, the Company
confirms that, except as set forth in this Agreement, no Purchaser has made
any
commitment or promise or has any other obligation to provide any financing
to
the Company or otherwise.
(c)
Notices.
Any
and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the Trading Day following the date of delivery to the
courier service, if sent by nationally recognized overnight courier service,
(ii) the third Trading Day following the date of mailing, if sent by
first-class, registered or certified mail, postage prepaid, (iii) the Trading
Day following transmission by electronic mail with receipt confirmed or
acknowledged, or (iv) upon actual receipt by the party to whom such notice
is
required to be given. The address for such notices and communications shall
be
delivered and addressed as set forth in the SPA (or
other
purchase agreement to which the Holder acquired securities convertible or
exercisable into the Registrable Securities)
or to
such other address as shall be designated in writing from time to time by a
party hereto.
11
(d)
Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
the
Holder.
(e)
Execution
and 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. 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.
(f)
Governing
Law.
This
Agreement shall be governed by and construed exclusively in accordance with
the
internal laws of the State of New York without regard to the conflicts of laws
principles thereof. The parties hereto hereby irrevocably agree that any suit
or
proceeding arising directly and/or indirectly pursuant to or under this
Agreement, shall be brought solely in a federal or state court located in the
City, County and State of New York. By its execution hereof, the parties hereby
covenant and irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect
as
if personally served upon them in New York City. The parties hereto waive any
claim that any such jurisdiction is not a convenient forum for any such suit
or
proceeding and any defense or lack of in
personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other party hereto of its reasonable counsel fees and
disbursements.
(g)
Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, 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 commercially 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.
(h)
Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
12
(i)
Independent
Nature of Investors.
The
Company acknowledges that the obligations of each Investor under the Transaction
Documents are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under the Transaction Documents. The Company
acknowledges that the decision of each Investor to purchase securities pursuant
to the SPA (or
other
purchase agreement to which the Holder acquired securities convertible or
exercisable into the Registrable Securities)
has been
made by such Investor independently of any other Investor and independently
of
any information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of its subsidiaries
which may have made or given by any other Investor or by any agent
or
employee of any other Investor, and no Investor or any of its agents or
employees shall have any liability to any Investor (or any other person)
relating to or arising from any such information, materials, statements or
opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Document, and no action taken by any Investor pursuant hereto
or
thereto (including, but not limited to, the (i) inclusion of a Investor in
a
Registration Statement and (ii) review by, and consent to, such Registration
Statement by a Investor) shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity,
or
create a presumption that the Investors are in any way acting in concert
or as a
group with respect to such obligations or the transactions contemplated by
the
Transaction Documents. The Company acknowledges that each Investor shall
be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor
to
be joined as an additional party in any proceeding for such purpose. The
Company
acknowledges that for reasons of administrative convenience only, the
Transaction Documents have been prepared by counsel for one of the Investors
and
such counsel does not represent all of the Investors. The Company acknowledges
that it has elected to provide all Investors with the same terms and Transaction
Documents for the convenience of the Company and not because it was required
or
requested to do so by the Investors. The Company acknowledges that such
procedure with respect to the Transaction Documents in no way creates a
presumption that the Investors are in any way acting in concert or as a group
with respect to the Transaction Documents or the transactions contemplated
hereby or thereby.
(j) This
Agreement Supersedes All Prior Agreements Between Parties.
Each of
the Company and the Investor agree that this Agreement supersedes in its
entirety all of the terms and provisions of any prior agreements between such
parties concerning the registration rights and the like pertaining to the Prior
Underlying Shares.
[Remainder
of page intentionally left blank]
13
IN
WITNESS WHEREOF,
the
parties have executed this Registration Rights Agreement as of the date first
written above.
By:
/s/ Xxxxxx Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
President
Other
Signature Pages Follow
14
OTHER
SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT
|
Vision
Opportunity Master Fund, Ltd.
By:
/s/ Xxxx
Xxxxxxxx
Name:
Xxxx
Xxxxxxxx
Title:
Portfolio
Mgr.
Address: 00 X.
00xx Xx. 0xx xxxxx, Xxx Xxxx, XX 00000
Facsimile
Number:
000-000-0000
|
|
15
ANNEX
A
Plan
of Distribution
The
Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which
the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker/dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker/dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker/dealer as principal and resale by the broker/dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the Rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
settlement
of short sales;
|
|
·
|
broker/dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per share;
|
|
·
|
a
combination of any such methods of sale; and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker/dealers
engaged by the Selling Stockholders may arrange for other brokers/dealers to
participate in sales. Broker/dealers may receive commissions from the Selling
Stockholders (or, if any broker/dealer acts as agent for the purchaser of
shares, from the purchaser) in amounts to be negotiated. The Selling
Stockholders do not expect these commissions to exceed what is customary in
the
types of transactions involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act of 1933 amending the list
of
Selling Stockholders to include the pledgee, transferee or other successors
in
interest as Selling Stockholders under this prospectus.
16
The
Selling Stockholders and any broker/dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker/dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions under
the
Securities Act. The Selling Stockholders have informed the Company
that it does not have any agreement or understanding, directly or indirectly,
with any person to distribute the Common Stock.
The
Company is required to pay all fees and expenses incident to the registration
of
the shares. The Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act.
17
EXHIBIT
A
SELLING
STOCKHOLDER QUESTIONNAIRE
000
Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Ladies
and Gentlemen:
I
acknowledge that I am a holder of securities of XA, Inc. (the “Company”).
I
understand that I will be named as a selling stockholder in the prospectus
that
forms a part of the registration statement on Form S-1 (or other applicable
form) that the Company will file with the Securities and Exchange Commission
to
register under the Securities Act of 1933, as amended, the securities I expect
to sell. The Company will use the information that I provide in this
Questionnaire to ensure the accuracy of the registration statement and the
prospectus.
|
Please
answer every question.
If
the answer to any question is “none”
or “not
applicable,”
please so state.
|
1.
Name. Type
or
print your name exactly as it should appear in the Registration
Statement.
______________________________________________________
2.
Manner
of
Ownership of Shares:
Individual
_______ Community Property
________ Tenants
in Common _______
Joint
Tenants with Rights of Survivorship ________ Corporate
________
Partnership
______ Trust
________ Other
___________________________
|
3.
|
Contact
Information. Provide
the address, telephone number and fax number where you can be reached
during business hours.
|
Address:
__________________________________________________________________
Phone:
__________________________________________________________________
Fax:
__________________________________________________________________
|
4.
|
Relationship
with the Company. Describe
the nature of any position, office or other material relationship
you have
had with the Company during the past three
years.
|
____________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________
5.
Organizational
Structure.
Please
indicate or (if applicable) describe how you are organized.
18
|
(a) Are
you a natural
person?
(if
so, please xxxx the box and skip to Question 5)
|
¨
Yes ¨
No
|
|
(b) Are
you a reporting
company
under the 1934 Act?
(if so, please xxxx the box and skip to Question 5)
|
¨
Yes ¨
No
|
|
(c) Are
you a majority-owned
subsidiary
of
a reporting company under the 1934 Act?
(if
so, please xxxx the box and skip to Question 5)
|
¨
Yes ¨
No
|
|
(d) Are
you a registered
investment fund
under the 1940 Act?
(if
so, please xxxx the box and skip to Question 5)
|
¨
Yes ¨
No
|
If
you
have answered ““no”” to all of the foregoing questions, please describe: (i) the
exact legal description of your entity (e.g., corporation, partnership, limited
liability company, etc.); (ii) whether the legal entity so described is managed
by another entity and the exact legal description of such entity (repeat this
step until the last entity described is managed by a person or persons, each
of
whom is described in any one of (a) through (d) above), (iii) the names of
each
person or persons having voting and investment control over the Company’’s
securities that the entity owns (e.g., director(s), general partner(s), managing
member(s), etc.).
Legal
Description of Entity:____
Name
of Entity(ies) Managing Such Entity (if any): ____
___________________________________________________________________________________________________________________________________________________
Name
of Entity(ies) Managing such Entity(ies) (if any): ____
____________________________________________________________________________________________________________________________________________________
· Name(s)
of Natural Persons Having Voting or Investment
Control
Over the Shares Held by such Entity(ies): ______
____________________________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________________________
|
6.
|
Ownership
of the Company’s Securities.
This question covers your beneficial ownership of the Company’s
securities. Please consult the Appendix
A
to
this Questionnaire for information as to the meaning of “beneficial
ownership.” State the number of shares of the Company’s common stock that
you beneficially owned as of the date this Questionnaire is
signed:
|
No. of Shares of Stock __________________________________________________________________________________
|
7.
|
Acquisition
of Shares.
Please describe below the manner in which you acquired your shares
of
Common Stock of the Company including, but not limited to, the
date, the
name and address of the seller(s), the purchase price and pursuant
to
which documents (the “Acquisition
Documents”).
Please forward such documents used to acquire your shares as provided
below.
|
|
8.
|
Plan
of Distribution.
I
have reviewed the proposed “Plan of Distribution” attached to this
Registration Rights Agreement as Annex
A,
and agree that the statements contained therein reflect my intended
method(s) of distribution or, to the extent these statements are
inaccurate or incomplete, I have communicated in writing to one of
the
parties listed above my signature to any changes to the proposed
“Plan of
Distribution” that are required to make these statements accurate and
complete. ¨ (Please
check the box if you have made any changes to Appendix
B)
|
19
|
9.
|
Reliance
on Responses.
I
acknowledge and agree that the Company and its legal counsel shall
be
entitled to rely on my responses in this Questionnaire in all matters
pertaining to the registration statement and the sale of any shares
of
common stock of the Company pursuant to the registration
statement.
|
|
10.
|
NASD.
The National Association of Securities Dealers, Inc. (“NASD”)
may request, in connection with their review of the Registration
Statement
and Prospectus under the Securities Act of 1933, as amended, that
the
Company inform them of the names of all persons who purchased securities
from the Company, together with any affiliations with the NASD of
such
purchasers. In order to aid the Company in responding to such request,
the
undersigned furnishes the following
information:
|
PART
A: DETERMINATION OF RESTRICTED PERSON STATUS:
Please
check all appropriate categories.
The
undersigned is:
|
___
|
(i)
|
a
broker-dealer;
|
|
___
|
(ii)
|
an
officer, director, general partner, associated person1
or
employee of a broker-dealer (other than a limited business
broker-dealer)2;
|
|
___
|
(iii)
|
an
agent of a broker-dealer (other than a limited business broker-dealer)
that is engaged in the investment banking or securities
business;
|
|
___
|
(iv)
|
an
immediate family member3 of
a person described in (ii) or (iii) above. Under certain circumstances,
if
the undersigned checks this category, he/she/it may be able to
participate
in New Issue investments. The Company may request additional information
in order to determine the eligibility of the
undersigned under this Restricted Person category;
|
|
___
|
(v)
|
a
finder or any person acting in a fiduciary capacity to a managing
underwriter, including, but not limited to, attorneys, accountants
and
financial consultants;
|
|
___
|
(vi)
|
a
person who has authority to buy or sell securities for a bank,
savings and
loan institution, insurance company, investment company, investment
advisor or collective investment account4 (including
a private investment vehicle such as a hedge fund or an offshore
fund);
|
|
___
|
(vii)
|
an
immediate family member of a person described in (v) or (vi) above
who
materially supports5,
or receives material support from, the undersigned;
|
|
___
|
(viii)
|
a
person listed or required to be listed in Schedule A, B or C of
a Form BD
(other than
with respect to a limited business broker-dealer), except persons
whose
listing on Schedule A, B or C is related to a person identified
by an
ownership code of less than 10% on Schedule
A;
|
1
A person “associated with” a broker-dealer includes any natural person engaged
in the investment banking or securities business who is directly or indirectly
controlling or controlled by a broker-dealer, any partner, director, officer
or
sole proprietor of a broker-dealer.
2 A
limited business broker-dealer is any broker-dealer whose authorization
to
engage in the securities business is limited solely to the purchase and
sale of
investment company/variable contracts securities and direct participation
program securities.
3
The term "Immediate family" includes the investor’s: (i) parents, (ii)
mother-in-law or father-in-law. (iii) husband or wife, (iv) brother or
sister,
(v) brother-in-law or sister-in-law, (vi) son-in-law or daughter-in-law,
(vii)
children, and (viii) any other person who is supported, directly or indirectly,
to a material extent by an officer, director, general partner, employee,
agent
of a broker-dealer or person associated with a broker-dealer.
4
A "collective investment account" is any hedge fund, investment corporation,
or
any other collective investment vehicle that is engaged primarily in the
purchase and/or sale of securities. investment clubs (groups of individuals
who
pool their money to invest in stock or other securities and who are collectively
responsible for making investment decisions) and family investment vehicles
(legal entities that are beneficially owned solely by immediate family
members
(as defined above)) are not considered collective investment
accounts.
5 The
term “material” support” means directly or indirectly providing more than 25% of
a person’s income in the prior calendar year or living in the same household
with a member of one’s Immediate family.
20
|
___
|
(ix)
|
a
person that (A) directly or indirectly owns 10% or more of a
public
reporting company listed, or required to be listed, in Schedule
A of a
Form BD or (B) directly or indirectly owns 25% or more of a public
reporting company listed, or required to be listed in Schedule
B of a Form
BD, in each case (A) or (B), other than a reporting company that
is listed
on a national securities exchange or is traded on the Nasdaq
National
Market, or other than with respect to a limited business
broker/dealer;
|
|
___
|
(x)
|
an
immediate family member of a person described in (viii) or (ix)
above.
Under certain circumstances, if the undersigned places a check
next to
this category, he/she/it may be able to participate in New Issue
investments. The Company may request additional information in
order to
determine the eligibility of the undersigned under this Restricted
Person
category;
|
|
___
|
(xi)
|
any
entity (including a corporation, partnership, limited liability
company,
trust or other entity) in which any person or persons listed
in (i)-(x)
above has a beneficial interest6;
or
|
|
___
|
None of the above categories apply and the undersigned is eligible to participate in New Issue securities. |
PART B: DETERMINATION OF EXEMPTED ENTITY STATUS:
The
undersigned is:
|
___
|
(i)
|
a
publicly-traded entity (other than a broker-dealer or an affiliate
of a
broker-dealer, where such broker-dealer is authorized to engage
in the
public offering of New Issues either as a selling group member
or
underwriter) that is listed on a national securities exchange or
traded on
the Nasdaq National Market or is a foreign issuer whose securities
meet
the quantitative designation criteria for listing on a national
securities
exchange or trading on the Nasdaq National Market;
|
|
____
|
(ii)
|
an
investment company registered under the Investment Company Act
of 1940, as
amended;
|
|
____
|
(iii)
|
a
corporation, partnership, limited liability company, trust or any
other
entity (including a private investment vehicle such as a hedge
fund or an
offshore fund, or a broker-dealer organized as an investment partnership)
and
|
|
|
(A)
the beneficial interests of Restricted Persons do not
exceed in the
aggregate 10% of such entity; or
|
|
|
|
(B)
such entity limits participation by Restricted Persons to not more
than
10% of the profits and losses of New Issues;
|
|
|
____
|
(iv)
|
an
investment company organized under the laws of a foreign jurisdiction
and
|
|
|
(A)
the investment company is listed on a foreign exchange or authorized
for
sale to the public by a foreign regulatory authority;
and
|
|
|
|
(B)
no person owning more than 5% of the shares of the investment company
is a
Restricted Person;
|
|
|
____
|
(v)
|
(A)
an employee benefits plan under the U.S. Employee Retirement Income
Security Act of 1974, as amended, that is qualified under Section
401(a)
of the Internal Revenue Code of 1986, as amended (the “Code”)
and such plan is not sponsored solely by a broker-dealer, (B) a
state or
municipal government benefits plan that is subject to state and/or
municipal regulation or (C) a church plan under Section 414(e)
of the
Code;
|
6
The term ‘beneficial interest” means any economic interest such as the right to
share in gains or losses. The receipt of a management or performance
based fee
for operating a collective investment account, or other fee for acting
in a
fiduciary capacity, is not considered a beneficial interest in the
account; however, if such fee is subsequently invested into the account
(as a
deferred fee arrangement or otherwise), it is considered a beneficial
interest
in that account.
21
|
___
|
(vi)
|
a
tax exempt charitable organization under Section 501(3) of the
Code;
|
|
___
|
(vii)
|
a
common trust fund or similar fund as described in Section 3(a)(12)(A)(iii)
of the Securities Exchange Act of 1934, as amended, and the
Company
|
|
|
(A)
has investments from 1,000 or more accounts, and
|
|
|
|
(B)
does not limit beneficial interests in the Company principally
to trust
accounts of Restricted Persons; or
|
|
|
___
|
(viii)
|
an
insurance company general, separate or investment account,
and
|
|
|
(A)
the account is funded by premiums from 1,000 or more policyholders,
or, if
a general account, the insurance company has 1,000 or more policyholders,
and
|
|
|
|
(B)
the insurance company does not limit the policyholders whose premiums
are
used to fund the account principally to Restricted Persons, or,
if a
general account, the insurance company does not limit its policyholders
principally to Restricted
Persons.
|
Please
acknowledge that your answers to the foregoing questions are true and correct
to
the best of your information and belief by signing and dating this Questionnaire
where indicated below. Please return the completed executed questionnaire
via
fax
to
The
Loev Law Firm, PC at (000) 000-0000 as
soon as possible.
If
at any
time you discover that your answer to any question was inaccurate, or if any
event occurring after your completion hereof would require a change in your
answer to any questions, please immediately contact The Loev Law Firm, PC at
(000) 000-0000.
Date:___________________________,
2007
______________________________________________________
(Print
name of
selling stockholder)
By:____________________________________________________
(Signature)
Name:__________________________________________________
(Print name)
Title:___________________________________________________
22
EXECUTION
COPY
APPENDIX
A
|
1.
|
Definition
of “Beneficial
Ownership”
|
|
(a)
|
A
“Beneficial Owner” of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise has or shares:
|
|
(1)
|
Voting
power which includes the power to vote, or to direct the voting of,
such
security; and/or
|
|
(2)
|
Investment
power which includes the power to dispose, or direct the disposition
of,
such security.
|
Please
note that either
voting
power or
investment power, or
both, is
sufficient for you to be considered the beneficial owner of shares.
|
(b)
|
Any
person who, directly or indirectly, creates or uses a trust, proxy,
power
of attorney, pooling arrangement or any other contract, arrangement
or
device with the purpose or effect of divesting such person of beneficial
ownership of a security or preventing the vesting of such beneficial
ownership as part of a plan or scheme to evade the reporting requirements
of the federal securities acts shall be deemed to be the beneficial
owner
of such security.
|
|
(c)
|
Notwithstanding
the provisions of paragraph (a), a person is deemed to be the “beneficial
owner” of a security, if that person has the right to acquire beneficial
ownership of such security within 60 days, including but not limited
to
any right to acquire: (A) through the exercise of any option, warrant
or right; (B) through the conversion of a security; (C) pursuant
to the power to revoke a trust, discretionary account or similar
arrangement; or (D) pursuant to the automatic termination of a trust,
discretionary account or similar arrangement; provided, however,
any
person who acquires a security or power specified in paragraphs (A),
(B)
or (C) above, with the purpose or effect of changing or influencing
the
control of the issuer, or in connection with or as a participant
in any
transaction having such purpose or effect, immediately upon such
acquisition shall be deemed to be the beneficial owner of the securities
which may be acquired through the exercise or conversion of such
security
or power.
|
23
