REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the __
day of ______, 2011, by and among, Prime Acquisition Corp., a company organized
under the laws of the Cayman Islands (the “Company”), and the undersigned
parties listed under Investors on the signature page hereto (each, an “Investor”
and collectively, the “Investors”).
WHEREAS,
the Investors currently hold all of the issued and outstanding securities of the
Company; and
WHEREAS,
the Investors and the Company desire to enter into this Agreement to provide the
Investors with certain rights relating to the registration of Ordinary Shares
owned by them, and the Insider Securities and the Ordinary Shares they may
acquire upon exercise of the Insider Securities;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. The
following capitalized terms used herein have the following
meanings:
“Agreement”
means this Agreement, as amended, restated, supplemented, or otherwise modified
from time to time.
“Commission”
means the Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.
“Company”
is defined in the preamble to this Agreement.
“Demand
Registration” is defined in Section 2.1.1.
“Demanding
Holder” is defined in Section 2.1.1.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall be
in effect at the time.
“Form
F-3” is defined in Section 2.3.
“Indemnified
Party” is defined in Section 4.3.
“Indemnifying
Party” is defined in Section 4.3.
“Insider
Securities” means the warrants owned by the Investors prior to the Company’s
initial public offering.
“Investor”
is defined in the preamble to this Agreement.
“Investor
Indemnified Party” is defined in Section 4.1.
“Maximum
Number of Shares” is defined in Section 2.1.4.
“Notices”
is defined in Section 6.3.
“Ordinary
Shares” shall mean ordinary shares of the Company, par value $0.001 per
share.
“Piggy-Back
Registration” is defined in Section 2.2.1.
“Register,”
“registered” and “registration” mean a registration effected by preparing and
filing a registration statement or similar document in compliance with the
requirements of the Securities Act, and the applicable rules and regulations
promulgated thereunder, and such registration statement becoming
effective.
“Registrable
Securities” means (i) all of the Ordinary Shares owned or held by Investors
prior to the consummation of the Company’s initial public offering and (ii) all
of the Insider Securities (and underlying Ordinary Shares) owned or held by
Investors upon consummation of the Company’s initial public
offering. Registrable Securities includes any warrants, Ordinary
Shares or other securities of the Company issued as a dividend or other
distribution with respect to or in exchange for or in replacement of such
Ordinary Shares. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when: (a) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been sold,
transferred, disposed of or exchanged in accordance with such Registration
Statement; (b) such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act; (c) such securities
shall have ceased to be outstanding, or (d) the Registrable Securities are
salable without volume restrictions pursuant to Rule 144 in the opinion of
counsel to the Company.
“Registration
Statement” means a registration statement filed by the Company with the
Commission in compliance with the Securities Act and the rules and regulations
promulgated thereunder for a public offering and sale of securities of the
Company (other than a registration statement on Form F-4 or Form S-8, or their
successors, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another entity).
“Release
Date” means the earliest date on which any of the Ordinary Shares or Insider
Securities may be disbursed from escrow pursuant to that certain Securities
Escrow Agreement dated as of ___________, 2011 by and among the parties hereto
and American Stock Transfer & Trust Company, as escrow agent.
“Repurchase
Right” is defined in Section 6.10.1.
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“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect at
the time.
“Underwriter”
means a securities dealer who purchases any Registrable Securities as principal
in an underwritten offering and not as part of such dealer’s market-making
activities.
2. REGISTRATION
RIGHTS.
2.1 Demand
Registration.
2.1.1 Request for
Registration. At any time and from time to time on or after
the date that is (i) after the Company consummates a business combination with
respect to the Insider Securities (or underlying Ordinary Shares) or
(ii) three months prior to the Release Date with respect to all
Registrable Securities (to the extent not previously registered by the Company
pursuant to the preceding subclause (i)), the holders of not less than a
majority of the Insider Securities or other Registrable Securities, as the case
may be, held by the Investors or the transferees of the Investors, may make a
written demand for registration under the Securities Act of all or part of their
Registrable Securities (a “Demand Registration”). Any demand for a
Demand Registration shall specify the number of shares of Registrable Securities
proposed to be sold and the intended method(s) of distribution
thereof. The Company will notify all holders of Registrable
Securities of the demand, and each holder of Registrable Securities who wishes
to include all or a portion of such holder’s Registrable Securities in the
Demand Registration (each such holder including shares of Registrable Securities
in such registration, a “Demanding Holder”) shall so notify the Company within
fifteen (15) days after the receipt by the holder of the notice from the
Company. Upon any such request, the Demanding Holders shall be
entitled to have their Registrable Securities included in the Demand
Registration, subject to Section 2.1.4 and the provisos set forth in Section
3.1.1. The Company shall not be obligated to effect more than an
aggregate of two (2) Demand Registrations under this Section 2.1.1 in respect of
Registrable Securities. In addition, Chardan Capital Markets, LLC (or
any other FINRA member) shall not be able to effect a Demand Registration after
five (5) years from the effective date of the Company’s registration statement
with respect to its initial public offering.
2.1.2 Effective
Registration. A registration will not count as a Demand
Registration until the Registration Statement filed with the Commission with
respect to such Demand Registration has been declared effective and the Company
has complied with all of its obligations under this Agreement with respect
thereto; provided, however, that if, after such Registration Statement has been
declared effective, the offering of Registrable Securities pursuant to a Demand
Registration is interfered with by any stop order or injunction of the
Commission or any other governmental agency or court, the Registration Statement
with respect to such Demand Registration will be deemed not to have been
declared effective, unless and until, (i) such stop order or injunction is
removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of
the Demanding Holders thereafter elect to continue the offering; provided,
further, that the Company shall not be obligated to file a second Registration
Statement until a Registration Statement that has been filed is counted as a
Demand Registration or is terminated or withdrawn.
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2.1.3 Underwritten
Offering. If not less than a majority interest of the
Demanding Holders so elect and such holders so advise the Company as part of
their written demand for a Demand Registration, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. In such event, the right of any holder to
include its Registrable Securities in such registration shall be conditioned
upon such holder’s participation in such underwriting and the inclusion of such
holder’s Registrable Securities in the underwriting to the extent provided
herein. All Demanding Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the Underwriter or Underwriters selected for such
underwriting by a majority-in-interest of the holders initiating the Demand
Registration.
2.1.4 Reduction of
Offering. If the managing Underwriter or Underwriters for a
Demand Registration that is to be an underwritten offering advises the Company
and the Demanding Holders in writing that the dollar amount or number of shares
of Registrable Securities which the Demanding Holders desire to sell, taken
together with all other Ordinary Shares or other securities which the Company
desires to sell and the Ordinary Shares, if any, as to which registration has
been requested pursuant to written contractual piggy-back registration rights
held by other shareholders of the Company who desire to sell, exceeds the
maximum dollar amount or maximum number of shares that can be sold in such
offering without adversely affecting the proposed offering price, the timing,
the distribution method, or the probability of success of such offering (such
maximum dollar amount or maximum number of shares, as applicable, the “Maximum
Number of Shares”), then the Company shall include in such registration: (i)
first, the Registrable Securities as to which Demand Registration has been
requested by the Demanding Holders (pro rata in accordance with the number of
shares of Registrable Securities which such Demanding Holder has requested be
included in such registration, regardless of the number of shares of Registrable
Securities held by each Demanding Holder) that can be sold without exceeding the
Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clause (i), the Ordinary Shares
or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares; (iii) third, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (i)
and (ii), the Ordinary Shares for the account of other persons that the Company
is obligated to register pursuant to written contractual arrangements with such
persons and that can be sold without exceeding the Maximum Number of Shares; and
(v) fourth, to the extent that the Maximum Number of Shares have not been
reached under the foregoing clauses (i), (ii), and (iii), the Ordinary Shares
that other shareholders desire to sell that can be sold without exceeding the
Maximum Number of Shares.
2.1.5 Withdrawal. If
a majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect to
withdraw from such offering by giving written notice to the Company and the
Underwriter or Underwriters of their request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of
the Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand
Registration.
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2.2 Piggy-Back
Registration.
2.2.1 Piggy-Back
Rights. If at any time on or after the Release Date the
Company proposes to file a Registration Statement under the Securities Act with
respect to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by the
Company for its own account or for shareholders of the Company for their account
(or by the Company and by shareholders of the Company including, without
limitation, pursuant to Section 2.1), other than a Registration Statement (i)
filed in connection with any employee stock option or other benefit plan, (ii)
for an exchange offer or offering of securities solely to the Company’s existing
shareholders, (iii) for an offering of debt that is convertible into equity
securities of the Company or (iv) for a dividend reinvestment plan, then the
Company shall (x) give written notice of such proposed filing to the holders of
Registrable Securities as soon as practicable but in no event less than ten (10)
days before the anticipated filing date, which notice shall describe the amount
and type of securities to be included in such offering, the intended method(s)
of distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale of
such number of shares of Registrable Securities as such holders may request in
writing within five (5) days following receipt of such notice (a “Piggy-Back
Registration”). The Company shall cause such Registrable Securities
to be included in such registration and shall use its best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method(s) of distribution
thereof. All holders of Registrable Securities proposing to
distribute their securities through a Piggy-Back Registration that involves an
Underwriter or Underwriters shall enter into an underwriting agreement in
customary form with the Underwriter or Underwriters selected for such Piggy-Back
Registration. In addition, Chardan Capital Markets, LLC (or any other
FINRA member) shall not have the right to participate in a Piggy-Back
Registration after seven (7) years from the effective date of the Company’s
registration statement with respect to its initial public offering.
2.2.2 Reduction of
Offering. If the managing Underwriter or Underwriters for a
Piggy-Back Registration that is to be an underwritten offering advises the
Company and the holders of Registrable Securities in writing that the dollar
amount or number of Ordinary Shares exceeds the Maximum Number of Shares, then
the Company shall include in any such registration:
(i) If
the registration is undertaken for the Company’s account: (A) first, the
Ordinary Shares or other securities that the Company desires to sell that can be
sold without exceeding the Maximum Number of Shares; (B) second, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clause (A), the Ordinary Shares, if any, including the Registrable Securities,
as to which registration has been requested pursuant to written contractual
piggy-back registration rights of security holders (pro rata in accordance with
the number of Ordinary Shares which each such person has actually requested to
be included in such registration, regardless of the number of Ordinary Shares
with respect to which such persons have the right to request such inclusion)
that can be sold without exceeding the Maximum Number of Shares;
and
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(ii) If
the registration is a “demand” registration undertaken at the demand of persons
other than the holders of Registrable Securities pursuant to written contractual
arrangements with such persons, (A) first, the Ordinary Shares for the account
of the demanding persons that can be sold without exceeding the Maximum Number
of Shares; (B) second, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clause (A), the Ordinary Shares or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; and (C) third, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clauses (A) and (B),
the Registrable Securities as to which registration has been requested under
this Section 2.2 (pro rata in accordance with the number of shares of
Registrable Securities held by each such holder); and (D) fourth, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clauses (A), (B) and (C), the Ordinary Shares, if any, as to which registration
has been requested pursuant to written contractual piggy-back registration
rights which other shareholders desire to sell that can be sold without
exceeding the Maximum Number of Shares.
2.2.3 Withdrawal. Any
holder of Registrable Securities may elect to withdraw such holder’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. The Company may also
elect to withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back Registration as
provided in Section 3.3.
2.3 Registrations on Form
F-3. The holders of Registrable Securities may at any time and
from time to time, request in writing that the Company register the resale of
any or all of such Registrable Securities on Form F-3 or any similar short-form
registration which may be available at such time (“Form F-3”); provided,
however, that the Company shall not be obligated to effect such request through
an underwritten offering. Upon receipt of such written request, the
Company will promptly give written notice of the proposed registration to all
other holders of Registrable Securities, and, as soon as practicable thereafter,
effect the registration of all or such portion of such holder’s or holders’
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other holder or holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration pursuant to this Section 2.3: (i) if Form F-3 is not available for
such offering; or (ii) if the holders of the Registrable Securities, together
with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at any aggregate price to the public of less than
[$500,000]. Registrations effected pursuant to this Section 2.3 shall
not be counted as Demand Registrations effected pursuant to Section
2.1.
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3. REGISTRATION
PROCEDURES.
3.1 Filings;
Information. Whenever the Company is required to effect the
registration of any Registrable Securities pursuant to Section 2, the Company
shall use its commercially reasonable best efforts to effect the registration
and sale of such Registrable Securities in accordance with the intended
method(s) of distribution thereof as expeditiously as practicable, and in
connection with any such request:
3.1.1 Filing Registration
Statement. The Company shall, as expeditiously as possible and
in any event within sixty (60) days after receipt of a request for a Demand
Registration pursuant to Section 2.1, prepare and file with the Commission a
Registration Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of all Registrable Securities to be registered thereunder in
accordance with the intended method(s) of distribution thereof, and shall use
its best efforts to cause such Registration Statement to become and remain
effective for the period required by Section 3.1.3; provided, however, that the
Company shall have the right to defer any Demand Registration for up to thirty
(30) days, and any Piggy-Back Registration for such period as may be applicable
to deferment of any demand registration to which such Piggy-Back Registration
relates, in each case if the Company shall furnish to the holders a certificate
signed by the Chief Executive Officer of the Company stating that, in the good
faith judgment of the Board of Directors of the Company, it would be materially
detrimental to the Company and its shareholders for such Registration Statement
to be effected at such time; provided further, however, that the Company shall
not have the right to exercise the right set forth in the immediately preceding
proviso more than once in any 365-day period in respect of a Demand Registration
hereunder.
3.1.2 Copies. The
Company shall, prior to filing a Registration Statement or prospectus, or any
amendment or supplement thereto, furnish without charge to the holders of
Registrable Securities included in such registration, and such holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each
amendment and supplement to such Registration Statement (in each case including
all exhibits thereto and documents incorporated by reference therein), the
prospectus included in such Registration Statement (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities
included in such registration or legal counsel for any such holders may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such holders.
3.1.3 Amendments and
Supplements. The Company shall prepare and file with the
Commission such amendments, including post-effective amendments, and supplements
to such Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective and in
compliance with the provisions of the Securities Act until all Registrable
Securities and other securities covered by such Registration Statement have been
disposed of in accordance with the intended method(s) of distribution set forth
in such Registration Statement (which period shall not exceed the sum of one
hundred eighty (180) days plus any period during which any such disposition is
interfered with by any stop order or injunction of the Commission or any
governmental agency or court) or such securities have been
withdrawn.
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3.1.4 Notification. After
the filing of a Registration Statement, the Company shall promptly, and in no
event more than two (2) business days after such filing, notify the holders of
Registrable Securities included in such Registration Statement of such filing,
and shall further notify such holders promptly and confirm such advice in
writing in all events within two (2) business days of the occurrence of any of
the following: (i) when such Registration Statement becomes effective; (ii) when
any post-effective amendment to such Registration Statement becomes effective;
(iii) the issuance or threatened issuance by the Commission of any stop order
(and the Company shall use commercially reasonable efforts to take all actions
required to prevent the entry of such stop order or to remove it if entered);
and (iv) any request by the Commission for any amendment or supplement to such
Registration Statement or any prospectus relating thereto or for additional
information or of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of the securities covered by such Registration Statement, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and promptly make available to the holders of
Registrable Securities included in such Registration Statement any such
supplement or amendment; except that before filing with the Commission a
Registration Statement or prospectus or any amendment or supplement thereto,
including documents incorporated by reference, the Company shall furnish to the
holders of Registrable Securities included in such Registration Statement and to
the legal counsel for any such holders, copies of all such documents proposed to
be filed sufficiently in advance of filing to provide such holders and legal
counsel with a reasonable opportunity to review such documents and comment
thereon, and the Company shall not file any Registration Statement or prospectus
or amendment or supplement thereto, including documents incorporated by
reference, to which such holders or their legal counsel shall
object.
3.1.5 State Securities Laws
Compliance. The Company shall use its best efforts to (i)
register or qualify the Registrable Securities covered by the Registration
Statement under such securities or “blue sky” laws of such jurisdictions in the
United States as the holders of Registrable Securities included in such
Registration Statement (in light of their intended plan of distribution) may
request and (ii) take such action necessary to cause such Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other Governmental Authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
necessary or advisable to enable the holders of Registrable Securities included
in such Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions; provided, however, that the Company shall not
be required to qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph 3.1.5 or
subject itself to taxation in any such jurisdiction.
3.1.6 Agreements for
Disposition. The Company shall enter into customary agreements
(including, if applicable, an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities. The representations,
warranties and covenants of the Company in any underwriting agreement which are
made to or for the benefit of any Underwriters, to the extent applicable, shall
also be made to and for the benefit of the holders of Registrable Securities
included in such registration statement. No holder of Registrable
Securities included in such registration statement shall be required to make any
representations or warranties in the underwriting agreement except, if
applicable, with respect to such holder’s organization, good standing,
authority, title to Registrable Securities, lack of conflict of such sale with
such holder’s material agreements and organizational documents, and with respect
to written information relating to such holder that such holder has furnished in
writing expressly for inclusion in such Registration Statement.
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3.1.7 Cooperation. The
principal executive officer of the Company, the principal financial officer of
the Company, the principal accounting officer of the Company and all other
officers and members of the management of the Company shall cooperate fully in
any offering of Registrable Securities hereunder, which cooperation shall
include, without limitation, the preparation of the Registration Statement with
respect to such offering and all other offering materials and related documents,
and participation in meetings with Underwriters, attorneys, accountants and
potential investors.
3.1.8 Records. The
Company shall make available for inspection by the holders of Registrable
Securities included in such Registration Statement, any Underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by any holder of Registrable
Securities included in such Registration Statement or any Underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any of them in connection with such
Registration Statement.
3.1.9 Opinions and Comfort
Letters. The Company shall furnish to each holder of
Registrable Securities included in any Registration Statement a signed
counterpart, addressed to such holder, of (i) any opinion of counsel to the
Company delivered to any Underwriter and (ii) any comfort letter from the
Company’s independent public accountants delivered to any
Underwriter. In the event no legal opinion is delivered to any
Underwriter, the Company shall furnish to each holder of Registrable Securities
included in such Registration Statement, at any time that such holder elects to
use a prospectus, an opinion of counsel to the Company to the effect that the
Registration Statement containing such prospectus has been declared effective
and that no stop order is in effect.
3.1.10 Earnings
Statement. The Company shall comply with all applicable rules
and regulations of the Commission and the Securities Act, and make available to
its shareholders, as soon as practicable, an earnings statement covering a
period of twelve (12) months, beginning within three (3) months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
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3.2 Obligation to Suspend
Distribution. Upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3.1.4(iv), or, in
the case of a resale registration on Form F-3 pursuant to Section 2.3 hereof,
upon any suspension by the Company, pursuant to a written xxxxxxx xxxxxxx
compliance program adopted by the Company’s Board of Directors, of the ability
of all “insiders” covered by such program to transact in the Company’s
securities because of the existence of material non-public information, each
holder of Registrable Securities included in any registration shall immediately
discontinue disposition of such Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such holder
receives the supplemented or amended prospectus contemplated by Section
3.1.4(iv) or the restriction on the ability of “insiders” to transact in the
Company’s securities is removed, as applicable, and, if so directed by the
Company, each such holder will deliver to the Company all copies, other than
permanent file copies then in such holder’s possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice.
3.3 Registration
Expenses. The Company shall bear all costs and expenses
incurred in connection with any Demand Registration pursuant to Section 2.1, any
Piggy-Back Registration pursuant to Section 2.2, and any registration on Form
F-3 effected pursuant to Section 2.3, and all expenses incurred in performing or
complying with its other obligations under this Agreement, whether or not the
Registration Statement becomes effective, including, without limitation: (i) all
registration and filing fees; (ii) fees and expenses of compliance with
securities or “blue sky” laws (including fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities); (iii)
printing expenses; (iv) the Company’s internal expenses (including, without
limitation, all salaries and expenses of its officers and employees); (v)
National Association of Securities Dealers, Inc. fees; (vi) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses or
costs associated with the delivery of any opinions or comfort letters requested
pursuant to Section 3.1.9); (vii) the fees and expenses of any special experts
retained by the Company in connection with such registration and (viii) the fees
and expenses of one legal counsel selected by the holders of a
majority-in-interest of the Registrable Securities included in such
registration. The Company shall have no obligation to pay any
underwriting discounts or selling commissions attributable to the Registrable
Securities being sold by the holders thereof, which underwriting discounts or
selling commissions shall be borne by such holders. Additionally, in
an underwritten offering, all selling shareholders and the Company shall bear
the expenses of the underwriter pro rata in proportion to the respective amount
of shares each is selling in such offering. Notwithstanding the
foregoing, Chardan Capital Markets, LLC (or any other FINRA member) will have
the right to only one Demand Registration at the Company’s expense.
3.4 Information. The
holders of Registrable Securities shall provide such information as may
reasonably be requested by the Company, or the managing Underwriter, if any, in
connection with the preparation of any Registration Statement, including
amendments and supplements thereto, in order to effect the registration of any
Registrable Securities under the Securities Act pursuant to Section 2 and in
connection with the Company’s obligation to comply with federal and applicable
state securities laws.
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4. INDEMNIFICATION
AND CONTRIBUTION.
4.1 Indemnification by the
Company. The Company agrees to indemnify and hold harmless
each Investor and each other holder of Registrable Securities, and each of their
respective officers, employees, affiliates, directors, partners, members,
attorneys and agents, and each person, if any, who controls an Investor and each
other holder of Registrable Securities (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (each, an “Investor
Indemnified Party”), from and against any expenses, losses, judgments, claims,
damages or liabilities, whether joint or several, arising out of or based upon
any untrue statement (or allegedly untrue statement) of a material fact
contained in any Registration Statement under which the sale of such Registrable
Securities was registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained in the Registration Statement,
or any amendment or supplement to such Registration Statement, or arising out of
or based upon any omission (or alleged omission) to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation promulgated thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration; and the Company shall promptly reimburse the Investor Indemnified
Party for any legal and any other expenses reasonably incurred by such Investor
Indemnified Party in connection with investigating and defending any such
expense, loss, judgment, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus,
or summary prospectus, or any such amendment or supplement, in reliance upon and
in conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall
indemnify any Underwriter of the Registrable Securities, their officers,
affiliates, directors, partners, members and agents and each person who controls
such Underwriter on substantially the same basis as that of the indemnification
provided above in this Section 4.1.
4.2 Indemnification by Holders
of Registrable Securities. Each selling holder of Registrable
Securities will, in the event that any registration is being effected under the
Securities Act pursuant to this Agreement of any Registrable Securities held by
such selling holder, indemnify and hold harmless the Company, each of its
directors and officers and each underwriter (if any), and each other person, if
any, who controls the company or such underwriter within the meaning of the
Securities Act, against any losses, claims, judgments, damages or liabilities,
whether joint or several, insofar as such losses, claims, judgments, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or allegedly untrue statement of a material fact contained in
any Registration Statement under which the sale of such Registrable Securities
was registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or the alleged omission to state a material fact
required to be stated therein or necessary to make the statement therein not
misleading, if the statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by such selling
holder expressly for use therein, and shall reimburse the Company, its directors
and officers, and each such controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigation or defending
any such loss, claim, damage, liability or action. Each selling
holder’s indemnification obligations hereunder shall be several and not joint
and shall be limited to the amount of any net proceeds actually received by such
selling holder.
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4.3 Conduct of Indemnification
Proceedings. Promptly after receipt by any person of any
notice of any loss, claim, damage or liability or any action in respect of which
indemnity may be sought pursuant to Section 4.1 or 4.2, such person (the
“Indemnified Party”) shall, if a claim in respect thereof is to be made against
any other person for indemnification hereunder, notify such other person (the
“Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability
or action; provided, however, that the failure by the Indemnified Party to
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
liability which the Indemnifying Party may have to such Indemnified Party
hereunder, except and solely to the extent the Indemnifying Party is actually
prejudiced by such failure. If the Indemnified Party is seeking
indemnification with respect to any claim or action brought against the
Indemnified Party, then the Indemnifying Party shall be entitled to participate
in such claim or action, and, to the extent that it wishes, jointly with all
other Indemnifying Parties, to assume control of the defense thereof with
counsel satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume control of
the defense of such claim or action, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal or other expenses subsequently incurred
by the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that in any action in
which both the Indemnified Party and the Indemnifying Party are named as
defendants, the Indemnified Party shall have the right to employ separate
counsel (but no more than one such separate counsel) to represent the
Indemnified Party and its controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Indemnified Party against the Indemnifying Party, with the fees and expenses of
such counsel to be paid by such Indemnifying Party if, based upon the written
opinion of counsel of such Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, consent to entry of judgment or
effect any settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such judgment or settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such claim or
proceeding.
4.4 Contribution.
4.4.1 If
the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is
unavailable to any Indemnified Party in respect of any loss, claim, damage,
liability or action referred to herein, then each such Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the Indemnified Parties and the Indemnifying Parties in connection with
the actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable
considerations. The relative fault of any Indemnified Party and any
Indemnifying Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
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4.4.2 The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding Section
4.4.1. The amount paid or payable by an Indemnified Party as a result
of any loss, claim, damage, liability or action referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 4.4, no holder
of Registrable Securities shall be required to contribute any amount in excess
of the dollar amount of the net proceeds (after payment of any underwriting
fees, discounts, commissions or taxes) actually received by such holder from the
sale of Registrable Securities which gave rise to such contribution
obligation. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
5. UNDERWRITING
AND DISTRIBUTION.
5.1 Rule
144. The Company covenants that it shall file all reports
required to be filed by it under the Securities Act and the Exchange Act and
shall take such further action as the holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act, as such Rules may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission.
6. MISCELLANEOUS.
6.1 Other Registration
Rights. Except with respect to those securities issued or
issuable upon exercise of that certain Unit Purchase Option to be issued to
Chardan Capital Markets, LLC or its designees in connection with the Company’s
initial public offering in _______ 2011, the Company represents and warrants
that no person, other than a holder of the Registrable Securities has any right
to require the Company to register any shares of the Company’s capital stock for
sale or to include shares of the Company’s capital stock in any registration
filed by the Company for the sale of shares of capital stock for its own account
or for the account of any other person.
6.2 Assignment; No Third Party
Beneficiaries. This Agreement and the rights, duties and
obligations of the Company hereunder may not be assigned or delegated by the
Company in whole or in part. This Agreement and the rights, duties
and obligations of the holders of Registrable Securities hereunder may be freely
assigned or delegated by such holder of Registrable Securities in conjunction
with and to the extent of any transfer of Registrable Securities by any such
holder. This Agreement and the provisions hereof shall be binding
upon and shall inure to the benefit of each of the parties and their respective
successors and the permitted assigns of the Investor or holder of Registrable
Securities or of any assignee of the Investor or holder of Registrable
Securities. This Agreement is not intended to confer any rights or
benefits on any persons that are not party hereto other than as expressly set
forth in Article 4 and this Section 6.2.
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6.3 Notices. All
notices, demands, requests, consents, approvals or other communications
(collectively, “Notices”) required or permitted to be given hereunder or which
are given with respect to this Agreement shall be in writing and shall be
personally served, delivered by reputable air courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed
given on the date of service or transmission if personally served or transmitted
by telegram, telex or facsimile; provided, that if such service or transmission
is not on a business day or is after normal business hours, then such notice
shall be deemed given on the next business day. Notice otherwise sent
as provided herein shall be deemed given on the next business day following
timely delivery of such notice to a reputable air courier service with an order
for next-day delivery.
To the
Company:
Xx. 000,
Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx
Xxxxx
Xxxxxxxx, 000000
People’s
Republic of China
Attn:
Xxxxxxx Xxx-Xxxxx Yu, President
with a
copy to:
Loeb
& Loeb LLP
000 Xxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxxxx
X. Xxxxxxxx, Esq.
To an
Investor, to:
Xx. 000,
Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx
Xxxxx
Xxxxxxxx, 000000
People’s
Republic of China
Attn:
[Investor]
6.4 Severability. This
Agreement shall be deemed severable, and the invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
this Agreement or of any other term or provision hereof. Furthermore,
in lieu of any such invalid or unenforceable term or provision, the parties
hereto intend that there shall be added as a part of this Agreement a provision
as similar in terms to such invalid or unenforceable provision as may be
possible and be valid and enforceable.
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6.5 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and the
same instrument.
6.6 Entire
Agreement. This Agreement (including all agreements entered
into pursuant hereto and all certificates and instruments delivered pursuant
hereto and thereto) constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede all prior and contemporaneous
agreements, representations, understandings, negotiations and discussions
between the parties, whether oral or written.
6.7 Modifications and
Amendments. No amendment, modification or termination of this
Agreement shall be binding upon any party unless executed in writing by such
party.
6.8 Titles and
Headings. Titles and headings of sections of this Agreement
are for convenience only and shall not affect the construction of any provision
of this Agreement.
6.9 Waivers and
Extensions. Any party to this Agreement may waive any right,
breach or default which such party has the right to waive, provided that such
waiver will not be effective against the waiving party unless it is in writing,
is signed by such party, and specifically refers to this
Agreement. Waivers may be made in advance or after the right waived
has arisen or the breach or default waived has occurred. Any waiver
may be conditional. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof nor of any other agreement or provision herein
contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
6.10 Remedies.
6.10.1 Specific
Performance. Each of the parties acknowledges and agrees that
the other parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to an injunction or injunctions
(without the necessity of posting a bond or other security) to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state or other foreign court or governmental body having
jurisdiction over the parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
6.11 Remedies
Cumulative. In the event that the Company fails to observe or
perform any covenant or agreement to be observed or performed under this
Agreement, the Investor or any other holder of Registrable Securities may
proceed to protect and enforce its rights by suit in equity or action at law,
whether for specific performance of any term contained in this Agreement or for
an injunction against the breach of any such term or in aid of the exercise of
any power granted in this Agreement or to enforce any other legal or equitable
right, or to take any one or more of such actions, without being required to
post a bond. None of the rights, powers or remedies conferred under
this Agreement shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy, whether
conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.
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6.12 Governing
Law. This Agreement shall be governed by, interpreted under,
and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed within the State of New York,
without giving effect to any choice-of-law provisions thereof that would compel
the application of the substantive laws of any other jurisdiction.
6.13 Waiver of Trial by
Jury. Each party hereby irrevocably and unconditionally waives
the right to a trial by jury in any action, suit, counterclaim or other
proceeding (whether based on contract, tort or otherwise) arising out of,
connected with or relating to this Agreement, the transactions contemplated
hereby, or the actions of the Investor in the negotiation, administration,
performance or enforcement hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to
be executed and delivered by their duly authorized representatives as of the
date first written above.
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By:
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Name:
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Title:
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Investors:
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Yong
Xxx Xx
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Xxxxx
Xxxx-Xxxx Xxx
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Xxxx
Xxx-Xxxx Xxxxx
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Xxxxxx
Xxx
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Xxxxxx
Xxx
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Xxxxxx
Xx
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Xxxxx
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Xxxxxxx Xxx-Xxxxx Yu | |
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THE
SHODAN COMPANY
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PUWAY
LTD.
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Name:
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Name:
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Title:
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Title:
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CHARDAN
CAPITAL MARKETS, LLC
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Name:
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Title:
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