SUBSCRIPTION AGREEMENT TO BE DELIVERED BY ACCREDITED INVESTORS
TO
BE DELIVERED BY ACCREDITED INVESTORS
The
Phoenix Group Corporation
0000
XxXxxxxx Xxxxxx
Suite
1555
Dallas,
TX 75201
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RE:
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Purchase
of Shares of The Phoenix Group
Corporation
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Gentlemen:
I
am
delivering this letter in connection with an offer of shares of common stock,
$0.001 par value per share (the “Shares”),
of
The Phoenix Group Corporation (the “Company”).
Subject
to the terms and conditions hereof, I hereby irrevocably subscribe for and
agree
to purchase __________ Shares for the purchase price of $________
per
Share
(which purchase price was approved via the attached Board Resolution). At the
Company’s election, I hereby either (i) tender herewith a certified bank check
payable to the order of the Company in such amount or (ii) agree to make such
funds immediately available by wire transfer to such account as the Company
may
specify in writing to me. Upon receipt of payment therefor, the Company shall
deliver one or more share certificates representing the Shares in such
denominations and in such names as I may instruct.
I
agree
that the Shares I may purchase pursuant to the terms of this Subscription
Agreement will be subject to a registration rights agreement in the form
attached hereto as Exhibit
A,
as
amended, supplemented, restated or otherwise modified from time to time (the
“Registration
Rights Agreement”).
I
hereby
represent, warrant and confirm that I am an “accredited investor” as defined in
Regulation D under the Securities Act of 1933 (the “Securities
Act”),
and I
have such knowledge and experience in financial and business matters that I
am
capable of evaluating the merits and risks of purchasing the Shares.
I
have
concluded that I am an accredited investor because:
(initial
all that apply)
_________ I
am a
natural person who has a net worth or joint net worth with my spouse exceeding
$1,000,000 at the time of purchase.
_________ I
am a
natural person who individually had income in excess of $200,000 in each of
the
two most recent years or joint income with my spouse in excess of $300,000
in
each of those years and who reasonably expects income in excess of those levels
in the current year.
_________ I
am a
director or executive officer of the Company (Note:
the
term “executive officer” means the president, any vice president in charge of a
principal business unit, division or function (such as sales, administration
or
finance), any other officer who performs a policy making function, or any other
person who performs similar policy making functions for the
Company).
_________ The
subscriber is either (a) a bank as defined in Section 3(a)(2) of the Securities
Act or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act, whether acting in its individual
or
fiduciary capacity, (b) any broker or dealer registered pursuant to Section
15
of the Securities Exchange Act of 1934, as amended, (c) an insurance company
as
defined in Section 2(13) of the Securities Act, (d) an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of such Act, (e) a Small Business
Investment Company licensed by the United States Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958, (f)
any plan established and maintained by a state, its political subdivisions,
or
any agency or instrumentality of a state or its political subdivisions, for
the
benefit of its employees, if such plan has total assets in excess of $5,000,000,
or (g) an employee benefit plan within the meaning of Title 1 of the Employee
Retirement Income Security Act of 1974, as amended, if the investment decision
is made by a plan fiduciary which is either a bank, a savings and loan
association, insurance company, or registered investment advisor, or if the
plan
has assets in excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors.
_________ The
subscriber is a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
_________ The
subscriber is any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
_________ The
subscriber is any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose purchase
is
directed by a sophisticated person as defined in section 230.506(b)(2)(ii)
of
Regulation D promulgated under the Securities Act.
________ The
subscriber is any entity in which all of the equity owners are accredited
investors.
In
the
case of a husband and wife subscribing jointly, satisfaction of the net worth
standards must be determined by aggregating their net worth and satisfaction
of
the income standards must be determined by joint or individual tax returns,
as
the case may be. Any other persons subscribing for Shares jointly, including
members of partnerships formed for the purpose of purchasing Shares, must each
satisfy the applicable net worth and income standards without regard to the
other joint purchasers. In the case of a subscriber that is itself a partnership
(other than a partnership formed for the purpose of purchasing Shares) or a
trust, the applicable net worth and income standards must be satisfied by the
entity. In the case of a subscriber purchasing as custodian for a minor, the
applicable net worth and income standards must be satisfied by the
custodian.
I
further
represent, warrant, and confirm that:
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any
purchase of Shares by me will be for my own account, for investment
only
and not with a view toward the resale or distribution
thereof.
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I
do not presently have any reason to anticipate any change in my present
financial circumstances or other particular occasion or event which
would
cause me to sell such Shares.
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I
have such knowledge and experience in financial and business matters
that
I am capable of evaluating the merits and risks of purchasing the
Shares;
I am experienced in buying instruments similar to the Shares; I am
able to
bear the economic risk of an investment in the Shares; and I acknowledge
that an investment in the Shares involves a high degree of risk,
including
the possible loss of my entire investment, and there is no assurance
of
any income from such investment.
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I
have adequate means of providing for current needs and possible personal
contingencies and have no need for liquidity in the investment in
the
Company.
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I
understand that the Shares have not been and will not be registered
under
the Securities Act, as amended, or any state law. I agree to notify
the
Company prior to any proposed sale, transfer, distribution or other
disposition of any Shares or any beneficial interest therein, and
will not
sell, transfer, distribute or otherwise dispose of any Shares without
the
consent of the Company, which may be granted or withheld in the Company’s
sole discretion, and unless the Shares are registered or such sale,
transfer, distribution or other disposition is exempt from registration.
I
understand that, except as set forth in the Registration Rights Agreement,
the Company has no intention to register the Shares with the United
States
Securities and Exchange Commission or any State of the United States
and
is under no obligation to assist me in obtaining or complying with
any
exemption from registration. The Company may require that a proposed
transferee meet appropriate financial suitability standards and that
the
transferor furnish a legal opinion satisfactory to the Company and
its
counsel that the proposed transfer complies with applicable federal,
state
and any other applicable securities laws. An appropriate legend evidencing
such restrictions may be placed on any certificates issued representing
the Shares and appropriate stop transfer instructions may be placed
with
respect to the Shares.
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I
must bear the economic risk of investment in the Company for an indefinite
period of time, since the Shares have not been registered under the
Securities Act nor any state securities laws and cannot be sold unless
the
Shares are either subsequently registered under the Securities Act
and
applicable state laws (and the Company has no obligation to register
the
Shares except pursuant to the Registration Rights Agreement) or an
exemption from such registration is available.
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I
am not purchasing Shares based upon representations, oral or written,
by
any person with respect to the future value of, or income from, the
Shares, or the length of time that I will be required to remain as
the
owner of the Shares but rather upon an independent examination and
judgment as to the prospects of the
Company.
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The
Shares were not offered to me by means of general solicitations,
publicly
disseminated advertisements or sales
literature.
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I
have not authorized any broker, dealer, agent, finder or similar
person to
act on my behalf nor do I have any knowledge of any broker, dealer,
agent,
finder or similar person purporting to act on my behalf with respect
to
this transaction.
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I
acknowledge that there is a very limited market for the Shares and
that it
is not anticipated that any significant public market for the Shares
will
develop.
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I
acknowledge that I was provided copies of the Company's filings with
the
SEC since May 24,2004 including: the Company's Annual Report on Form
10-KSB, filed May 24, 2004 and Form 10-Q SB, filed May 24, 2004.
I have
been afforded the opportunity to review these documents and to ask
questions of representatives of the Company and receive satisfactory
answers thereto, as I deem necessary in connection with my decision
to
purchase the Shares.
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I
have been afforded the opportunity to ask questions of representatives
of
the Company and receive satisfactory answers thereto, as I deem necessary
in connection with my decision to purchase the
Shares.
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I
am not entitled to cancel, terminate or revoke this Subscription
Agreement
or any agreements of the undersigned hereunder and understand that
this
Subscription Agreement shall survive my death or
disability.
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I
acknowledge that the offering of Shares is not subject to any minimum
number of Shares being purchased and that the proceeds from the offering
may be insufficient to achieve the results contemplated in the Company’s
business plan.
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I
acknowledge that the price for the Shares and the number of Shares
being
offered in the offering were determined by the Company and there
has been
no independent appraisal of the
Shares.
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I
acknowledge that the Company has limited operating history on which
to
base a decision to invest in the
Shares.
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I
acknowledge that any financial projections provided to me by the
Company
are subject to numerous risks and uncertainties and that the actual
results of the Company will vary from those contained in the financial
projections and such variations may be material and
adverse.
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The
representations, warranties and acknowledgments of this letter are true and
accurate as of the date hereof, shall be true and correct as of the date of
delivery of this letter to the Company, and shall survive such delivery to
the
Company. If in any respect any such representation, warranty or acknowledgment
shall not be true and accurate prior to such delivery, I shall give immediate
written notice of such fact to the Company, specifying which representations,
warranties and acknowledgments are not true and accurate and the reasons
therefor.
I
acknowledge that I understand the meaning and legal consequences of the
representations, warranties and acknowledgments contained in this letter, and
I
agree to indemnify and hold harmless the Company, its directors, officers and
any of its affiliates, associates, agents and employees from and against any
and
all loss, damage or liability (including costs and reasonable attorney’s fees
and disbursements) due to or arising out of a breach of any representation,
warranty or acknowledgment by me.
I
further
acknowledge that the Company intends to use the net proceeds from my purchase
of
the Shares for working capital and general corporate purposes. I understand
that
the amounts actually expended by the Company for such purposes will vary
significantly depending on a number of factors and that the Company’s management
will have broad discretion with respect to the use of such proceeds.
I
further
acknowledge that in the event the Company issues additional securities in the
future, including in connection with future acquisitions, employment
arrangements or the issuance or exercise of warrants and stock options, I may
experience dilution in net tangible book value per Share.
If
an
investment in the Company is being made by a corporation, partnership, trust
or
estate, I, the person signing on behalf of the undersigned entity, represent
that I have all right and authority, in my capacity as an officer, general
partner, trustee, executor or other representative of such corporation,
partnership, trust or estate, as the case may be, to make such decision to
invest in the Company and to execute and deliver this Subscription Agreement
on
behalf of such corporation, partnership, trust or estate as the case may be,
enforceable in accordance with its terms. In addition, the undersigned entity
will, upon request of the Company, deliver any documents evidencing the
existence of such corporation, partnership, trust or estate, the legality of
an
investment in the Shares and the authority of the person executing this
Subscription Agreement on behalf of the undersigned entity. I also represent
on
behalf of the undersigned entity that any such corporation, partnership or
trust
was not formed for the purpose of buying the Shares hereby
subscribed.
Subject
only to the acceptance of this Subscription Agreement by the Company, I make,
constitute and appoint the Company, acting through any of its authorized
members, directors, managers, partners and officers and with power of
substitution, my true and lawful agent and attorney, with full power and
authority in my name, place and xxxxx, to make, execute, acknowledge, record
and/or file (i) any certificate or other document required to effect the
formation, continuation or qualification of the Company that legal counsel
to
the Company deems necessary or desirable to comply with any federal, state
or
other law applicable to the Company, and (ii) any amendments to any of the
foregoing. The power of attorney granted hereby is a special power of attorney
coupled with an interest and shall be irrevocable to the fullest extent
permitted by law.
This
Subscription Agreement constitutes the entire agreement between the parties
with
respect to the subject matter hereof and may be amended or superseded only
by a
writing executed by the parties.
Dated:
Address:
SSN/EIN:
____________________
ACCEPTED:
THE
PHOENIX GROUP CORPORATION
By:
Name: Xxx
Xxxx
Title: Chairman
Exhibit
A
Form
of
Registration Rights Agreement
REGISTRATION
RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT (the “Agreement”),
dated
as of ____________________ by and among The Phoenix Group Corporation, a
Delaware corporation (the “Company”),
and
the purchasers named on the signature pages hereto (the “Purchasers”).
PRELIMINARY
STATEMENT
Pursuant
to the Subscription Agreement (as defined below), each Purchaser has agreed
to
purchase shares of the Company’s Common Stock (the “Shares”)
relying, in part, on the Company granting the registration rights set forth
in
this Agreement.
ACCORDINGLY,
to induce the Purchasers to enter into the Subscription Agreement and to
purchase the Shares and in consideration of the mutual representations and
agreements set forth in this Agreement, the Company and the Purchasers,
intending to be legally bound, now agree as follows:
STATEMENT
OF AGREEMENT
SECTION
1. DEFINITIONS.
1.1 Certain
Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means
any entity controlling, controlled by or under common control with a designated
Person. For the purposes of this definition, “control” shall have the meaning
specified as of the date of this Agreement for that word in Rule 405 promulgated
by the SEC under the Securities Act of 1933.
“Common
Stock”
means
the common stock, par value $0.001 per share, of the Company.
“Equity
Security”
shall
mean any stock or similar security, including without limitation securities
containing equity features and securities containing profit participation
features, or any security convertible or exchangeable, with or without
consideration, into or for any stock or similar security, or any security
carrying any warrant or right to subscribe to or purchase any stock or similar
security, or any such warrant or right.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, or any similar federal statute,
and the rules and regulations of the SEC thereunder, all as the same shall
be in
effect from time to time.
“Person”
means
any individual, corporation, partnership, joint venture, association, limited
liability company, joint-stock company, trust, unincorporated organization
or
government or any agency or political subdivision thereof.
“Registrable
Securities”
shall
mean the Shares and any Common Stock issued with respect to the Shares by way
of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, until the
earliest to occur of (a) the date on which such security has been
effectively registered under the Securities Act and disposed of in accordance
with a registration statement and (b) the date on which such security may be
sold pursuant to Rule 144 (without any volume limitations thereunder) or may
be
sold without compliance with such rule.
“Rule
144”
means
Rule 144 promulgated by the SEC under the Exchange Act, as such rule may be
amended from time to time, or any successor rule thereto.
“SEC”
means
the Securities and Exchange Commission of the United States of America or any
successor to the rights and duties thereof.
“Shares”
means
the shares
of
Common Stock of the Company purchased by the Purchasers under the terms of
the
Subscription Agreements.
“Subscription
Agreement(s)”
means
the Subscription Agreements dated as of ____________________, 2004 by and
between the Company and each of the Purchasers.
1.2 Incorporated
Definitions.
Capitalized terms used in this Agreement and not otherwise defined herein shall
have the meanings set forth in the Subscription Agreements.
SECTION
2. REGISTRATION.
2.1 Piggyback
Registration.
(a) Except
as
set forth in Section 2.1(b), as, if and when the Company proposes to register
any Common Stock under the Securities Act for sale to the public, on a form
that
would also permit the registration of the Registrable Securities (other than
registrations on Form S-8, or any successor form, or Form S-4, or any successor
form) (an “Eligible
Registration”),
each
such time it will give written notice to the holders of Registrable Securities
(the “Holders”)
of its
intention so to do. Upon the written request of a Holder received by the Company
within 20 days after the giving of any such notice by the Company, to register
such number of shares of Registrable Securities held by such Holder specified
in
such written request, the Company will cause the Registrable Securities as
to
which registration shall have been so requested to be included in the securities
to be covered by the registration statement proposed to be filed by the Company
with respect to such Eligible Registration, all to the extent requisite to
permit the sale or other disposition by such Holder (in accordance with its
written request) of such Registrable Securities so registered. In the event
that
any Eligible Registration pursuant to this Section 2.1 shall be, in whole or
in
part an underwritten offering of Common Stock (an “Underwritten
Offering”),
the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would materially adversely affect
the marketing of the securities to be sold by the Company therein. In the event
such a reduction is necessary, the reduction shall be borne first by the Holders
proposing to sell Registrable Securities in the Underwritten Offering, on a
pro-rata
basis,
based on the aggregate number of shares of Registrable Securities that each
Holder proposed to offer for sale in the Underwritten Offering. Notwithstanding
the foregoing provisions, the Company may for any reason and without the consent
of the Holders in good faith withdraw any registration statement referred to
in
this Section 2.1 without thereby incurring any liability to the
Holders.
(b) Notwithstanding
the foregoing, an Eligible Registration may occur only during the one year
period following the issuance of the Shares to the Purchasers. No Eligible
Registration shall occur except at the times allowed pursuant to this Section
2.1(b).
2.2 Registration
Statement Form.
Registrations pursuant to Section 2.1 shall be on such appropriate registration
form of the SEC as shall be selected by the Company.
2.3 Expenses.
Except
as otherwise provided in this Section 2.3, all expenses incurred in connection
with each registration pursuant to Section 2.1 hereof (excluding in each case
underwriting discounts and commissions applicable to Registrable Securities),
including, without limitation, in each case, all registration, filing and other
fees of the securities exchange; all fees and expenses of complying with
securities or blue sky laws; all word processing, duplicating and printing
expenses, messenger, delivery and shipping expenses; fees and disbursements
of
the accountants and counsel for the Company including the expenses of any
special audits or “cold comfort” letters or opinions required by or incident to
such registrations; and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, but excluding underwriting discounts
and commissions, if any, shall be borne by the Company. In all cases, the
Holders shall pay the underwriting discounts and commissions applicable to
the
securities sold by the Holders.
2.4 Effective
Registration Statement.
Registrations pursuant to this Section 2 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto has become
effective (unless a substantial cause of the failure of such registration
statement to become effective shall be attributable to the Holders), (ii) if
after it has become effective, such registration is interfered with by any
stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court for any reason, resulting in a failure to consummate the
offering of Registrable Securities offered thereby, (iii) if after a
registration statement with respect thereto has become effective, the offering
of Registrable Securities offered thereby is not consummated due to factors
beyond the control of the Purchasers, other than the fact that the underwriters
have advised the Holders that the Registrable Securities cannot be sold at
a net
price equal to or above the net price anticipated at the time of filing of
the
preliminary prospectus, or (iv) if the conditions to closing specified in the
underwriting agreement entered into in connection with such registration are
not
satisfied (unless a substantial cause of such conditions to closing not being
satisfied shall be attributable to the Holders).
2.5 Selection
of Underwriters.
If a
registration pursuant to Section 2.1 hereof involves an underwritten offering,
the underwriter or underwriters thereof shall be selected by the Company in
its
sole discretion.
SECTION
3. REGISTRATION
PROCEDURES.
3.1 Procedures.
The
Company will, subject to the limitations provided herein, as expeditiously
as
possible:
(a) prepare
and file with the SEC the requisite registration statement to effect such
registration, and thereafter, use reasonable efforts to cause such registration
statement to become effective; provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, including
documents incorporated by reference, the Company will furnish to counsel to
the
Holders of the Registrable Securities covered by such registration statement
and
the managing underwriter or underwriters, if any, draft copies of all such
documents proposed to be filed (other than exhibits, unless so requested) a
reasonable time prior thereto, which documents will be subject to the reasonable
review of such counsel and such Holders and underwriters, and will notify each
Holder of the Registrable Securities of any stop order issued by the SEC in
connection therewith and take all reasonable actions required to remove such
stop order;
(b) prepare
and file with the SEC such 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 to comply with the provisions
of
the Securities Act with respect to the disposition of all securities covered
by
such registration statement until such time as all of such securities have
been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement; provided,
however,
that
the Company shall not in any event be required to keep a registration statement
filed pursuant to Section 2.1 effective for a period of more than nine months
after such registration statement becomes effective; and provided further that
the Company may, at any time, delay the filing or suspend the effectiveness
of
any registration under this Agreement, or without suspending such effectiveness,
instruct the Purchasers not to sell any Registrable Securities included in
any
such registration, (i) if the Company shall have determined upon the advice
of
counsel that the Company would be required to disclose any actions taken or
proposed to be taken by the Company in good faith and for valid business
reasons, including without limitation, the acquisition or divestiture of assets,
which disclosure would have a material adverse effect on the Company or on
such
actions, or (ii) if required by law, to update the prospectus relating to any
such registration to include updated financial statements (a “Suspension
Period”)
by
providing the Purchasers with written notice of such Suspension Period and
the
reasons therefore; provided,
however,
that
the Company will not be required to disclose such reasons with particularity
if
an authorized executive officer of the Company certifies that the Company
believes it is required by law to delay the filing or suspend the effectiveness
of any such registration. In addition, the Company shall not be required to
keep
any registration effective, or may without suspending such effectiveness,
instruct the Purchasers if it has Registrable Securities included in such
registration not to sell such securities, during any period which the Company
is
instructed, directed, ordered or otherwise requested by any governmental agency
or self-regulatory organization to stop or suspend such trading or sales
(“Supplemental
Extension Period”).
In
the event of a Suspension Period or Supplemental Extension Period, the period
during which any registration under this Agreement is to remain effective
pursuant to this Section 3.1(b) shall be tolled until the end of any such
Suspension Period or Supplemental Extension Period. The Company will use
reasonable efforts to restrict any Suspension Period or Supplemental Extension
Period to less than 60 days;
(c) furnish
to the Purchasers such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the Securities
Act, and such other documents, as the Purchasers may reasonably
request;
(d) use
its
reasonable efforts to register or qualify all Registrable Securities and other
securities covered by such registration statement under such other securities
or
blue sky laws of such jurisdictions as each seller thereof shall reasonably
request and to keep such registration or qualification in effect for so long
as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable such seller to consummate
the
disposition in such jurisdictions of the securities owned by such seller, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it would
not
but for the requirements of this Section 3.1(d) be obligated to be so qualified
or to consent to general service of process in any such
jurisdiction.
(e) use
its
reasonable efforts to cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other United
States Federal or state governmental agencies or authorities as may be necessary
to enable the Purchasers to consummate the disposition of such Registrable
Securities;
(f) notify
in
writing the Purchasers, if Registrable Securities are covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or
upon
the happening of any event as a result of which the prospectus included in
such
registration statement, as then in effect, includes an untrue statement of
a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the
circumstances under which they were made, and at the request of the Purchasers
prepare and furnish to the Purchasers a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as
thereafter delivered to the purchasers of such securities, such prospectus
shall
not include 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
not misleading in the light of the circumstances under which they were
made.
(g) otherwise
use reasonable efforts to comply with all applicable rules and regulations
of
the SEC and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve months
beginning with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions
of
Section 11(a) of the Securities Act;
(h) provide
and cause to be maintained a transfer agent for all Registrable Securities
covered by such registration statement from and after a date not later than
the
effective date of such registration statement; and
(i) use
its
reasonable efforts to list all Registrable Securities covered by such
registration statement on any securities exchange on which any of the Company’s
Common Stock is then listed.
3.2 Information
Requirements.
It
shall be a condition precedent to the obligations of the Company to take any
action with respect to registering the Purchasers’ Registrable Securities
pursuant to this Section 3 that the Purchasers furnish the Company in writing
such information regarding the Purchasers, the Registrable Securities and other
securities of the Company held by the Purchasers, and the distribution of such
securities as the Company may from time to time reasonably request in writing.
If a Purchaser refuses to provide the Company with any of such information
on
the grounds that it is not necessary to include such information in the
registration statement, the Company may exclude the Purchaser’s Registrable
Securities from the registration statement unless such Purchaser provides the
Company with an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to the Company and its counsel, to the effect that
such
information need not be included in the registration statement.
The
Purchasers agree by acquisition of such Registrable Securities that upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 3.1(f), the Purchasers will forthwith discontinue the
Purchasers’ disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until the Purchasers’ receipt
of the copies of the supplemented or amended prospectus contemplated by Section
3.1(f) and, if so directed by the Company, will deliver to the Company copies,
other than permanent file copies then in the Purchasers’ possession, of the
current prospectus relating to such Registrable Securities at the time of
receipt of such notice.
SECTION
4. UNDERWRITTEN
OFFERINGS.
If
requested by the underwriters for any underwritten offering of Registrable
Securities pursuant to a registration under Section 2 hereof, the Company will
enter into an underwriting agreement with such underwriters for such offering,
such agreement to be satisfactory in substance and form to the Company and
the
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of this type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 6 hereof. If requested by the underwriters of any
underwritten offering pursuant to a registration under Section 2 hereof, the
Purchasers agree to enter into an agreement with such underwriters not to sell
their shares of stock in the Company for a period of time (not to exceed 180
days) after the effectiveness of a registration statement equal to the period
of
time which the sellers of securities in such registration have agreed not to
sell their shares after the effectiveness of such registration statement. The
Purchasers shall be a party to such underwriting agreement and must cooperate
with the Company in the negotiation of the underwriting agreement. The
Purchasers shall not be required to make any representations, warranties or
agreements with the Company other than representations, warranties or agreements
regarding the Purchasers, Purchasers’ Registrable Securities and other
securities of the Company, the Purchasers’ intended method of distribution, and
any representations, warranties or agreements required by law.
SECTION
5. PREPARATION;
REASONABLE INVESTIGATION.
In
connection with the preparation and filing of each registration statement under
the Securities Act in connection with an Eligible Registration, the Company
will
give the Purchasers and their respective agents and advisors and the
underwriters, if any, the reasonable opportunity to participate in the
preparation of such registration statement, each prospectus included therein
or
filed with the SEC, and each amendment thereof or supplement thereto, and will
give each of them such access to its books and records and such opportunities
to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the option of the Purchasers’ counsel, to conduct a reasonable investigation
within the meaning of the Securities Act. Subject to the rights and obligations
of the Company under the Securities Act and other applicable laws, the
Purchasers shall have the right to review and approve those portions of such
registration statement that directly pertain to the Purchasers.
SECTION
6. INDEMNIFICATION
6.1 Indemnification
by the Company.
In the
event any Registrable Securities are included in a registration statement under
this Agreement, to the extent permitted by law, the Company will, and hereby
does, indemnify and hold harmless each Purchaser, its directors and officers,
each other Person who participates as an underwriter in the offering or sale
of
such securities and each other Person, if any, who controls each Purchaser
or
any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which each
Purchaser or any such director or officer or underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon
any
untrue statement or alleged untrue statement of any material fact contained
in
any registration statement under which such securities were registered under
the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and
the Company will reimburse the Purchasers and each such director, officer,
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding; provided
that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by the Purchasers, and provided further
that the
Company shall not be liable to any Person who participates as an underwriter
in
the offering or sale of Registrable Securities or any other Person, if any,
who
controls such underwriter within the meaning of the Securities Act, in any
such
case to the extent that any such loss, claim, damage, liability (or action
or
proceeding in respect thereof) or expense arises out of such Person’s failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus and such delivery
would have mitigated liability. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Purchasers
or
any such director, officer, underwriter or controlling person and shall survive
the transfer of such securities by such seller.
6.2 Indemnification
by the Purchasers.
In the
event any Registrable Securities are included in a registration statement under
this Agreement, to the extent permitted by law, each Purchaser whose Registrable
Securities are registered pursuant to such registration statement will, and
hereby does indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 6.1) each underwriter, each Person who controls
such underwriter within the meaning of the Securities Act, the Company, each
director of the Company, each officer of the Company and each other Person,
if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was
made
in reliance upon and in strict conformity with written information furnished
to
the Company by the Purchasers expressly for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided
that the
Purchasers shall not be liable to any Person who participates as an underwriter
in the offering or sale of Registrable Securities or any other Person, if any,
who controls such underwriter within the meaning of the Securities Act, in
any
such case to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of such Person’s failure
to send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made
by or
on behalf of any underwriter, the Company or any such director, officer or
controlling Person and shall survive the transfer of such securities by such
seller.
6.3 Notices
of Claims, etc.
Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in Sections 6.1 and 6.2,
such
indemnified party will, if a claim in respect thereof is to be made against
an
indemnifying party, give written notice to the latter of the commencement of
such action; provided
that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 6, except to the extent that the indemnifying
party
is actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it
may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election
so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred
by
the latter in connection with the defense thereof other than reasonable costs
of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement, which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. No indemnified party shall
consent to entry of any judgment or enter into any settlement without the
consent of the indemnifying party.
6.4 Other
Indemnification.
Indemnification similar to that specified in the preceding subdivisions of
this
Section 6 (with appropriate modifications) shall be given by the Company and
the
Purchasers with respect to any required registration or other qualification
of
securities under any Federal or state law or regulation of any governmental
authority other than the Securities Act.
6.5 Indemnification
Payments.
The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is
incurred.
6.6 Contribution.
If the
indemnification provided for in this Section 6 from the indemnifying party
is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the 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,
claims, damages, liabilities or expenses in such proportion as is appropriate
to
reflect the relative fault of the indemnifying party and indemnified parties
in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall
be
determined by reference to, among other things, whether any action in question,
including any untrue statement of material fact or omission or alleged omission
to state a material fact, has been made by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to
include, subject to the limitations set forth in Section 6.3 hereof, any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6.6 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 paragraph.
Notwithstanding the provisions of this Section 6.6 no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed
to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue
or
alleged untrue statement or omission or alleged omission. 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.
If
indemnification is available under this Section 6, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Section
6.1 through Section 6.5 hereof without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 6.6.
SECTION
7. REPORTING
REQUIREMENTS UNDER EXCHANGE ACT.
If
and
when the Company registers the Common Stock under the Exchange Act, thereafter
the Company shall use its reasonable efforts to keep effective the registration
of its Common Stock under Section 12 of the Exchange Act and shall timely file
such information, documents and reports as the SEC may require or prescribe
under Section 13 of the Exchange Act. The Company shall timely file such
information, documents and reports which a corporation, partnership or other
entity subject to Section 13 or 15(d) (whichever is applicable) of the Exchange
Act is required to file.
If
the
Company is subject to the reporting requirements of either Section 13 or 15(d)
of the Exchange Act, the Company shall forthwith upon request furnish the
Purchasers (i) a written statement by the Company that it has complied with
such
reporting requirements, (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such other reports and documents filed by
the
Company with the SEC as the Purchasers may reasonably request in availing itself
of an exemption for the sale of Registrable Securities without registration
under the Securities Act. The Company acknowledges and agrees that the purpose
of the requirements contained in this Section 7 are to enable the Purchasers
to
comply with the current public information requirement contained in Paragraph
(c) of Rule 144 under the Securities Act should the Purchasers ever wish to
dispose of any of the Securities of the Company acquired by it without
registration under the Securities Act in reliance upon Rule 144 (or any other
similar exemptive provision). In addition, the Company shall take such other
measures and file such other information, documents and reports, as shall
hereafter be required by the SEC as a condition to the availability of Rule
144
under the Securities Act (or any similar exemptive provision hereafter in
effect).
SECTION
8. STOCKHOLDER
INFORMATION.
The
Company may require the Purchasers to furnish the Company such information
in
writing with respect to the Purchasers and the distribution of its Registrable
Securities as the Company may from time to time reasonably request in writing
and as shall be required by law or by the SEC in connection
therewith.
SECTION
9. FORMS.
All
references in this Agreement to particular forms of registration statements
are
intended to include, and shall be deemed to include, references to all successor
forms which are intended to replace, or to apply to similar transactions as,
the
forms herein referenced.
SECTION
10. TRANSFER
OF REGISTRATION RIGHTS.
The
registration rights granted to the Purchasers under this Agreement may not
be
transferred without the prior written consent of the Company, which may be
withheld or granted in the Company’s sole discretion.
SECTION
11. AMENDMENT.
This
Agreement may be amended only by a written agreement signed by the Company
and
the Purchasers.
SECTION
12. NOTICES.
All
notices, requests, consents and other communications required or permitted
hereunder shall be in writing and shall be delivered, or mailed first-class
postage prepaid, registered or certified mail,
(a) If
to a
Purchaser at its respective address as shown on the books of the Company, or
at
such other address as such Purchaser may specify by written notice to the
Company, or
(b) If
to the
Company at 0000 XxXxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention:
Chief Executive Officer; or at such other address as the Company may specify
by
written notice to the Purchaser,
and
such
notices and other communications shall for all purposes of this Agreement be
treated as being effective or having been given if delivered personally, or,
if
sent by mail, when received.
SECTION
13. COUNTERPARTS.
This
Agreement may be executed concurrently in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION
14. CHOICE
OF LAW.
THIS
AGREEMENT AND THE VALIDITY AND ENFORCEABILITY HEREOF SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
SECTION
15. SEVERABILITY.
Should
any one or more of the provisions of this Agreement or any agreement entered
into pursuant to this Agreement be determined to be illegal or unenforceable,
all other provisions of this Agreement and of each other agreement entered
into
pursuant to this Agreement, shall be given effect separately from the provision
or provisions determined to be illegal or unenforceable and shall not be
affected thereby.
SECTION
16. WHOLE
AGREEMENT.
This
Agreement constitutes the complete agreement and understanding by and among
the
parties hereto and shall supersede any prior understanding, agreement or
representation by or among the parties, whether written or oral, related to
the
subject matter hereof.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their duly authorized representatives effective the day and year first above
written.
THE
PHOENIX GROUP CORPORATION
By:
Name: Xxx
Xxxx
Title: Chairman
and CEO ______
PURCHASERS:
____________________________________
Name:
Address:
