REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is
entered into as of September 1, 2005 among General Steel Holdings Inc., a Nevada
corporation (the “Company”),
and
each of the shareholders of the Company listed on the signature pages of this
Agreement (each, a “Shareholder” and collectively, the
“Shareholders”).
RECITALS
A. The
Shareholders and the Company are parties to a certain Subscription Agreement
dated on or about the date hereof (the “Purchase
Agreement”)
pursuant to which the Company may issue up to an aggregate of 3,333,333 shares
of its common stock, par value $0.001 per share (“Common
Stock”)
to the
Shareholders.
B. In
connection with the execution of the Purchase Agreement, each of the
Shareholders and the Company entered into a Warrant Agreement (individually,
a
“Warrant
Agreement”
and
collectively, the “Warrant
Agreements”)
pursuant to which the Shareholders may acquire shares of Common
Stock.
C. In
consideration of the substantial direct and indirect benefits which the Company
will realize from the consummation of the transactions contemplated by the
Purchase Agreement and the Warrant Agreements, the Company desires to enter
into
this Agreement to grant the following registration rights to the Shareholders
pursuant to the terms and conditions hereof.
AGREEMENT
In
consideration of the mutual covenants and agreements set forth herein, and
for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
For
purposes of this Agreement, the following terms shall have the meanings
specified below:
“Business
Day”
shall
mean any day that is not a Saturday, Sunday or other day on which banks in
the
State of Delaware are authorized or required to close.
“Commission”
shall
mean the Securities and Exchange Commission or any other Federal agency at
the
time administering the 1933 Act.
“Demanding
Holders”
shall
mean MatlinPatterson or the holders of a majority of the Registrable
Securities.
1
“Demand
Registration”
shall
have the meaning specified in Section 2.1(a).
“Indemnified
Party”
shall
have the meaning specified in Section 4.3.
“Indemnifying
Party”
shall
have the meaning specified in Section 4.3.
“MatlinPatterson”
shall
mean MatlinPatterson Global Opportunities Partners II L.P., MatlinPatterson
Global Opportunities Partners (Caymans) II L.P., or any affiliate thereof that
is a holder of Shares.
“Maximum
Numbers of Shares”
shall
have the meaning specified in Section 2.1(d).
“1933
Act”
shall
mean the Securities Act of 1933, as amended, and the rules and regulations
of
the Commission thereunder, all as the same shall be in effect at the
time.
“1934
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
at
the time.
“Person”
means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, a governmental entity or any department, agency or political
subdivision thereof or any other legal entity.
“Piggy-Back
Registration”
shall
have the meaning specified in Section 2.2(a).
“Register”,
“registered”
and
“registration”
shall
mean a registration effected by preparing and filing a registration statement
or
similar document in compliance with the 1933 Act, and the applicable rules
and
regulations thereunder, and such registration statement becoming
effective.
“Registrable
Securities”
shall
mean, collectively, the Shares and any securities issued or issuable upon any
stock dividend, stock split, recapitalization, merger, combination,
consolidation or similar event with respect to the Shares. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (i) a registration statement covering such securities shall have
become effective under the 1933 Act and such securities shall have been sold
pursuant to such registration statement, (ii) such securities shall have
been distributed to the public pursuant to Rule 144 (or any successor
provisions) under the 1933 Act, or (iii) such securities shall have ceased
to be outstanding.
“Shares”
shall
mean all Common Stock issuable pursuant to the Warrant Agreements, the shares
of
Common Stock issued to the Shareholders pursuant to the Purchase Agreement
and
any other shares of Common Stock or preferred stock held by the Shareholders
at
any time.
“Shareholder
Indemnified Party”
shall
have the meaning specified in Section
4.1.
2
“Underwriter”
shall
mean 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.
Capitalized
terms not otherwise defined herein shall have the meaning given to them in
the
Purchase Agreement.
2. REGISTRATION
RIGHTS.
2.1 Demand
Registration.
(a) Request
for Registration.
At any
time and from time to time on or after the date of this Agreement, the Demanding
Holders may make a written request for registration under the 1933 Act of all
or
part of their Registrable Securities (a “Demand
Registration”).
Such
request for a Demand Registration must specify the number of shares of
Registrable Securities proposed to be sold and must also specify the intended
method of disposition thereof (provided, however, that the Demanding Holders
may
change the intended method of disposition upon notice to the Company up until
the effectiveness of the registration statement relating thereto). 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(d)
and the
proviso set forth in Section
3.1(a).
Within
10 days following receipt of any such request, the Company will provide written
notice of such registration request to all holders of Registrable Securities
and
will, subject to the provisions of Section 2.1(d) and the proviso set forth
in
Section 3.1(a), include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 15 days after distribution to the applicable holder of the Company’s
notice. The Company shall not be obligated to effect more than two Demand
Registrations with respect to the Registrable Securities under this Section 2.1(a).
(b) Effective
Registration.
A
registration will not count as a Demand Registration until it has become
effective and the Company has complied with its obligations under this Agreement
with respect thereto; provided, however, that, after it has been declared
effective, if the offering of Registrable Securities pursuant to a Demand
Registration is interfered with by any stop order, injunction or other order
or
requirement of the Commission or any other governmental agency or court, such
Demand Registration will be deemed not to have become effective during the
period of such interference.
(c) Underwritten
Offering.
If the
Demanding Holders so elect, the offering of such Registrable Securities pursuant
to such Demand Registration shall be in the form of an underwritten offering.
The Demanding Holders shall select one or more firms of investment bankers
to
act as the managing Underwriter or Underwriters in connection with such offering
and shall select any additional managers to be used in connection with the
offering.
3
(d) 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 and other holders of Registrable Securities desire to sell
pursuant to Section
2.1(a)
together
with all other shares of Common Stock which the Company desires to sell or
which
other shareholders of the Company desire to sell, exceeds the maximum dollar
amount or number 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 (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 and other holders of Registrable Securities (pro rata in accordance
with
the number of shares of Registrable Securities held by each Demanding Holder
and
the other holders of Registrable Securities requesting to be included in the
registration, regardless of the number of shares of Registrable Securities
which
such Demanding Holder or other holders of Registrable Securities has requested
be included in such registration) that can be sold without exceeding the Maximum
Number of Shares, (ii) second, the shares of Common Stock that the Company
desires to sell that can be sold without exceeding the Maximum Number of Shares
and (iii) third, to the extent the Maximum Number of Shares has not been reached
under the foregoing clauses (i) and (ii), the shares of Common Stock that other
shareholders desire to sell that can be sold without exceeding the Maximum
Number of Shares.
(e) Withdrawal.
The
Demanding Holders may withdraw a Demand Request at any time and under any
circumstances. The first withdrawal shall not be counted as a Demand
Registration. Notwithstanding any such withdrawal, the Company shall pay all
expenses incurred by the holders of Registrable Securities in connection with
such Demand Registration as provided in Section 3.3.
2.2 Piggy-Back
Registration.
(a) Piggy-Back
Rights.
If at
any time the Company proposes to file a registration statement under the 1933
Act with respect to an offering of equity securities, or securities convertible
or exchangeable into equity securities, by the Company for its own account
or by
shareholders of the Company for their account (or by the Company and by
shareholders of the Company) other than a registration statement (i) on
Form S-4 or S-8 (or any substitute or successor form that may be adopted by
the Commission), or (ii) filed in connection with any employee stock option
or other benefit 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 30 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
such number of shares of Registrable Securities as such holders may request
in
writing within 15 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 of distribution thereof.
4
(b) Reduction
of Offering.
If the
managing Underwriter or Underwriters for a Piggy-Back Registration that is
to be
an underwritten offering of shares for the Company’s
account
advises the Company and the holders of Registrable Securities in writing that
the dollar amount or number of shares of Common Stock or other securities which
the Company desires to sell, taken together with the Registrable Securities
as
to which registration has been requested hereunder or which other shareholders
of the Company desire to sell, exceeds the Maximum Number of Shares, then the
Company shall include in such registration: (i) first, the shares of Common
Stock or other securities that the Company desires to sell that can be sold
without exceeding the Maximum Number of Shares, (ii) second, to the extent
the
Maximum Number of Shares has not been reached under the foregoing clause (i),
the Registrable Securities as to which registration has been requested hereunder
(pro rata in accordance with the number of shares of Registrable Securities
held
by such Persons, regardless of the number of shares of Registrable Securities
which such Person has actually requested be included in such registration)
that
can be sold without exceeding the Maximum Number of Shares and (iii) third,
to
the extent the Maximum Number of Shares has not been reached under the foregoing
clauses (i) and (ii), the shares of Common Stock or other securities that other
shareholders desire to sell that can be sold without exceeding the Maximum
Number of Shares.
(c) 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 Shelf
Registration.
Any
holder of Registrable Securities may at any time request in writing that the
Company register the resale of any or all of such Registrable Securities on
Form
S-3 (or any similar short-form registration which may be available at such
time)
for an offering to be made on a continuous basis. 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
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
if (i)
Form S-3 is not available for such offering; (ii) the holders propose to effect
an underwritten offering, (iii) the holders propose to sell Registrable
Securities at an anticipated aggregate price to the public (net of any
underwriters’
discounts or commissions) of less than $500,000, or (iv) 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, it would
be
materially detrimental to the Company and its shareholders for such Form S-3
registration to be effected at such time, in which event the Company shall
have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than 60 days after receipt of the request of the holder
or
holders under this Section
2.3,
provided, however, that in the event the Company elects to exercise such right
with respect to any registration, it shall not have the right to exercise such
right again prior to the date which is ten months after the date on which the
registration statement relating to such deferred registration is declared
effective. The Company shall use its best efforts to maintain each registration
statement under this Section
2.3
effective until the Registrable Securities covered thereby have been sold.
Registrations effected pursuant to this Section
2.3
shall
not be counted as Demand Registrations effected pursuant to Section
2.1.
5
3. REGISTRATION
PROCEDURES.
3.1 Filings;
Information.
If and
whenever the Company is required to effect the registration of any Registrable
Securities under the 1933 Act pursuant to Section 2,
the
Company shall use its best efforts to effect the registration and the sale
of
such Registrable Securities in accordance with the intended method of
disposition thereof as expeditiously as practicable, and in connection with
any
such request:
(a) Filing
Registration Statement.
The
Company shall, as expeditiously as possible, prepare and file, within 60 days
after receipt of a request for a Demand Registration pursuant to Sections 2.1
or
registration pursuant to Section
2.3,
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 the Registrable Securities to be registered
thereunder in accordance with the intended method 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(c);
provided, however, that with respect to Demand Registrations, the Company shall
have the right to defer such registration for up to 60 days 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, it would
be
materially detrimental to the Company and its shareholders for such registration
statement to be effected at such time; provided further, that in the event
the
Company elects to exercise such right with respect to any such registration,
it
shall not have the right to exercise such right again prior to the date which
is
12 months after the date on which the registration statement relating to such
deferred registration is declared effective.
6
(b) 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 holder may request
in order to facilitate the disposition of the Registrable Securities owned
by
such holders.
(c) 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 continuously effective and in compliance with the
provisions of the 1933 Act until all Registrable Securities and other securities
covered by such registration statement have been disposed of in accordance
with
the intended methods of disposition set forth in such registration statement
or
such securities have been withdrawn.
(d) Notification.
After
the filing of the registration statement, the Company shall promptly, and in
no
event more than two Business Days, notify the holders of Registrable Securities
included in such registration statement, and confirm such advice in writing,
(i) when such registration statement becomes effective, (ii) when any
post-effective amendment to such registration statement becomes effective,
(iii) of any stop order issued or threatened by the Commission (and the
Company shall take all actions required to prevent the entry of such stop order
or to remove it if entered) and (iv) of 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 legal
counsel, shall object on a timely basis in light of the requirements of the
1933
Act or any other applicable laws and regulations.
7
(e) 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) cause
such Registrable Securities covered by the registration statement to be
registered with or approved by such other governmental agencies or authorities
in the United States 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 (e), or
subject itself to taxation in any such jurisdiction.
(f) 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 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.
(g) Cooperation.
The
Chief Executive Officer, the President of the Company, the Chief Financial
Officer of the Company, any Senior Vice President of the Company and any other
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.
(h) 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.
8
(i) 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.
(j) Earnings
Statement.
The
Company shall comply with all applicable rules and regulations of the Commission
and the 1933 Act, and make available to its shareholders, as soon as
practicable, an earnings statement covering a period of 12 months, beginning
within three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of
Section 11(a) of the 1933 Act and Rule 158
thereunder.
(k) Listing.
The
Company shall use its best efforts to cause all Registrable Securities included
in any registration to be listed on such exchanges or otherwise designated
for
trading in the same manner as similar securities issued by the Company are
then
listed or designated or, if no such similar securities are then listed or
designated, in a manner satisfactory to the holders of a majority of the
Registrable Securities included in such registration.
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(d)(iv),
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(d)(iv),
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 pay all expenses incurred in connection with any Demand
Registration pursuant to Section 2.1.,
any
Piggy-Back Registration pursuant to Section 2.2,
any
registrations requested pursuant to Section
2.3
and all
expenses incurred in performing or complying with the Company’s
obligations under this Section 3,
whether
or not the registration statement becomes effective, in each case including,
but
not limited to: (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) the fees and expenses incurred in
connection with the listing of the Registrable Securities as required by
Section
3.1(k);
(vi) National Association of Securities Dealers, Inc. fees and any listing
or other fees for any securities exchanges, Nasdaq or otherwise for designation
with respect to the securities; (vii) 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(i));
(viii) the fees and expenses of any special experts retained by the Company
in connection with such registration; (ix) one-half of the cost for selling
stockholder errors and omissions insurance for the benefit of the holders of
Registrable Securities included in such registration which the holders of a
majority of such Registrable Securities may elect to purchase (with the other
one-half of such cost to be paid by the holders of Registrable Securities
included in such registration, pro rata in accordance with the number of shares
included in such registration); and (x) all fees and expenses incurred by
the holders of Registrable Securities included in such registration statement
in
connection with its participation in such registration, including, without
limitation, the fees and expenses of such holders’
legal
counsel, accountants and other experts. The Company shall have no obligation
to
pay any underwriting fees, discounts or selling commissions attributable to
the
Registrable Securities being sold by holders of Registrable Securities, which
expenses shall be borne by such holders.
9
3.4 Information.
The
holders of Registrable Securities shall provide such information as reasonably
requested by the Company 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 1933 Act pursuant to
Section 2.
4. INDEMNIFICATION
AND CONTRIBUTION.
4.1 Indemnification
by the Company.
The
Company agrees to indemnify and hold harmless (i) each Shareholder and each
other holder of Registrable Securities, and (ii) the respective officers,
employees, affiliates, directors, partners, members and agents of each of the
Shareholders or any holder of Registrable Securities, and each Person, if any,
who controls each of the Shareholders or any holder of Registrable Securities
within the meaning of Section 15
of the
1933 Act or Section 20
of the
1934 Act (each, a Shareholder
Indemnified Party@),
from
and against any loss, claim, damage or liability and any action in respect
thereof to which any Shareholder Indemnified Party may become subject under
the
1933 Act or the 1934 Act or any other statute or common law, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon,
(a) any untrue statement or alleged untrue statement of a material fact
made in connection with the sale of Registrable Securities or shares of Common
Stock, whether or not such statement is contained or incorporated by reference
in any registration statement or prospectus relating to the Registrable
Securities (as amended or supplemented if the Company shall have furnished
any
amendments or supplements thereto) or any preliminary prospectus, (b) any
omission or alleged omission to state a material fact required to be stated
in
any registration statement or prospectus or necessary to make the statements
therein not misleading, or (c) any violation by the Company of any Federal,
state or common law, rule or regulation applicable to the Company and relating
to action required of or inaction by the Company in connection with such
registration. The Company also shall promptly, but in no event more than ten
Business Days after request for payment, pay directly or reimburse each
Shareholder Indemnified Party for any legal and other expenses incurred by
such
Shareholder Indemnified Party in investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action. 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 Underwriters on substantially the same basis as that of the
indemnification provided above in this Section 4.1.
10
The
indemnity agreement contained in this Section 4.1
shall
not apply to amounts paid in settlement of any such loss, claim, damage or
liability or any action in respect thereof if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable to any holder of Registrable
Securities included in any registration for any loss, claim, damage, liability
or any action in respect thereof to the extent that it arises solely from or
is
based solely upon and is in conformity with information related to such holder
furnished in writing by such holder expressly for use in connection with such
registration, nor shall the Company be liable to any holder of Registrable
Securities included in any registration for any loss, claim, damage or liability
or any action in respect thereof to the extent it arises solely from or is
based
solely upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating
to
the Registrable Securities delivered in writing by such holder after the Company
had provided written notice to such holder that such registration statement
or
prospectus contained such untrue statement or alleged untrue statement of a
material fact, or (ii) 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 after the Company had provided written notice to such
holder that such registration statement or prospectus contained such omission
or
alleged omission.
4.2 Indemnification
by Holders of Registrable Securities.
Each
holder of Registrable Securities shall indemnify and hold harmless the Company,
its officers, directors, partners, members and agents and each Person, if any,
who controls the Company within the meaning of Section 15
of the
1933 Act or Section 20
of the
1934 Act to the same extent as the foregoing indemnity from the Company to
such
holder, but solely with reference to information related to such holder
furnished in writing by such holder expressly for use in any registration
statement or prospectus relating to Registrable Securities of such holder
included in any registration, or any amendment or supplement thereto, or any
preliminary prospectus. Each holder of Registrable Securities included in any
registration hereunder shall also indemnify and hold harmless any Underwriter
of
such holder’s
Registrable Securities, their officers, directors, partners, members and agents
and each Person who controls such Underwriters on substantially the same basis
as that of the indemnification of the Company provided in this Section 4.2;
provided,
however,
that in
no event shall any indemnity obligation under this Section 4.2
exceed
the dollar amount of the net proceeds (after payment of any underwriting fees,
discounts or commissions) actually received by such holder from the sale of
Registrable Securities which gave rise to such indemnification obligation under
such registration statement or prospectus.
11
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 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 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 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 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.
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.
12
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 paragraph. 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 or commissions) 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 0000 Xxx) 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 any reports required to be filed by it
under the 1933 Act and the 1934 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 1933 Act within the limitation of the exemptions
provided by Rule 144 or Rule 144A under the 1933 Act, as such Rules
may be amended from time to time, or any similar Rule or regulation
hereafter adopted by the Commission.
5.2 Restrictions
on Sale by the Company and Others.
The
Company agrees (i) not to effect any sale or distribution of any securities
similar to those being registered in accordance with Section 2.1,
or any
securities convertible into or exchangeable or exercisable for such securities,
during the 90 days prior to, and during the 120-day period beginning on, the
effective date of any Demand Registration (except as part of such Demand
Registration to the extent permitted by Section
2.1(d));
and
(ii) that any agreement entered into after the date hereof pursuant to
which the Company issues or agrees to issue any privately placed securities
shall contain a provision under which holders of such securities agree not
to
effect any sale or distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant to
Rule 144 or 144A under the 1933 Act (except as part of any such
registration, if permitted); provided,
however,
that
the provisions of this Section 5.2
shall
not prevent the conversion or exchange of any securities pursuant to their
terms
into or for other securities and shall not prevent the issuance of securities
by
the Company under any employee benefit, stock option or stock subscription
plans.
13
6. MISCELLANEOUS.
6.1 Other
Registration Rights.
The
Company represents and warrants that other than pursuant to this Agreement
no
Person 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. From and
after
the date of this Agreement, the Company shall not, without the prior written
consent of MatlinPatterson, enter into any agreement granting any piggy-back
registration right (i.e., the right to require the Company to register the
sale
of any 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) which is
inconsistent with, equal to or superior to any registration rights granted
hereunder.
6.2 Successors
and Assigns.
The
rights and obligations of the Shareholders under this Agreement shall be freely
assignable in whole or in part. Each such assignee, by accepting such assignment
of the rights of the assignor hereunder shall be deemed to have agreed to and
be
bound by the obligations of the assignor hereunder. The rights and obligations
of the Company hereunder may not be assigned.
6.3 Notices.
All
notices, requests, demands and other communications which are required or may
be
given under this Agreement shall be in writing and shall be deemed to have
been
duly given if transmitted by telecopier with receipt acknowledged, or upon
delivery, if delivered personally or by recognized commercial courier with
receipt acknowledged, or upon the expiration of 72 hours after mailing, if
mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If
to any
other Shareholder:
At
such
address set forth on the signature page hereto.
If
to any
assignee of any Shareholder:
At
such
assignee’s
address
as shown on the books of the Company.
If
to the
Company, to:
10th
Flr., Block A Haitong Building
Xx.0
Xxxxxxxx Xxx.
Xxxxxxx
Xxxxxxxx, Xxxxxxx 000000
The
People’s Republic of China
Attention:
Xxxx Xxxx
Chief
Financial Officer
Fax:
00-00-00000000
14
or
at
such other address or addresses as any Shareholder, such assignee or the
Company, as the case may be, may specify by written notice given in accordance
with this Section.
6.4 Severability.
In case
any provision of this Agreement shall be invalid, illegal or unenforceable,
the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby.
6.5 Counterpart.
This
Agreement may be executed in two or more counterparts, each of which shall
be an
original, but all of which together shall constitute one
instrument.
6.6 Descriptive
Headings, Construction and Interpretation.
The
descriptive headings in this Agreement are for convenience of reference only
and
do not constitute a part of this Agreement and are not to be considered in
construing or interpreting this Agreement. All section, preamble, recital and
party references are to this Agreement unless otherwise stated. No party, nor
its counsel, shall be deemed the drafter of this Agreement for purposes of
construing the provisions of this Agreement, and all provisions of this
Agreement shall be construed in accordance with their fair meaning, and not
strictly for or against any party.
6.7 Waivers
and Amendments.
The
provisions of this Agreement may not be amended, modified, waived or
supplemented, unless the Company has obtained the written consent of the
MatlinPatterson. Each holder of any Registrable Securities at the time or
thereafter shall be bound by any consent authorized by this Section, whether
or
not such holder consented or whether or not such Registrable Securities have
been marked to indicate such consent.
6.8 Remedies.
In the
event that the Company fails to observe or perform any covenant or agreement
to
be observed or performed under this Agreement, any Shareholder 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. The Company agrees to pay all fees, costs, and expenses, including
without limitation, fees and expenses of attorneys, accountants and other
experts, and all fees, costs and expenses of appeals, incurred by any
Shareholder or any other holder of Registrable Securities in connection with
the
enforcement of this Agreement or the collection or any sums due hereunder,
whether or not suit is commenced. 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.
15
6.9 Governing
Law.
In all
respects, including all matters of construction, validity and performance,
this
Agreement and the rights and obligations arising hereunder shall be governed
by,
and construed and enforced in accordance with, the laws of the State of New
York
applicable to contracts made and performed in such state, without regard to
principles thereof regarding conflicts of laws.
6.10 Entire
Agreement.
This
Agreement (including the Purchase Agreement and Warrant Agreements and Exhibits
and Schedules hereto and thereto) constitutes the entire agreement among the
parties and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
hereof.
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 above written.
By:_____________________
Name:
Zuo
Xxxxx Xx
Title: Chief
Executive Officer
16
Shareholders:
Name
of Shareholder:
|
Address
for Notices (Please Print):
|
______________________________
|
_______________________________________
|
_______________________________________
|
|
_______________________________________
|
|
Attention:_______________________________
|
|
Telecopy:_______________________________
|
|
By:___________________________
|
|
Name:
|
|
Title:
|
17