REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of June 5, 2007, by and among National Realty and
Mortgage, Inc, a Nevada corporation (the “Company”),
and
the purchasers listed on Schedule I hereto (the “Purchasers”).
This
Agreement is being entered into pursuant to the Series B Convertible Preferred
Stock Purchase Agreement dated as of the date hereof among the Company and
the
Purchasers (the “Purchase
Agreement”).
The
Company and the Purchasers hereby agree as follows:
| 1. |
Definitions.
|
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
“Additional
Filing Date”
shall
mean the thirtieth (30th)
day
following the date on which a Demand Notice is received by the Company;
provided
that if
any Additional Filing Date falls on a Saturday, Sunday or any other day which
shall be a legal holiday or a day on which the Commission is authorized by
law
or other government actions to close, the Additional Filing Date shall be the
following Business Day.
“Advice”
shall
have meaning set forth in Section 3(m).
“Affiliate”
means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For
the
purposes of this definition, “control,” when used with respect to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms of
“affiliated,”
“controlling”
and
“controlled”
have
meanings correlative to the foregoing.
“Board”
shall
have meaning set forth in Section 3(n).
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the state of New York generally are
authorized or required by law or other government actions to close.
“Closing
Date”
means
the date of the Closing of the purchase and sale of the Preferred Stock and
the
Warrants pursuant to the Purchase Agreement.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the Company’s Common Stock, par value $0.001 per share.
1
“Demand
Notice”
shall
have the meaning set forth in Section 2A.
“Effectiveness
Date”
means,
with respect to any Registration Statement the earlier of (A) the one hundred
twentieth (120th)
day
following the Filing Date or any Additional Filing Dates, as applicable, or
(B)
in the event the Registration Statement receives a “full review” by the
Commission, the one hundred fiftieth (150th)
day
following the Filing Date or any Additional Filing Dates, as applicable, which
shall be extended for an additional thirty (30) days in the event the Commission
provides comments solely on the issues related to Rule 415, or (C) the date
which is within three (3) Business Days after the date on which the Commission
informs the Company the (i) the Commission will not review a Registration
Statement or (ii) the Company may request the acceleration of the effectiveness
of a Registration Statement and the Company makes such request; provided,
that,
if the Effectiveness Date falls on a Saturday, Sunday or any other day which
shall be a legal holiday or a day on which the Commission is authorized or
required by law or other government actions to close, the Effectiveness Date
shall be the following Business Day.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2.
“Event”
shall
have the meaning set forth in Section 7(e).
“Event
Date”
shall
have the meaning set forth in Section 7(e).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Filing
Date”
means,
the thirtieth (30th)
day
following the Closing Date; provided,
that,
if the Filing Date falls on a Saturday, Sunday or any other day which shall
be a
legal holiday or a day on which the Commission is authorized or required by
law
or other government actions to close, the Filing Date shall be the following
Business Day.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Initiating
Holders”
shall
have the meaning set forth in Section 2A.
“Losses”
shall
have the meaning set forth in Section 5(a).
“Person”
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“Preferred
Stock”
means
shares of the Company’s Series B Convertible Preferred Stock issued to the
Purchasers pursuant to the Purchase Agreement.
2
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
“Registrable
Securities”
means
(i) the shares of Common Stock issuable upon conversion of the Preferred Stock
(“Conversion Shares”), (ii) the shares of Common Stock issuable upon exercise of
the Warrants (“Warrant Shares”) and (iii) the shares of Common Stock that may be
acquired by the Purchasers either (x) upon their release from escrow on the
terms and subject to the conditions set forth in the Securities Escrow Agreement
(the “Escrow Shares”) or (y) pursuant to Section 3.25 of the Purchase Agreement
(the “Principal Stockholder Shares”).
“Registration
Statement”
means
the registration statements and any additional registration statements
contemplated by Section 2, including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus, including pre-
and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
158”
means
Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Securities
Escrow Agreement”
means
the Securities Escrow Agreement dated as of June 5, 2007 by and among the
Company, Vision Opportunity Master Fund, Ltd, as purchaser representative and
Rise Elite International Limited and Loeb and Loeb, LLP, as escrow agent.
3
“Series
J Warrant”
means
the Series J Warrant of the Company dated June 6, 2007.
“Special
Counsel”
means
____________________, for which the Holders will be reimbursed by the Company
pursuant to Section 4.
“2008
Escrow Shares”
shall
have the meaning ascribed to such term in the Securities Escrow
Agreement.
“2007
Escrow Shares”
shall
have the meaning ascribed to such term in the Securities Escrow
Agreement.
“Warrants”
means
the warrants to purchase shares of Common Stock issued to the Purchasers
pursuant to the Purchase Agreement.
| 2. |
Resale
Registrations.
|
(a) On
or
prior to the Filing Date, the Company shall prepare and file with the Commission
a “resale” Registration Statement providing for the resale of all Conversion
Shares for an offering to be made on a continuous basis pursuant to Rule 415.
Such Registration Statement shall be on Form SB-2 (except if the Company is
not
then eligible to register for resale the Conversion Shares on Form SB-2, in
which case such registration shall be on another appropriate form in accordance
herewith and the Securities Act and the rules promulgated thereunder). Such
Registration Statement shall cover to the extent allowable under the Securities
Act and the rules promulgated thereunder (including Rules 415 and 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Conversion
Shares. The Company shall (i) not permit any securities other than the
Conversion Shares to be included in such Registration Statement and (ii) use
its
best efforts to cause such Registration Statement to be declared effective
under
the Securities Act as promptly as possible after the filing thereof, but in
any
event prior to the applicable Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until such date as
is
the earlier of (x) the date when all Conversion Shares covered by such
Registration Statement have been sold or (y) the date on which the Conversion
Shares may be sold without any restriction pursuant to Rule 144(k) as determined
by the counsel to the Company pursuant to a written opinion letter, addressed
to
the Company’s transfer agent to such effect (the “Effectiveness Period”). The
Company shall request that the effective time of any such Registration Statement
is 5:00 p.m. Eastern Time on the effective date.
(b) In
the
event that the Company is unable to register for resale under Rule 415 of
Regulation C under the Securities Act all of the Conversion Shares on the
Registration Statement that it has agreed to file pursuant to the first sentence
of this Section 2(a) due to limits imposed by the Commission’s interpretation of
Rule 415 of Regulation C under the Securities Act, the Company will file a
Registration Statement under the Securities Act with the Commission covering
the
resale by the Purchasers of such lesser amount of the as the Company is able
to
register pursuant to the Commission’s interpretation of Rule 415 of Regulation C
under the Securities Act and use its reasonable best efforts to have such
Registration Statement become effective as promptly as possible, and, when
permitted to do so by the Commission, to file subsequent registration
statement(s) under the Securities Act with the Commission covering the resale
any Conversion Shares that were omitted from previous registration statement(s)
and use its reasonable best efforts to have such registration declared effective
as promptly as possible. In furtherance of the Company’s obligations set forth
in the preceding sentence, the parties hereby agree that in the event that
any
Holder shall deliver to the Company a written notice at any time after the
later
of (x) the date which is six months after the Effectiveness Date of the latest
Registration Statement that was filed pursuant to Section 2(a) or 2(b) hereof,
as applicable, or (y) the date on which all Conversion Shares registered on
the
all of the prior Registration Statements filed pursuant to Section 2(a) and
2(b)
hereof are sold, that the Company shall file, within 30 days following the
date
of receipt of such written notice, an additional Registration Statement
registering any Conversion Shares that were omitted from the initial
Registration Statement.
4
| 2A. |
Demand
Registrations.
|
(a) At
Any
time following the date on which all Conversion Shares have been registered
for
resale pursuant to Section 2 hereof (the “Permitted Request Date”), (i) a Holder
or Holders owning 25% or more in interest of the Registrable Securities (other
than the Conversion Shares) (the “Initiating Holders”) may request that the
Company file a Registration Statement providing for the resale of all
Registrable Securities then held by the Initiating Holders by giving written
notice (a “Demand Notice”) of such demand to the Company. The Demand Notice
shall describe the number of Registrable Securities intended to be disposed
of
and the intended method of disposition. The Company shall then prepare and
file
with the Commission on or prior to the Additional Filing Date, a “resale”
Registration Statement providing for the resale of all Registrable Securities
included in the Demand Notice for an offering to be made on a continuous basis
pursuant to Rule 415. Any such Registration Statements shall be on Form SB-2
(except if the Company is not then eligible to register for resale such
Registrable Securities on Form SB-2, in which case such registrations shall
be
on another appropriate form in accordance herewith and the Securities Act and
the rules promulgated thereunder). Each such Registration Statement shall cover
to the extent allowable under the Securities Act and the rules promulgated
thereunder (including Rules 415 and 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities. The Company
shall (i) not permit any securities other than the Registrable Securities to
be
included in any such Registration Statement and (ii) use its reasonable best
efforts to cause any such Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, but in
any
event prior to the applicable Effectiveness Date, and to keep any such
Registration Statement continuously effective under the Securities Act until
such date as is the earlier of (x) the date when all Registrable Securities
covered by such Registration Statement have been sold or (y) the date on which
the Registrable Securities may be sold without any restriction pursuant to
Rule
144(k) as determined by the counsel to the Company pursuant to a written opinion
letter, addressed to the Company’s transfer agent to such effect (the
“Effectiveness Period”). The Company shall request that the effective time of
any such Registration Statement is 5:00 p.m. Eastern Time on the effective
date.
(b) In
the
event that the Company is unable to register for resale under Rule 415 of
Regulation C under the Securities Act all of the Registrable Securities on
any
of the Registration Statements that it has agreed to file pursuant to the first
sentence of this Section 2A(a) due to limits imposed by the Commission’s
interpretation of Rule 415 of Regulation C under the Securities Act, the Company
will file a Registration Statement under the Securities Act with the Commission
covering the resale by the Purchasers of such lesser amount of the Registrable
Securities (in the proportions set forth in the last sentence of this Section
2A(b)) as the Company is able to register pursuant to the Commission’s
interpretation of Rule 415 of Regulation C under the Securities Act and use
its
reasonable best efforts to have such Registration Statement become effective
as
promptly as possible, and, when permitted to do so by the Commission, to file
subsequent registration statement(s) under the Securities Act with the
Commission covering the resale any Registrable Securities that were omitted
from
its prior Registration Statements filed with the Commission pursuant to this
Section 2A(b) and use its reasonable best efforts to have such registration
declared effective as promptly as possible. In furtherance of the Company’s
obligations set forth in the preceding sentence, the parties hereby agree that
in the event that any Holder shall deliver to the Company a written notice
at
any time after the later of (x) the date which is six months after the
Effectiveness Date of the latest Registration Statement filed pursuant to
Section 2A(a) or 2A(b) hereof, as applicable, or (y) the date on which all
Registrable Securities registered on all of the prior Registration Statements
filed pursuant to Section 2A(a) and 2A(b) hereof are sold, that the Company
shall file, within 30 days following the date of receipt of such written notice,
an additional Registration Statement registering any Registrable Securities
that
were the subject of the applicable Demand Notice that were omitted from such
Registration Statement.
5
| 3. |
Registration
Procedures.
|
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) Prepare
and file with the Commission, on or prior to each of the Filing Date and each
Additional Filing Date, a Registration Statement on Form SB-2 (or if the Company
is not then eligible to register for resale the Registrable Securities on Form
SB-2 such registration shall be on another appropriate form in accordance
herewith and the Securities Act and the rules promulgated thereunder) in
accordance with the plan of distribution as set forth on Exhibit
A
hereto
and in accordance with applicable law, and cause such Registration Statement
to
become effective and remain effective as provided herein; provided,
however,
that
not less than five (5) Business Days prior to the filing of such Registration
Statement or any related Prospectus or any amendment or supplement thereto,
the
Company shall (i) furnish to the Holders and any Special Counsel, copies of
all
such documents proposed to be filed, which documents will be subject to the
review of such Holders and such Special Counsel, and (ii) cause its officers
and
directors, counsel and independent certified public accountants to respond
to
such inquiries as shall be necessary, in the reasonable opinion of Special
Counsel, to conduct a reasonable review of such documents. The Company shall
not
file any Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities or any Special Counsel shall reasonably object in writing within
three (3) Business Days of their receipt thereof.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective as to the applicable Registrable
Securities for the applicable Effectiveness Period and prepare and file with
the
Commission such additional Registration Statements as necessary in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause any related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant
to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible, but in no event later
than ten (10) Business Days, to any comments received from the Commission with
respect to any such Registration Statement or any amendment thereto and as
promptly as possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to any such Registration
Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
Act no later than 9:00 a.m. Eastern Time on the Business Day following the
date
any such Registration Statement is declared effective by the Commission; and
(v)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by any such Registration Statement during the Effectiveness Period
in
accordance with the intended methods of disposition by the Holders thereof
set
forth in such Registration Statement as so amended or in such Prospectus as
so
supplemented.
6
(c) Notify
the Holders of Registrable Securities and any Special Counsel as promptly as
possible (and, in the case of (i)(A) below, not less than three (3) Business
Days prior to such filing, and in the case of (iii) below, on the same day
of
receipt by the Company of such notice from the Commission) and (if requested
by
any such Person) confirm such notice in writing no later than one (1) Business
Day following the day (i)(A) when a Prospectus or any Prospectus supplement
or
post-effective amendment to any Registration Statement is filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement and (C) with respect to any Registration Statement or
any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to any Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of any Registration Statement covering any
or
all of the Registrable Securities or the initiation or threatening of any
Proceedings for that purpose; (iv) if at any time any of the representations
and
warranties of the Company contained in any agreement contemplated hereby ceases
to be true and correct in all material respects; (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale
in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in any Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or
that requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of any Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading.
(d) Use
its
best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of,
as promptly as possible, (i) any order suspending the effectiveness of any
such
Registration Statement or (ii) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction.
7
(e) If
requested by the Holders of a majority in interest of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to any Registration Statement such information as
the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to
be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) If
requested by any Holder, furnish to such Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished
or
incorporated by reference) promptly after the filing of such documents with
the
Commission.
(g) Promptly
deliver to each Holder and any Special Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior
to
any public offering of Registrable Securities, use its best efforts to register
or qualify or cooperate with the selling Holders and any Special Counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable
the
disposition in such jurisdictions of the Registrable Securities covered by
a
Registration Statement; provided,
however,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by the
Purchase Agreement and applicable federal and state securities laws, shall
be
free of all restrictive legends, and to enable such Registrable Securities
to be
in such denominations and registered in such names as any Holder may request
in
connection with any sale of Registrable Securities.
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(vi), as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, neither
such Registration Statement nor such Prospectus will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
8
(k) Use
its
best efforts to cause all Registrable Securities relating to any Registration
Statement to be listed or quoted on the OTC Bulletin Board or any other
securities exchange, quotation system or market, if any, on which similar
securities issued by the Company are then listed or traded as and when required
pursuant to the Purchase Agreement.
(l) Comply
in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders all documents
filed or required to be filed with the Commission, including, but not limited,
to, earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of each of the Registration Statements, which
statement shall conform to the requirements of Rule 158.
(m) The
Company may require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as
is
required by law to be disclosed in any Registration Statement, Prospectus,
or
any amendment or supplement thereto, and the Company may exclude from such
registration the Registrable Securities of any such Holder who unreasonably
fails to furnish such information within a reasonable time after receiving
such
request.
If
any
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the deletion
of the reference to such Holder in any amendment or supplement to such
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each
Holder covenants and agrees that it will not sell any Registrable Securities
under any Registration Statement until the Company has electronically filed
the
Prospectus as then amended or supplemented as contemplated in Section 3(g)
and
notice from the Company that such Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(c).
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the
“Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
9
(n) If
(i)
there is material non-public information regarding the Company which the
Company’s Board of Directors (the “Board”)
determines not to be in the Company’s best interest to disclose and which the
Company is not otherwise required to disclose, (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board determines not to be in the Company’s best interest
to disclose, or (iii) the Company is required to file a post-effective amendment
to a Registration Statement to incorporate the Company’s quarterly and annual
reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
Company may (x) postpone or suspend filing of a registration statement for
a
period not to exceed thirty (30) consecutive days or (y) postpone or suspend
effectiveness of a registration statement for a period not to exceed twenty
(20)
consecutive days; provided,
that
the Company may not postpone or suspend effectiveness of a registration
statement under this Section 3(n) for more than forty-five (45) days in the
aggregate during any three hundred sixty (360) day period; provided,
however,
that no
such postponement or suspension shall be permitted for consecutive twenty (20)
day periods arising out of the same set of facts, circumstances or
transactions.
| 4. |
Registration
Expenses.
|
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in this Section 4, shall
be
borne by the Company whether or not a Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to
such Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing
fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the OTC Bulletin Board and each other securities
exchange or market on which Registrable Securities are required hereunder to
be
listed, if any, (B) with respect to filing fees required to be paid to the
National Association of Securities Dealers, Inc. and the NASD Regulation, Inc.
(including, without limitation, pursuant to NASD Rule 2710) and (C) in
compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Holders in connection
with
Blue Sky qualifications of the Registrable Securities and determination of
the
eligibility of the Registrable Securities for investment under the laws of
such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses
of
printing certificates for Registrable Securities and of printing prospectuses
if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in a Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the
Company and Special Counsel for the Holders, in the case of the Special Counsel,
up to a maximum amount of $7,500, (v) Securities Act liability insurance, if
the
Company so desires such insurance, and (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation,
the
Company’s independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange if required hereunder. The Company shall
not be responsible for any discounts, commissions, transfer taxes or other
similar fees incurred by the Holders in connection with the sale of the
Registrable Securities.
10
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5.
|
Indemnification.
|
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, managers, partners, members,
shareholders, agents, brokers, investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section
15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys’ fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or relating to any violation of securities laws or
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case
of
any Prospectus or form of prospectus or supplement thereto, in the light of
the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder or such other Indemnified Party
furnished in writing to the Company by such Holder expressly for use therein.
The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with
the
transactions contemplated by this Agreement.
(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents and employees
of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as determined by a court of competent jurisdiction
in a final judgment not subject to appeal or review), as incurred, arising
solely out of or based solely upon any untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out
of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in
any
information so furnished in writing by such Holder or other Indemnifying Party
to the Company specifically for inclusion in any Registration Statement or
such
Prospectus. Notwithstanding anything to the contrary contained herein, each
Holder shall be liable under this Section 5(b) for only that amount as does
not
exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
11
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall be entitled to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to
the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such parties shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which any Indemnified Party is a party
and
indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided,
that
the Indemnified Party shall reimburse all such fees and expenses to the extent
it is finally judicially determined that such Indemnified Party is not entitled
to indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable
to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other from the offering
of the Preferred Stock and the Warrants. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate
to
reflect not only the relative benefits referred to in the foregoing sentence
but
also the relative fault, as applicable, of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to
information supplied by, such Indemnifying Party or Indemnified Party, and
the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section was available
to
such party in accordance with its terms. In no event shall any selling Holder
be
required to contribute an amount under this Section 5(d) in excess of the net
proceeds received by such Holder upon the sale of such Holder’s Registrable
Securities pursuant to a Registration Statement giving rise to such contribution
obligation.
12
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties pursuant to the law.
|
6.
|
Rule
144.
|
As
long
as any Holder owns Preferred Stock, Warrants or Registrable Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. As long as any Holder owns Preferred Stock, Warrants or Registrable
Securities, if the Company is not required to file reports pursuant to Section
13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
and make publicly available in accordance with Rule 144(c) promulgated under
the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
such
Person to sell Conversion Shares and Warrant Shares without registration under
the Securities Act within the limitation of the exemptions provided by Rule
144
promulgated under the Securities Act, including providing any legal opinions
reasonably requested relating to such sale pursuant to Rule 144. Upon the
request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
13
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7.
|
Miscellaneous.
|
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, such Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
(b) No
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has, as of the date hereof entered
into
and currently in effect, nor shall the Company or any of its subsidiaries,
on or
after the date of this Agreement, enter into any agreement with respect to
its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
on Schedule 2.1(c) of the Purchase Agreement or Schedule II hereto, neither
the
Company nor any of its subsidiaries has previously entered into any agreement
currently in effect granting any registration rights with respect to any of
its
securities to any Person. Without limiting the generality of the foregoing,
without the written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right
to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to
the
prior rights in full of the Holders set forth herein, and are not otherwise
in
conflict with the provisions of this Agreement.
(c) No
Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in any
Registration Statement, and the Company shall not after the date hereof enter
into any agreement providing such right to any of its securityholders, unless
the right so granted is subject in all respects to the prior rights in full
of
the Holders set forth herein, and is not otherwise in conflict with the
provisions of this Agreement.
(d) Piggy-Back
Registrations.
If at
any time when there is not an effective Registration Statement providing for
the
resale of the Registrable Securities, the Company shall determine to prepare
and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of
its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated
under
the Securities Act) or their then equivalents relating to equity securities
to
be issued solely in connection with any acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each holder of Registrable Securities
written notice of such determination and, if within thirty (30) days after
receipt of such notice, or within such shorter period of time as may be
specified by the Company in such written notice as may be necessary for the
Company to comply with its obligations with respect to the timing of the filing
of such registration statement, any such holder shall so request in writing,
(which request shall specify the Registrable Securities intended to be disposed
of by the Purchasers), the Company will cause the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that
if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may,
at
its election, give written notice of such determination to such holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with
such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided,
however,
that
the Company shall not be required to register any Registrable Securities
pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k)
of the Securities Act. In the case of an underwritten public offering, if the
managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then
if
the Company after consultation with the managing underwriter should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement,
and
based on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration
statement shall be reduced pro-rata among such Holders (based upon the number
of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion
of
fewer Registrable Securities, or (y) none of the Registrable Securities of
the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided,
however,
that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction
of
the number of Registrable securities intended to be offered by the Holders
than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).
14
(e) Failure
to File Registration Statement and Other Events.
The
Company and the Purchasers agree that the Holders will suffer damages if a
Registration Statement is not filed on or prior to the Filing Date or any
Additional Filing Date, as applicable, or after notice from the Holders, as
set
forth in Section 2(b) hereto or Section 2A(b) hereto, and, in each case, not
declared effective by the Commission on or prior to the applicable Effectiveness
Date and maintained in the manner contemplated herein during the applicable
Effectiveness Period or if certain other events occur. The Company and the
Holders further agree that it would not be feasible to ascertain the extent
of
such damages with precision. Accordingly, if (A) a Registration Statement is
not
filed on or prior to the Filing Date, any Additional Filing Date or after notice
from the Holders, as set forth in Section 2(b) hereof or Section 2A(b) hereof,
or (B) a Registration Statement is not declared effective by the
Commission on or prior to the applicable Effectiveness Date, or (C) the Company
fails to file with the Commission a request for acceleration in accordance
with
Rule 461 promulgated under the Securities Act within three (3) Business Days
of
the date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not be “reviewed,”
or not subject to further review, or (D) any Registration Statement is filed
with and declared effective by the Commission but thereafter ceases to be
effective as to all Registrable Securities at any time prior to the expiration
of the Effectiveness Period, without being succeeded immediately by a subsequent
Registration Statement filed with and declared effective by the Commission,
or
(E) the Company has breached Section 3(n), or (F) trading in the Common Stock
shall be suspended or if the Common Stock is no longer quoted on or is delisted
from the OTC Bulletin Board (or other principal exchange on which the Common
Stock is listed or traded) for any reason for more than three (3) Business
Days
in the aggregate (any such failure or breach being referred to as an
“Event,”
and
for purposes of clauses (A) and (B) the date on which such Event occurs, or
for
purposes of clause (C) the date on which such three (3) Business Day period
is
exceeded, or for purposes of clause (D) after more than fifteen (15) Business
Days, or for purposes of clause (F) the date on which such three (3) Business
Day period is exceeded, being referred to as “Event
Date”),
the
Company shall pay an amount in cash as liquidated damages to each Holder equal
to one percent (1%) of the amount of the Holder’s initial investment in the
Preferred Stock for each calendar month or portion thereof thereafter from
the
Event Date until the applicable Event is cured; provided,
however,
that in
no event shall the amount of liquidated damages payable at any time and from
time to time to any Holder pursuant to this Section 7(e) exceed an aggregate
of
ten percent (10%) of the amount of the Holder’s initial investment in the
Preferred Stock; and provided,
further,
that
notwithstanding the foregoing, in the event the Commission does not permit
all
of the Registrable Securities to be included in a Registration Statement because
of its application of Rule 415, no liquidated damages shall be payable pursuant
to this Section by the Company with respect to any Registrable Securities that
the Company was not permitted to include on such Registration Statement and
provided
further,
that
notwithstanding the foregoing, no liquidated damages shall be payable with
respect to the occurrence of an Event set described in clauses (A) and (B)
above
for any Warrant Shares other than the Warrant Shares issuable upon exercise
of
the Series J Warrant. Notwithstanding anything to the contrary in this paragraph
(e), if (a) any of the Events described in clauses (A), (B), (C), (D) or (F)
shall have occurred, (b) on or prior to the applicable Event Date, the Company
shall have exercised its rights under Section 3(n) hereof and (c) the
postponement or suspension permitted pursuant to such Section 3(n) shall remain
effective as of such applicable Event Date, then the applicable Event Date
shall
be deemed instead to occur on the second Business Day following the termination
of such postponement or suspension. Liquidated damages payable by the Company
pursuant to this Section 7(d) shall be payable on the first (1st) Business
Day
of each thirty (30) day period following the Event Date. The parties agree
that
the liquidated damages set forth in this Section 7(e) shall be the exclusive
remedy of the parties hereto with respect to the breaches by the Company of
this
Section 7(e).
15
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and the Holders of a majority of the Registrable
Securities outstanding.
(g) Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses
for
such communications shall be:
|
If
to the Company:
|
National
Realty and Mortgage, Inc
c/o
Daqing Sunway Technology Co., Ltd.
Daqing
Hi-Tech Industry Development Zone
Daqing,
Helongjiang, Post Code 163316
People’s
Republic of China
Attention:
Dr. Xxxxx Xxxx, Chief Financial Officer
Tel:
00-000-0000000
Fax:
00-000-0000000
Email: xxx0000@000.xxx
|
|
|
with
copies (which copies
shall
not constitute notice)
to:
|
Guzov
Ofsink, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxx Xxxxxx
Tel.
No.: (000) 000-0000, ext. 127
Fax
No.: (000) 000-0000
|
|
|
If
to any Purchaser:
|
||
|
with
copies (which copies
shall
not constitute notice)
to:
|
Loeb
& Loeb LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxxxx Xxxxxxxx
Facsimile:
000-000-0000
|
16
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
(h) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Holder and its successors and assigns. The Company may not assign this Agreement
or any of its rights or obligations hereunder without the prior written consent
of each Holder. Each Purchaser may assign its rights hereunder in the manner
and
to the Persons as permitted under the Purchase Agreement.
(i) Assignment
of Registration Rights.
The
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of
this
Agreement, shall be automatically assignable by each Holder to any Person to
whom all or a portion of the Preferred Stock, the Warrants or the Registrable
Securities are transferred if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement
is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee
or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws unless
such securities are registered in a Registration Statement under this Agreement
(in which case the Company shall be obligated to amend such Registration
Statement to reflect such transfer or assignment) or are otherwise exempt from
registration, (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this Section, the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions of this
Agreement, and (v) such transfer shall have been made in accordance with the
applicable requirements of the Purchase Agreement. The rights to assignment
shall apply to the Holders (and to subsequent) successors and
assigns.
(j) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or
on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(k) Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts
of
law principles which would result in the application of the substantive law
of
another jurisdiction. This Agreement shall not be interpreted or construed
with
any presumption against the party causing this Agreement to be drafted. The
Company and the Holders agree that venue for any dispute arising under this
Agreement will lie exclusively in the state or federal courts located in New
York County, New York, and the parties irrevocably waive any right to raise
forum
non conveniens
or any
other argument that New York is not the proper venue. The Company and the
Holders irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York. The Company and the Holders consent to process
being served in any such suit, action or proceeding by mailing a copy thereof
to
such party at the address in effect for notices to it under this Agreement
and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this Section 7(k) shall affect or limit any
right
to serve process in any other manner permitted by law. The Company and the
Holders hereby agree that the prevailing party in any suit, action or proceeding
arising out of or relating to this Agreement or the Purchase Agreement, shall
be
entitled to reimbursement for reasonable legal fees from the non-prevailing
party. The parties hereby waive all rights to a trial by jury.
17
(l) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(m) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void
or
unenforceable.
(n) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(o) Shares
Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the
Company or its Affiliates (other than any Holder or transferees or successors
or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason
of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(p) Independent
Nature of Purchasers.
The
Company acknowledges that the obligations of each Purchaser under the
Transaction Documents are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under the Transaction
Documents. The Company acknowledges that the decision of each Purchaser to
purchase Securities pursuant to the Purchase Agreement has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of its Subsidiaries
which may have made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees
shall
have any liability to any Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. The Company
acknowledges that nothing contained herein, or in any Transaction Document,
and
no action taken by any Purchaser pursuant hereto or thereto (including, but
not
limited to, the (i) inclusion of a Purchaser in a Registration Statement and
(ii) review by, and consent to, such Registration Statement by a Purchaser)
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
The
Company acknowledges that each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Purchaser to be joined as an additional party
in
any proceeding for such purpose. The Company acknowledges that for reasons
of
administrative convenience only, the Transaction Documents have been prepared
by
counsel for one of the Purchasers and such counsel does not represent all of
the
Purchasers. The Company acknowledges that it has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience
of
the Company and not because it was required or requested to do so by the
Purchasers. The Company acknowledges that such procedure with respect to the
Transaction Documents in no way creates a presumption that the Purchasers are
in
any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated hereby or thereby.
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19
20
21
22
Schedule
I
Purchasers
|
Investor
|
Investment
|
Shares
Purchased
|
Series
A Warrants
|
Series
B Warrants
|
Series
J Warrants
|
Series
C Warrants
|
Series
D Warrants
|
|||||||||||||||
23
Schedule
II
24
Exhibit
A
Plan
of Distribution
The
selling security holders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock being offered under this prospectus on any stock exchange,
market or trading facility on which shares of our common stock are traded or
in
private transactions. These sales may be at fixed or negotiated prices. The
selling security holders may use any one or more of the following methods when
disposing of shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resales by the broker-dealer
for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
to
cover short sales made after the date that the registration statement
of
which this prospectus is a part is declared effective by the
Commission;
|
|
·
|
broker-dealers
may agree with the selling security holders to sell a specified number
of
such shares at a stipulated price per
share;
|
|
·
|
a
combination of any of these methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
shares may also be sold under Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), if available, rather than under this prospectus. The
selling security holders have the sole and absolute discretion not to accept
any
purchase offer or make any sale of shares if they deem the purchase price to
be
unsatisfactory at any particular time.
The
selling security holders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling security holder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers
engaged by the selling security holders may arrange for other broker-dealers
to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling security holders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, which
commissions as to a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.
25
If
sales
of shares offered under this prospectus are made to broker-dealers as
principals, we would be required to file a post-effective amendment to the
registration statement of which this prospectus is a part. In the post-effective
amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such
sales.
The
selling security holders and any broker-dealers or agents that are involved
in
selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
sales. Commissions received by these broker-dealers or agents and any profit
on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Any broker-dealers or agents
that are deemed to be underwriters may not sell shares offered under this
prospectus unless and until we set forth the names of the underwriters and
the
material details of their underwriting arrangements in a supplement to this
prospectus or, if required, in a replacement prospectus included in a
post-effective amendment to the registration statement of which this prospectus
is a part.
The
selling security holders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M. These provisions may restrict activities
of,
and limit the timing of purchases and sales of any of the shares by, the selling
security holders or any other person. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to those securities
for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may
affect the marketability of the shares.
If
any of
the shares of common stock offered for sale pursuant to this prospectus are
transferred other than pursuant to a sale under this prospectus, then subsequent
holders could not use this prospectus until a post-effective amendment or
prospectus supplement is filed, naming such holders. We offer no assurance
as to
whether any of the selling security holders will sell all or any portion of
the
shares offered under this prospectus.
We
have
agreed to pay all fees and expenses we incur incident to the registration of
the
shares being offered under this prospectus. However, each selling security
holder and purchaser is responsible for paying any discounts, commissions and
similar selling expenses they incur.
We
and
the selling security holders have agreed to indemnify one another against
certain losses, damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.
26
