AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Exhibit
4.4
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
“Agreement”), dated this 31st day of March, 2008, is made by and between
MDWERKS, INC., a Delaware corporation (the “Company”), and VICIS CAPITAL MASTER
FUND (the “Purchaser”), a series of the Vicis Capital Master Trust, a trust
formed under the laws of the Cayman Islands and amends and restates that certain
Registration Rights Agreement, dated September 28, 2007, as amended on January
18, 2008 (the "Prior Purchase Agreements").
RECITALS
WHEREAS,
in connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities Purchase Agreement") and the
Prior
Purchase Agreements, the Company has agreed, upon the terms and subject to
the
conditions set forth in such Agreements, to issue and sell to the Purchaser
(i) shares of the Company's Series B Convertible Preferred Stock, par value
$0.001 per share (the "Preferred Shares") which will, among other things, be
convertible into shares of the Company's common stock, par value $0.001 per
share (the "Common Stock") (as converted, the "Conversions Shares") in
accordance with the terms of the Preferred Shares, and (ii) warrants (the
"Warrants") which will be exercisable to purchase a number of shares of Common
Stock in accordance with the terms of the Warrants (as exercised collectively,
the "Warrant Shares").
WHEREAS,
To induce the Purchaser to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights to
the
Purchaser.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Company and the Purchaser 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:
"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 Shares 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.
"Effectiveness
Date"
means,
subject to Section 2(b) hereof, with respect to the Registration Statement
the
earlier of (A) the one hundred fiftieth (150th)
day
following the Closing Date (or the one hundred eightieth (180th)
day
after Closing if the Registration Statement receives a "full review" from the
Commission) or (B) the
date
which is within five (5) Business Days after the date on which the Commission
informs the Company (i) that the Commission will not review the Registration
Statement or (ii) that
the
Company may request the acceleration of the effectiveness of the 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,
subject to Section 2(b) hereof, the sixtieth (60th)
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).
"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.
-2-
“Preferred
Shares”
shall
have the meaning ascribed to it in the Preamble and shall include all shares
of
Series B Convertible Preferred Stock of the Company hereafter acquired by the
Purchaser.
"Proceeding"
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
"Prospectus"
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
"Registrable
Securities”
means
(i) the shares of Common Stock issuable upon conversion of the Preferred Shares,
including any dividends paid thereon, and (ii) the shares of Common Stock
issuable upon exercise of the Warrants.
"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.
"Special
Counsel"
means
the counsel identified by Holders to the Company, for which the Holders will
be
reimbursed by the Company pursuant to Section 4.
-3-
“Warrants”
means
the Series F, Series G and Series H Warrants to purchase shares of Common Stock
issued to the Purchaser pursuant to the Securities Purchase Agreement, or the
Prior Purchase Agreements and
all
Series F, Series G and Series H Warrants hereafter acquired by the
Purchaser.
| 2. |
Resale
Registration.
|
(a) Initial
Registration Statement.
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 that number of
Registrable Securities equal to thirty percent (30%) of the issued and
outstanding shares of Common Stock of the Company for an offering to be made
on
a continuous basis pursuant to Rule 415.
(b) Subsequent
Registration Statements.
The
Company shall use its commercially reasonable best efforts to file subsequent
Registration Statements to register the Registrable Securities that were not
registered in the initial Registration Statement under Section 2(a) hereof
(or
any subsequent Registration Statement) as promptly as possible and in a manner
permitted by the Commission. For purposes of this Section 2(b), “Filing Date”
means with respect to each subsequent Registration Statement filed pursuant
hereto, the later of (i) sixty (60) days following the sale of substantially
all
of the Registrable Securities included in the initial Registration Statement
or
any subsequent Registration Statement and (ii) six (6) months following the
effective date of the initial Registration Statement or any subsequent
Registration Statement, as applicable, or such earlier date as permitted by
the
Commission. For purposes of this Section 2(b), “Effectiveness Date” means with
respect to each subsequent Registration Statement filed pursuant hereto, the
earlier of (A) the ninetieth (90th)
day
following the filing date of such Registration Statement (or in the event such
Registration Statement receives a “full review” by the Commission, the one
hundred twentieth (120th)
day
following such filing date) or (B) the date which is within three (3) Business
Days after the date on which the Commission informs the Company (i) that the
Commission will not review such Registration Statement or (ii) that
the
Company may request the acceleration of the effectiveness of such 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.
-4-
(c) Registration
Statements Generally.
(i) Each
Registration Statement shall be on Form S-1 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form S-1, in
which
case such registration shall be on another appropriate form in accordance
herewith and with the Securities Act and the rules promulgated thereunder).
Each
Registration Statement shall cover to the extent allowable under the Securities
Act and the rules promulgated thereunder (including Rule 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 the Registration Statement, except
for
111,111 shares of Common Stock that are subject to piggyback registration rights
issued to Xxxxx Xxxxxxx, and (ii) use its commercially reasonable best efforts
to cause each Registration Statement to be declared effective under the
Securities Act on or before the Effectiveness Date, and subject to the terms
of
this Agreement, including, but not limited to Section 3(n) hereof, to keep
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 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 the Registration Statement
is
4:00 p.m. Eastern Time on the effective date. If at any time and for any reason,
an additional Registration Statement is required to be filed because at such
time the actual number of shares of Common Stock into which the Preferred Shares
are convertible and the Warrants are exercisable plus the number of shares
of
Common Stock exceeds the number of shares of Registrable Securities remaining
under the Registration Statement or the period of time for which the
Registration Statement may remain effective under the rules of the Commission
has expired, the Company shall have twenty (20) Business Days after the
occurrence of either such event to file an additional Registration Statement,
and the Company shall use its commercially reasonable best efforts to cause
such
additional Registration Statement to be declared effective by the Commission
as
soon as possible, but in no event later than one hundred twenty (120) days
after
filing.
(ii) Notwithstanding
anything to the contrary set forth in this Section 2, in the event the
Commission does not permit the Company to register all of the Registrable
Securities in the Registration Statement because of the Commission’s application
of Rule 415, the Company shall register in a Registration Statement such number
of Registrable Securities as is permitted by the Commission, provided, however,
that The number of Registrable Securities to be included in the initial
Registration Statement
and
each
subsequent Registration Statement shall
be
determined in the following order: (i) first, the shares of Common Stock
issuable upon conversion of the Preferred Shares shall be registered on a pro
rata basis among the holders of the Preferred Shares, and (ii) second, the
shares of Common Stock issuable upon exercise of the Warrants shall be
registered on a pro rata basis among the holders of the Warrants.
| 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 the Filing Date, a Registration
Statement on Form S-1 (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-1 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 the Registration Statement
to
become effective and remain effective as provided herein; provided,
however,
that
not less than three (3) Business Days prior to the filing of the 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 the 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.
-5-
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the 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
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule
424
(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
the
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 the 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 the 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 the Registration
Statement during the Effectiveness Period in accordance with the intended
methods of disposition by the Holders thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
(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 the 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 the 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 the Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any
or
all of the Registrable Securities or the initiation or threatening of any
Proceedings for that purpose; (iv) of the receipt by the Company of any written
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 receipt by the Company of any written notification of the
initiation of any Proceeding for such purpose; and (v) of the occurrence of
any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case
of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
-6-
(d) Use
its
commercially reasonable best efforts to obtain the withdrawal of, as promptly
as
possible, (i) any order suspending the effectiveness of the Registration
Statement or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities
for sale in any jurisdiction.
(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 the 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 commercially reasonable
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.
-7-
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(v), as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(k) Use
its
commercially reasonable best efforts to cause all Registrable Securities
relating to the 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.
(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 the 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
the
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 the
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 the 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 the 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) or 3(n), such Holder
will forthwith discontinue disposition of such Registrable Securities under
the
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.
-8-
(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 the 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 forty-five (45) consecutive days or (y) postpone or suspend
effectiveness of a registration statement for a period not to exceed thirty
(30)
consecutive days; provided that the Company may not postpone or suspend
effectiveness of a registration statement under this Section 3(n) for more
than
sixty (60) 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 thirty (30)
day periods arising out of the same set of facts, circumstances or transactions;
further,
provided that,
if a
Registration Statement is declared effective by the Commission prior to its
Effectiveness Date, the Company may postpone or suspend effectiveness of a
registration statement for an unlimited period from the date of effectiveness
for such Registration Statement until the required Effectiveness Date for such
Registration Statement if the Company, in good faith, determines a material
event necessitates such suspension.
| 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 the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the 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. 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 the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and one Special Counsel for the
Holders, in the case of the Special Counsel, up to a maximum amount of $3,500,
(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 as 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.
-9-
| 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, reasonable
attorneys' fees and disbursements) 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 the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case
of
any Prospectus or form of prospectus or supplement thereto, in 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 incurred, arising solely out of or based solely
upon any untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or 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 the Registration Statement or such Prospectus, amendment or
supplement. 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.
-10-
(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; 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).
-11-
(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 Shares 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 sale of such Holder’s Registrable
Securities pursuant to the Registration Statement giving rise to such
contribution obligation.
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 Shares, 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 Shares, 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 promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
such
Person to sell Conversion Shares and Warrant Shares without registration under
the Securities Act within the limitation of the exemptions provided by Rule
144
promulgated under the Securities Act, including providing any legal opinions
relating to such sale pursuant to Rule 144. 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.
-12-
| 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.
Except
for that certain registration rights agreement by and between the Company and
Gottbetter Capital Master, Ltd., 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 in Schedule
I
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 the
Registration Statement. Without the consent of the Majority Holders, the Company
shall not file any other registration statement with the Commission until the
earlier of: (i) 60 Trading Days following the date that a Registration Statement
or Registration Statements registering all the Registrable Securities is
declared effective by the Commission; and (ii) the date the Registrable
Securities are saleable under Rule 144 under the Securities Act without
limitation as to volume or manner of sale limitations; provided that this
Section shall not prohibit the Company from filing a post effective amendment
to
registration statement that was declared effective prior to the date hereof
or
to a registration statement filed with the Commission on Forms S-4 or S-8 or
such other form which may be used to register securities issued in connection
with any merger, acquisition or similar transaction.
-13-
(d) Piggy-Back
Registrations.
If at
any time when there is not an effective Registration Statement covering (i)
Conversion Shares or (ii) Warrant Shares, 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
twenty (20) 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 Holders), 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
of
the Securities Act without limitation as to volume or manner of sale
limitations. 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) Liquidated
Damages.
The
Company agrees that the Holders will suffer damages if certain 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) the Company
fails
to file with the Commission a request for acceleration in accordance with Rule
461 promulgated under the Securities Act within five (5) 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 (B) the Registration Statement is filed with
and
declared effective by the Commission but thereafter ceases to be effective
as to
the registered 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
(C) the Company has breached Section 3(n) hereof, or (D) trading in the Common
Stock shall be suspended or if the Common Stock is no longer quoted on or
delisted from the principal exchange on which the Common Stock is then 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 clause clause (A) the date on which such five (5) Business
Day
period is exceeded, or for purposes of clause (B) after more than fifteen (15)
Business Days, or for purposes of clause (D) the date on which such three (3)
Business Day period is exceeded, being referred to as "Event
Date"),
the
Company shall pay an amount as liquidated damages to each Holder, payable in
cash, equal to one and one-half percent (1.5%) of the aggregate stated value
of
the Preferred Shares then held by such Holder for each calendar month or portion
thereof on such Event Date and 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
nine percent (9%) of the aggregate stated value of the Preferred Shares then
held by such Holder.
Notwithstanding anything to the contrary in this paragraph (e), if (a) any
of
the Events described in clauses (A), (B), or (D) 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(e) shall be payable on the first (1st)
Business Day of each thirty (30) day period following the Event Date.
Notwithstanding anything to the contrary contained herein, in no event shall
any
liquidated damages be payable with respect to the Warrants or the Warrant
Shares, but to the extent the Warrant Shares are not registered within six
months of the Closing Date, the Holders thereof shall be permitted to effect
cashless exercises of the Warrants to the extent the underlying Warrant Shares
are not eligible for resale pursuant to an effective registration statement.
(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 more than fifty percent (50%) of the
Registrable Securities outstanding.
(g) Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be made in accordance with the terms of the Purchase
Agreement.
-15-
(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 of
all
or a portion of
the
Preferred Shares or the Registrable Securities 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, (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 Company agrees to pay all costs and
expenses of enforcement of the Transaction Documents, including, without
limitation, reasonable attorneys' fees and expenses. The parties hereby waive
all rights to a trial by jury.
-16-
(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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-17-
IN
WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Registration Rights Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
|
COMPANY:
|
|
|
/s/
Xxxxxx X. Xxxx
|
|
|
Name:
Xxxxxx X. Xxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
PURCHASER:
|
|
|
VICIS
CAPITAL MASTER FUND
|
|
|
By:
Vicis Capital LLC
|
|
|
/s/
Xxxxx Xxxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxxx
|
|
|
Title:
Managing Director
|
-18-
Schedule
I
| 1. |
Registration
rights agreement with Gottbetter Capital Master, Ltd.
|
| 2. |
Piggyback
Registration rights granted to Xxxxx Xxxxxxx in Subscription Agreement,
dated August 24, 2006.
|
| 3. |
Registration
rights granted to purchasers of the Company’s Series A Preferred Stock and
detachable warrants contained in the Subscription Agreements for
the
private placement of such securities.
|
-19-
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.
-20-
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.
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