Exhibit 10.2
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EXHIBIT A
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REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (this "Agreement") is made and entered
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into as of December 31, 2004, by and among Sinovac Biotech Ltd., a West Indies
corporation (the "Company"), and the purchasers signatory hereto (each such
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purchaser, a "Purchaser" and collectively, the "Purchasers").
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This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof among the Company and the Purchasers (the "Purchase
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Agreement").
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The Company and the Purchasers hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined
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herein that are defined in the Purchase Agreement 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 the meaning set forth in Section 6(d).
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"Effectiveness Date" means, with respect to the Registration
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Statement required to be filed hereunder, the earlier of (a) May 15,
2005, and (b) the fifth Trading Day following the date on which the
Company is notified by the Commission that the Registration Statement
will not be reviewed or is no longer subject to further review and
comments.
"Effectiveness Period" shall have the meaning set forth in Section
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2(a).
"Event" shall have the meaning set forth in Section 2(b).
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"Event Date" shall have the meaning set forth in Section 2(b).
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"Filing Date" means, with respect to the Registration Statement
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required to be filed hereunder, February 15, 2005.
"Holder" or "Holders" means the holder or holders, as the case may
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be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
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5(c).
"Indemnifying Party" shall have the meaning set forth in Section
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5(c).
"Losses" shall have the meaning set forth in Section 5(a).
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"Plan of Distribution" shall have the meaning set forth in Section
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2(a).
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"Proceeding" means an action, claim, suit, investigation or
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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
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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 or
deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means all of the Shares and the Warrant
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Shares issuable, together with any shares of Common Stock issued or
issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing,
including the Shares issuable pursuant to Section 4.15 of the Purchase
Agreement.
"Registration Statement" means the registration statements
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required to be filed hereunder, including (in each case) the Prospectus,
amendments and supplements to the registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in the registration statement.
"Rule 415" means Rule 415 promulgated by the Commission pursuant
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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 purpose and effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant
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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 purpose and effect as such Rule.
"Selling Shareholder Questionnaire" shall have the meaning set
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forth in Section 3(a).
2. Registration.
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(a) On or prior to the Filing Date, the Company shall prepare
and file with the Commission the Registration Statement covering the
resale of all of the Registrable Securities for an offering to be made on
a continuous basis pursuant to Rule 415 or the relevant provisions
permitting the filing of a Registration Statement by a foreign private
issuer. The Registration Statement required hereunder shall be on Form
F-3 (except if the Company is not then eligible to register for resale
the Registrable Securities on Form F-3, in which case the Registration
shall be on another appropriate form in accordance herewith). The
Registration Statement required hereunder shall contain (except if
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otherwise directed by the Holders) substantially the "Plan of
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Distribution" attached hereto as Annex A. Subject to the terms of this
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Agreement, the Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act
as promptly as possible after the filing thereof, but in any event not
later than the Effectiveness Date, and shall use its best efforts to keep
the Registration Statement continuously effective under the Securities
Act until the date when all Registrable Securities covered by the
Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Company's transfer agent and the affected Holders
(the "Effectiveness Period"). The Company shall immediately notify the
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Holders via facsimile of the effectiveness of the Registration Statement
on the same day that the Company receives notification of the
effectiveness from the Commission. Failure to so notify the Holder within
1 Trading Day of such notification shall be deemed an Event under Section
2(b).
(b) If: (i) a Registration Statement is not filed on or prior
to the Filing Date (if the Company files a Registration Statement without
affording the Holder the opportunity to review and comment on the same as
required by Section 3(a), the Company shall not be deemed to have
satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act, within five Trading 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 is not subject to further review, or (iii) prior to the
date when such Registration Statement is first declared effective by the
Commission, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in
respect of such Registration Statement within 20 calendar days after the
receipt of comments by or notice from the Commission that such amendment
is required in order for a Registration Statement to be declared
effective, or (iv) a Registration Statement filed or required to be filed
hereunder is not declared effective by the Commission on or before the
Effectiveness Date, or (v) after a Registration Statement is first
declared effective by the Commission, it ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is
required to be effective, or the Holders are not permitted to utilize the
Prospectus therein to resell such Registrable Securities, for in any such
case 10 consecutive calendar days but no more than an aggregate of 15
calendar days during any 12 month period (which need not be consecutive
Trading Days)(any such failure or breach being referred to as an "Event,"
and for purposes of clause (i) or (iv) the date on which such Event
occurs, or for purposes of clause (ii) the date on which such five
Trading Day period is exceeded, or for purposes of clause (iii) the date
which such 20 calendar day period is exceeded, or for purposes of clause
(v) the date on which such 10 or 15 calendar day period, as applicable,
is exceeded being referred to as "Event Date"), then in addition to any
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other rights the Holders may have hereunder or under applicable law,
then, on each such Event Date and on each monthly anniversary of each
such Event Date (if the applicable Event shall not have been cured by
such date) until the applicable Event is cured, the Company shall pay to
each Holder an amount in cash, as partial liquidated damages and not as a
penalty, equal to 1.0% during the first two months that an Event
continues and thereafter 2.0% monthly of the aggregate purchase price
paid by such Holder pursuant to the Purchase Agreement for any
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Registrable Securities then held by such Holder; provided, however, if
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the Company files another registration Statement prior to the Effective
Date of the Registration Statement, liquidated damages, if any, that
accrue prior to the Effective Date of the Registration Statement shall be
2% per month until the Effective Date, notwithstanding the foregoing
provision. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 18% per annum
(or such lesser maximum amount that is permitted to be paid by applicable
law) to the Holder, accruing daily from the date such partial liquidated
damages are due until such amounts, plus all such interest thereon, are
paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to
the cure of an Event.
(c) If the Company issues additional Shares pursuant to Section
4.15 of the Purchase Agreement (such date, the "Additional Registration
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Date"), then the Company shall file as soon as reasonably practicable but
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in any case prior to the 45th day after the Additional Registration Date,
an additional Registration Statement covering the resale by the Holders
of all of such Shares and cause such Registration Statement to be
declared effective within 120 days of the Additional Registration Date.
Such filing date and date to be effective shall be deemed Filing Dates
and Effectiveness Dates for purposes of determining liquidated damages on
such Registrable Securities.
3. Registration Procedures
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In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Not less than five Trading 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 copies
of all such documents proposed to be filed (including documents
incorporated or deemed incorporated by reference to the extent requested
by such Person) which documents will be subject to the review of such
Holders, 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 respective counsel to
conduct a reasonable investigation within the meaning of the Securities
Act. 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 shall reasonably object in
good faith, provided that the Company is notified of such objection in
writing no later than 5 Trading Days after the Holders have been so
furnished copies of such documents. Each Holder agrees to furnish to the
Company a completed Questionnaire in the form attached to this Agreement
as Annex B (a "Selling Shareholder Questionnaire") not less than two
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Trading Days prior to the Filing Date or by the end of the fourth Trading
Day following the date on which such Holder receives draft materials in
accordance with this Section.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and
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the Prospectus used in connection therewith 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 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; (iii) respond
as promptly as reasonably possible to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto and, as promptly as reasonably possible, upon request, provide
the Holders true and complete copies of all correspondence from and to
the Commission relating to the Registration Statement; and (iv) 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 applicable
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 to be sold as
promptly as reasonably possible and (if requested by any such Person)
confirm such notice in writing promptly following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a "review" of the
Registration Statement and whenever the Commission comments in writing on
the Registration Statement (the Company shall upon request provide true
and complete copies thereof and all written responses thereto to each of
the Holders); 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 during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) 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 (v) of the occurrence of any event or
passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or 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 light of the circumstances under which they were
made, not misleading.
(d) Use best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of
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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, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one
conformed copy of the Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated
or deemed to be incorporated therein by reference to the extent requested
by such Person, 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.
(f) Promptly deliver to each Holder, 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 in connection with resales by the Holder of
Registrable Securities. Subject to the terms of this Agreement, 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, except after the
giving on any notice pursuant to Section 3(c).
(g) Prior to any resale of Registrable Securities by a Holder,
use its commercially reasonable efforts to register or qualify or
cooperate with the selling Holders in connection with the registration or
qualification (or exemption from the Registration or qualification) of
such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United
States as any Holder reasonably requests in writing, to keep the
Registration or qualification (or exemption therefrom) effective during
the Effectiveness Period and to do any and all other acts or things
reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement;
provided, that the Company shall not be required to qualify generally to
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do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where it
is not then so subject or file a general consent to service of process in
any such jurisdiction.
(h) If NASDR Rule 2710 requires any broker-dealer to make a
filing prior to executing a sale by a Holder, make an Issuer Filing with
the NASDR, Inc. Corporate Financing Department pursuant to NASDR Rule
2710(b)(10)(A)(i) and respond within five Trading Days to any comments
received from NASDR in connection therewith, and pay the filing fee
required in connection therewith.
(i) If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statement, which certificates shall be free,
to the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may
request.
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(j) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as reasonably 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 light
of the circumstances under which they were made, not misleading. If the
Company notifies the Holders in accordance with clauses (ii) through (v)
of Section 3(c) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable. The Company shall be entitled to exercise its
right under this Section 3(i) to suspend the availability of a
Registration Statement and Prospectus, subject to the payment of partial
liquidated damages pursuant to Section 2(b), for a period not to exceed
60 days (which need not be consecutive days) in any 12 month period.
(k) Comply with all applicable rules and regulations of the
Commission.
(l) The Company may require each selling Holder to furnish to
the Company a certified statement as to the number of shares of Common
Stock beneficially owned by such Holder and, if required by the
Commission, the person thereof that has voting and dispositive control
over the Shares. During any periods that the Company is unable to meet
its obligations hereunder with respect to the registration of the
Registrable Securities solely because any Holder fails to furnish such
information within three Trading Days of the Company's request, any
liquidated damages that are accruing at such time as to such Holder only
shall be tolled and any Event that may otherwise occur solely because of
such delay shall be suspended as to such Holder only, until such
information is delivered to the Company.
4. Registration Expenses. All fees and expenses incident to the
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performance of or compliance with this Agreement by the Company shall be borne
by the Company 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 Trading Market on which the Common Stock is then
listed for trading, (B) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing that may be required to be made by any broker through which a
Holder intends to make sales of Registrable Securities with NASD Regulation,
Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving no more
than a customary brokerage commission in connection with such sale, (ii)
printing expenses (including, without limitation, expenses of printing
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certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably 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, (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. 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 and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the
Holders.
5. Indemnification
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(a) Indemnification by the Company. The Company shall,
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notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of
Common Stock), 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 expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or
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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 light of the circumstances under which they were made) not
misleading, except to the extent, but only to the extent, that (i) such
untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates
to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement
thereto (it being understood that the Holder has approved Annex A hereto
for this purpose) or (ii) in the case of an occurrence of an event of the
type specified in Section 3(c)(ii)-(v), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 6(d).
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.
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(b) Indemnification by Holders. Each Holder shall, severally
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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 or employees of
such controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, to the extent arising out
of or based solely upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any 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 not misleading (i) 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 to the Company
specifically for inclusion in the Registration Statement or such
Prospectus or (ii) to the extent that (1) such untrue statements or
omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or
such Holder's proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement (it being understood that
the Holder has approved Annex A hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or
(2) in the case of an occurrence of an event of the type specified in
Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(d). In no event shall the
liability of any selling Holder hereunder be greater in amount than the
dollar amount of the net proceeds received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
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shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall promptly
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notify the Person from whom indemnity is sought (the "Indemnifying
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Party") in writing, and the Indemnifying Party shall have the right to
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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 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; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding
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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 Indemnified Party shall reasonably
believe that a material 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 the reasonable fees
and expenses of one separate 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. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all reasonable 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 Trading
Days of written notice thereof to the Indemnifying Party; provided, that
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the Indemnified Party shall promptly reimburse the Indemnifying Party for
that portion of such fees and expenses applicable to such actions for
which such Indemnified Party is not entitled to indemnification
hereunder, determined based upon the relative faults of the parties.
(d) Contribution. If the indemnification under Section 5(a) or
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5(b) is unavailable to an Indemnified Party or insufficient to hold an
Indemnified Party harmless for any Losses, then each Indemnifying Party
shall contribute to the amount paid or payable by such Indemnified Party,
in such proportion as is appropriate to reflect the relative fault 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 this Agreement, 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.
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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. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount
in excess of the amount by which the proceeds actually received by such
Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, except in the case of fraud by
such Holder.
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.
6. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company or by a
--------
Holder, of any of their obligations under this Agreement, each 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 Piggyback on Registrations. Except as set forth on
--------------------------------
Schedule 6(b) attached hereto, 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 a Registration Statement
other than the Registrable Securities.
(c) Compliance. Each Holder covenants and agrees that it will
----------
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
(d) Discontinued Disposition. 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), 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 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. The Company
will use its best efforts to ensure that the use of the Prospectus may be
resumed as promptly as it practicable. The Company agrees and
11
acknowledges that any periods during which the Holder is required to
discontinue the disposition of the Registrable Securities hereunder shall
be subject to the provisions of Section 2(b).
(e) Piggy-Back Registrations. If at any time during the
-------------------------
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and 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 the stock option or other
employee benefit plans or on account of the Company's status as a foreign
private issuer, then the Company shall send to each Holder a written
notice of such determination and, if within fifteen days after the date
of such notice, any such Holder shall so request in writing, the Company
shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered, subject to
customary underwriter cutbacks applicable to all holders of registration
rights.
(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 each Holder of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of all of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence
-------- -------
may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(g) Notices. Any and all notices or other communications or
-------
deliveries required or permitted to be provided hereunder shall be
delivered as set forth in the Purchase Agreement.
(h) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the
prior written consent of all of the Holders of the then-outstanding
Registrable Securities. Each Holder may assign their respective rights
hereunder in the manner and to the Persons as permitted under the
Purchase Agreement.
(i) No Inconsistent Agreements. Neither the Company nor any of
--------------------------
its subsidiaries has entered, as of the date hereof, 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
would have the effect of impairing the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Except
as set forth on Schedule 6(i), neither the Company nor any of its
--------------
12
subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person
that have not been satisfied in full.
(j) Execution and 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. 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. All questions concerning the construction,
-------------
validity, enforcement and interpretation of this Agreement shall be
determined with the provisions of the Purchase Agreement.
(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 by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, 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
commercially 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 in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(o) Independent Nature of Holders' Obligations and Rights. The
------------------------------------------------------
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be
responsible in any way for the performance of the obligations of any
other Holder hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by
any Holder pursuant hereto or thereto, shall be deemed to constitute the
Holders as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect
and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder
to be joined as an additional party in any proceeding for such purpose.
*************************
13
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
SINOVAC BIOTECH LTD.
--------------------
By:
---------------------------------
Name:
Title:
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
14
[HOLDER'S SIGNATURE PAGE TO SVA RRA]
Name of Holder:
--------------------------------
Signature of Authorized Signatory of Holder:
---------------------------
Name of Authorized Signatory:
--------------------------
Title of Authorized Signatory:
--------------------------
[SIGNATURE PAGES CONTINUE]
15
ANNEX A
-------
Plan of Distribution
--------------------
The Selling Stockholders (the "Selling Stockholders") of the common stock
--------------------
("Common Stock") of Sinovac Biotech Ltd., a West Indies corporation (the
-------------
"Company") and any of their pledgees, assignees and successors-in-interest may,
-------
from time to time, sell any or all of their shares of Common Stock on any stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
Selling Stockholders may use any one or more of the following methods when
selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o 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;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales entered into after the date of this
prospectus;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise; or
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
--------------
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each Selling Stockholder does not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the
types of transactions involved.
16
In connection with the sale of the Common Stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the Common Stock short and deliver these
securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such 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. Each Selling Stockholder has
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.
The Company is required to pay certain fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Each Selling Stockholder has advised us that they have not entered into any
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the Common Stock for a period of two
business days prior to the commencement of the distribution. In addition, the
17
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may
limit the timing of purchases and sales of shares of the Common Stock by the
Selling Stockholders or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale.
18
Annex B
-------
Sinovac Biotech Ltd.
--------------------
Selling Securityholder Notice and Questionnaire
-----------------------------------------------
The undersigned beneficial owner of common stock, par value $0.001 per
share (the "Common Stock"), of Sinovac Biotech Ltd., a West Indies corporation
------------
(the "Company"), (the "Registrable Securities") understands that the Company has
------- ----------------------
filed or intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (the "Registration
---------- ------------
Statement") for the registration and resale under Rule 415 of the Securities Act
---------
of 1933, as amended (the "Securities Act"), of the Registrable Securities, in
---------------
accordance with the terms of the Registration Rights Agreement, dated as of
December 31, 2004 (the "Registration Rights Agreement"), among the Company and
------------------------------
the Purchasers named therein. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.
NOTICE
------
The undersigned beneficial owner (the "Selling Securityholder") of
-----------------------
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise specified under such Item 3)
in the Registration Statement.
19
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
-------------
1. Name.
(a) Full Legal Name of Selling Securityholder
------------------------------------------------------------------
(b) Full Legal Name of Registered Holder (if not the same as (a)
above) through which Registrable Securities Listed in Item 3 below
are held:
------------------------------------------------------------------
(c) Full Legal Name of Natural Control Person (which means a natural
person who directly you indirectly alone or with others has power
to vote or dispose of the securities covered by the
questionnaire):
------------------------------------------------------------------
2. Address for Notices to Selling Securityholder:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Telephone:
----------------------------------------------------------------------
Fax:
---------------------------------------------------------------------------
Contact Person:
----------------------------------------------------------------
3. Beneficial Ownership of Registrable Securities:
(a) Type and Number of Registrable Securities beneficially owned:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
20
4. Broker-Dealer Status:
(a) Are you a broker-dealer?
Yes [_] No [_]
Note: If yes, the Commission's staff has indicated that you should be
identified as an underwriter in the Registration Statement.
(b) Are you an affiliate of a broker-dealer?
Yes [_] No [_]
(c) If you are an affiliate of a broker-dealer, do you certify that
you bought the Registrable Securities in the ordinary course of
business, and at the time of the purchase of the Registrable
Securities to be resold, you had no agreements or understandings,
directly or indirectly, with any person to distribute the
Registrable Securities?
Yes [_] No [_]
Note: If no, the Commission's staff has indicated that you should be
identified as an underwriter in the Registration Statement.
5. Beneficial Ownership of Other Securities of the Company Owned by the
Selling Securityholder.
Except as set forth below in this Item 5, the undersigned is not the
beneficial or registered owner of any securities of the Company other
than the Registrable Securities listed above in Item 3.
(a) Type and Amount of Other Securities beneficially owned by the
Selling Securityholder:
------------------------------------------------------------------
------------------------------------------------------------------
21
6. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners of 5%
of more of the equity securities of the undersigned) has held any
position or office or has had any other material relationship with the
Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The undersigned agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein that may occur subsequent to the
date hereof at any time while the Registration Statement remains effective.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation or amendment of the
Registration Statement and the related prospectus.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated: Beneficial Owner:
--------------------- -----------------------------
By:
------------------------------------------
Name:
Title:
PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
22
Schedule 6(b) to the Registration Rights Agreement -
----------------------------------------------------
No Piggyback and Registrations
------------------------------
The information on this Schedule 6(b) modifies the representation and
warrant set forth in Section 6(b) of the Registration Rights Agreement:
The Company reserves the right to include up to 650,000 Units in the
capital of the Company in a Registration Statement over and above the
Registrable Securities.
23