REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 7, 2008, by and among Total Luxury Group, Inc., an Indiana
corporation (the "Company"), and the purchaser listed on Schedule I hereto (the
"Purchaser").
This Agreement is being entered into pursuant to the Stock Purchase
Agreement dated as of the date hereof among the Company and the Purchaser (the
"Purchase Agreement").
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 Shares as such term is defined in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $0.001 per
share.
"Company" means Total Luxury Group, Inc., an Indiana corporation.
"Conversion Shares" means any shares of Common Stock issuable upon
conversion of the Note.
"Counsel" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP.
"Effectiveness Date" means, subject to Section 2(b) hereof, with respect to
the Registration Statement the earlier of (A) the one hundred twentieth (120th)
day following the Filing Date (or in the event the Registration Statement
receives a "full review" by the Commission and/or the Company uses its
Extensions, the one hundred eightieth (180th) day following the 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 the
Registration Statement or (ii) that the Company may request the acceleration of
the effectiveness of the Registration Statement.
"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.
"Extensions" shall have the meaning set forth in Section 7(e).
"Filing Date" means, subject to Section 2(b) hereof, the sixtieth (60th)
day following the Closing Date.
"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).
"Notes" means the Senior Secured 9% Convertible Promissory Notes issued to
the Purchaser pursuant to the Purchase Agreement.
"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.
"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 Note and any interest and dividends accrued thereon; and (ii)
the shares of Common Stock issuable upon exercise of the Warrants. In the event
that the Company is not able to include all of the Registrable Securities in any
Registration Statement (as defined below), such Registrable Securities shall be
registered in accordance with the terms of this Agreement in the following
2
order: (y) shares of Common Stock issuable upon conversion of the Note and any
interest and dividends accrued thereon; and (z) 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.
"Warrants" means the Series A warrants to purchase shares of Common Stock
issued to the Purchaser pursuant to the Purchase Agreement.
"Warrant Shares" means any shares of Common Stock issuable upon exercise of
the Warrants.
2. Resale Registration.
(a) On or prior to the Filing Date, the Company shall prepare and file
with the Commission a "resale" Registration Statement providing for the
resale of all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The 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 the Securities Act and the rules promulgated thereunder). Such
Registration Statement shall cover to the extent allowable under the
Securities Act and the rules promulgated thereunder (including 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 and (ii) use commercially reasonable 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 prior to
the Effectiveness Date, and to keep such Registration Statement
continuously effective under the Securities Act until such date as is the
earlier of (x) the date when all 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 (the "Effectiveness Period"). The Company shall request that the
effective time of the Registration Statement shall be 5:00 p.m. Eastern
Time on the effective date. If at any time and for any reason, an
3
additional Registration Statement is required to be filed because at such
time the actual number of shares of Common Stock into which the Note is
convertible and the Warrants are exercisable plus the number of shares of
Common Stock held by the Holders exceeds the number of shares of
Registrable Securities remaining under the Registration Statement, the
Company shall have twenty (20) Business Days to file such additional
Registration Statement, and the Company shall use commercially reasonable
efforts to cause such additional Registration Statement to be declared
effective by the Commission as soon as possible, but in no event later than
sixty (60) days after filing.
(b) 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 the
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 such Registration Statement or any
subsequent registration statement shall be determined in the following
order: (i) first, the shares of Common Stock issuable upon conversion of
the Note shall be registered, and (ii) second, the shares of Common Stock
issuable upon exercise of the Warrants shall be registered. In the event
the Commission does not permit the Company to register all of the
Registrable Securities in the initial Registration Statement, the Company
shall use commercially reasonable efforts to file subsequent Registration
Statements to register the Registrable Securities that were not registered
in the initial 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.
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 five (5) 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
Counsel, copies of all such documents proposed to be filed, which documents
will be subject to the review of such Holders and such 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 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
4
Holders of a majority of the Registrable Securities or Counsel shall
reasonably object in writing within three (3) Business Days of their
receipt thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to 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); (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; 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 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 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 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) if at any time any of the representations and
warranties of the Company contained in any agreement contemplated hereby
ceases to be true and correct in all material respects; (v) of the receipt
by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening
of any Proceeding for such purpose; and (vi) of the occurrence of any event
that makes any statement made in 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. A form of written confirmation from Counsel to
the Company that a Registration Statement covering resales of the
Registrable Securities has been declared effective by the SEC under the
1933 Act is attached hereto as Exhibit B.
(d) Use commercially reasonable efforts to avoid the issuance of, or,
if issued, 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.
5
(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 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 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
commercially reasonable efforts to register or qualify or cooperate with
the selling Holders and Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as any Holder
requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
a Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company to any material tax in any such jurisdiction
where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to a Registration Statement, which certificates, to the extent
permitted by the Purchase Agreement and applicable federal and state
securities laws, shall be free of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in
such names as any Holder may request in connection with any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section 3(c)(vi),
as promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to 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 commercially reasonable efforts to cause all Registrable
Securities relating to the Registration Statement to be listed or quoted on
6
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 quoted, 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 earning statements satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration
Statement, which statement shall conform to the requirements of Rule 158.
For the avoidance of doubt, the filing and continued availability of the
information on the ▇▇▇▇▇ electronic filing system shall satisfy the
requirements of this subsection (l).
(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 is 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), 3(c)(vi) 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.
(n) If (i) there is material non-public information regarding the
Company which the Company's Board of Directors (the "Board") reasonably
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 reasonably 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, or Form 10-Q and
Form 10-K, as applicable, then the Company may postpone or suspend filing
or effectiveness of a registration statement for a period not to exceed
twenty (20) consecutive days; provided that the Company may not postpone or
suspend filing or effectiveness of a registration statement under this
Section 3(n) for more than forty-five (45) days in the aggregate during any
7
three hundred sixty (360) day period; provided, however, that no such
postponement or suspension shall be permitted for consecutive twenty (20)
day periods arising out of the same set of facts, circumstances or
transactions.
4. Registration Expenses.
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company, except as and to the extent specified in this
Section 4, shall be borne by the Company whether or not 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, (B) with respect to filing fees
required to be paid to the National Association of Securities Dealers, Inc. and
the NASD Regulation, Inc. (including, without limitation, pursuant to NASD Rule
2710) and (C) in compliance with state securities or Blue Sky laws (including,
without limitation, fees and disbursements of counsel for the Holders in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Counsel for the Holders, (v)
Securities Act liability insurance, if the Company 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 expenses
incurred by the Holders in connection with the sale of the Registrable
Securities.
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 (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, managers, partners, members, shareholders, agents and employees
of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys' fees) and expenses (collectively, "Losses"), as incurred,
arising out of or relating to (i) any violation of securities laws or (ii)
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
8
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, which information
was reasonably relied on by the Company 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, managers,
partners, members, shareholders, 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,
managers, partners, members, shareholders, officers, agents and employees
of such controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, based solely upon any 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
based solely upon 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, 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 expressly for use therein and that
such information was reasonably relied upon by the Company for use therein
and was reviewed and expressly approved in writing by such Holder expressly
for use in the Registration Statement or such Prospectus or such form of
Prospectus or any amendment or supplement thereto. 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.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing,
and the Indemnifying Party shall be entitled to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
in writing to pay such fees and expenses; or (2) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any
such Proceeding; or (3) the named parties to any such Proceeding (including
any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and any such party 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
9
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened
Proceeding in respect of which any Indemnified Party is a party and
indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating
or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within
ten (10) Business Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided that the
Indemnified Party shall reimburse all such fees and expenses to the extent
it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is due but unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a result of such Losses, in such proportion as is appropriate to reflect
the relative benefits received by the Indemnifying Party on the one hand
and the Indemnified Party on the other from the offering of the Shares, as
such term is defined in the Purchase Agreement. 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.
10
Within ninety (90) days of the Closing Date, the Company covenants to file
all reports required to have been filed, but were not so filed, by the Company
within the (12) twelve months prior to the date hereof pursuant to Section 13(a)
or 15(d) of the Exchange Act. As long as any Holder owns Notes, Conversion
Shares, Warrants or Warrant Shares, 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 Notes, Conversion Shares, Warrants or Warrant Shares, if the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act,
it will prepare and furnish to the Holders and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Person to sell Conversion Shares and Warrant
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including providing any legal opinions 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.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder,
of any of their obligations under this Agreement, such Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has, as of the date hereof entered into and currently in
effect, nor shall the Company or any of its subsidiaries, on or after the
date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Except as
disclosed in the Purchase Agreement, 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 Piggy-Back on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto
or as disclosed in the Purchase Agreement) may include securities of the
Company in the Registration Statement, and the Company shall not after the
date hereof enter into any agreement providing such right to any of its
11
security holders, unless the right so granted is subject in all respects to
the prior rights in full of the Holders set forth herein, and is not
otherwise in conflict with the provisions of this Agreement.
(d) Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering (i) the 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 thirty (30) days after receipt of such notice, or within such
shorter period of time as may be specified by the Company in such written
notice as may be necessary for the Company to comply with its obligations
with respect to the timing of the filing of such registration statement,
any such Holder shall so request in writing (which request shall specify
the Registrable Securities intended to be disposed of by the Purchasers),
the Company will cause the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register
by the Holder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered; provided that if at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the
Company may, at its election, give written notice of such determination to
such Holder and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its
obligation to pay expenses in accordance with Section 4 hereof), and (ii)
in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering such
other securities. The Company shall include in such registration statement
all or any part of such Registrable Securities such Holder requests to be
registered. 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).
(e) Failure to File Registration Statement and Other Events. The
Company and the Purchasers agree that the Holders will suffer damages if
the Registration Statement is not filed on or prior to the Filing Date and
not declared effective by the Commission on or prior to the Effectiveness
Date and maintained in the manner contemplated herein during the
Effectiveness Period or if certain other events occur. The Company and the
Holders further agree that it would not be feasible to ascertain the extent
of such damages with precision. Accordingly, if (A) the Registration
Statement is not filed on or prior to the Filing Date, or (B) the
Registration Statement is not declared effective by the Commission on or
12
prior to the Effectiveness Date, or (C) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within three (3) Business Days of the
date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not be
"reviewed," or is not subject to further review, or (D) the Registration
Statement is filed with and declared effective by the Commission but
thereafter ceases to be effective as to all Registrable Securities at any
time prior to the expiration of the Effectiveness Period, without being
succeeded immediately by a subsequent Registration Statement filed with and
declared effective by the Commission in accordance with Section 2(a)
hereof, or (E) the Company has breached Section 3(n), or (F) at any time
subsequent to completion of the re-listing process, trading in the Common
Stock shall be suspended, or if the Common Stock is no longer quoted on or
is delisted from the OTC Bulletin Board (or other principal exchange on
which the Common Stock is traded) for any reason for more than three (3)
Business Days in the aggregate (any such failure or breach being referred
to as an "Event," and for purposes of clauses (A) and (B) the date on which
such Event occurs, or for purposes of clause (C) the date on which such
three (3) Business Day period is exceeded, or for purposes of clause (D)
after more than fifteen (15) Business Days, or for purposes of clause (F)
the date on which such three (3) Business Day period is exceeded, being
referred to as "Event Date"), the Company shall pay an amount in cash or
registered Common Stock (at the Company's sole discretion) to each Holder,
as partial liquidated damages and not as a penalty, equal to two percent
(2%) of the amount of the Holder's Registrable Securities for each calendar
month or portion thereof thereafter from the Event Date until the
applicable Event is cured; provided, however, that in no event shall the
amount of liquidated damages payable at any time and from time to time to
any Holder pursuant to this Section 7(e) exceed an aggregate of eighteen
percent (18%) of the amount of the Holder's Registrable Securities.
Notwithstanding anything to the contrary in this paragraph (e), if (i) any
of the Events described in clauses (A), (B), (C), (D) or (F) shall have
occurred, (ii) on or prior to the applicable Event Date, the Company shall
have exercised its rights under Section 3(n) hereof and (iii) the
postponement or suspension permitted pursuant to such Section 3(n) shall
remain effective as of such applicable Event Date, then the applicable
Event Date shall be deemed instead to occur on the second Business Day
following the termination of such postponement or suspension. Liquidated
damages payable by the Company pursuant to this Section 7(d) shall be
payable on the first (1st) Business Day of each thirty (30) day period
following the Event Date.
In the event the Commission does not permit all of the Registrable
Securities to be included in the Registration Statement because of its
application and issuance of comments concerning Rule 415 then the Company
shall be allowed to respond to such comments within ten (10) calendar days
after its receipt and shall be entitled to an additional ten (10) calendar
day period to exchange comments with the Commission before any liquidated
damages pursuant to this Section shall occur (each such ten day period, an
"Extension"). No more than two (2) Extensions shall be available to the
Company, such that the time before such liquidated damages will be incurred
will not exceed one hundred eighty (180) days from the Filing Date.
Subsequent to any and all Extensions, liquidated damages payable pursuant
to this Section shall be payable by the Company based on two percent (2%)
of the portion of the Holder's Registrable Securities that corresponds to
the number of such Holder's Registrable Securities not permitted to be
registered by the Commission in such Registration Statement pursuant to
Rule 415.
(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 seventy-five percent (75%) of the
Registrable Securities outstanding. No consideration shall be offered or
paid to any Holders of Notes or Holders of the Warrants to amend or consent
to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the
parties to the Transaction Documents, Holders of Notes or Holders of the
Warrants, as the case may be. The Company has not, directly or indirectly,
made any agreements with any Purchasers relating to the terms or conditions
of the transactions contemplated by the Transaction Documents except as set
13
forth in the Transaction Documents. Without limiting the foregoing, the
Company confirms that, except as set forth in this Agreement, no Purchaser
has made any commitment or promise or has any other obligation to provide
any financing to the Company or otherwise.
(g) Notices. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed
effectively given upon (i) personal delivery, (ii) two business days after
deposit with Federal Express or another nationally recognized overnight
courier service, (iii) five business days after deposit in the United
States Postal Service, sent certified mail return receipt requested,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto, or (iv) the
same day upon transmission by means of facsimile transmission or electronic
mail (if attached in a commonly readable format and the sender has received
no generated notice that the email message has not been successfully
delivered).
If to the Company: Total Luxury Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Tel. No.: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Purchasers: At the address
of such Purchaser set forth on
Schedule I to this Agreement, with
copies to Purchaser's counsel
(which copies shall not constitute
notice to such purchaser) as set
forth on Schedule I or as
specified in writing by such
Purchaser.
with copies to: ▇▇▇▇▇▇▇ Savage LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days written notice of such changed address to
the other parties hereto.
(h) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors
and assigns. The Company may not assign this Agreement or any of its rights
or obligations hereunder without the prior written consent of each Holder.
Each Purchaser may assign its rights hereunder in the manner and to the
Persons as permitted under the Purchase Agreement.
(i) Assignment of Registration Rights. The rights of each Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement,
shall be automatically assignable by each Holder of all or a portion of,
the Common Stock or the Registrable Securities to any Person 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
14
reasonable time after such assignment, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (A) the name and address of such transferee or assignee, and (B)
the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the
further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws
unless such securities are registered in a Registration Statement under
this Agreement (in which case the Company shall be obligated to amend such
Registration Statement to reflect such transfer or assignment) or are
otherwise exempt from registration, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section,
the transferee or assignee agrees in writing with the Company to be bound
by all of the provisions of this Agreement, and (v) such transfer shall
have been made in accordance with the applicable requirements of the
Purchase Agreement. In addition, each Holder shall have the right to assign
its rights hereunder to any other person with the prior written consent of
the Company, which consent shall not unreasonably be withheld. 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. The parties acknowledge and agree
that any claim, controversy, dispute or action relating in any way to this
agreement or the subject matter of this agreement shall be governed solely
by the laws of the State of Delaware, without regard to any conflict of
laws doctrines. The parties irrevocably consent to being served with legal
process issued from the state and federal courts located in New York and
irrevocably consent to the exclusive personal jurisdiction of the federal
and state courts situated in the State of New York. The parties irrevocably
waive any objections to the personal jurisdiction of these courts. Said
courts shall have sole and exclusive jurisdiction over any and all claims,
controversies, disputes and actions which in any way relate to this
agreement or the subject matter of this agreement. The parties also
irrevocably waive any objections that these courts constitute an
oppressive, unfair, or inconvenient forum and agree not to seek to change
venue on these grounds or any other grounds. The parties hereby agree that
the prevailing party in any suit, action or proceeding arising out of or
relating to this Agreement or the Purchase Agreement, shall be entitled to
reimbursement for reasonable legal fees from the non-prevailing party. The
parties hereby waive all rights to a trial by jury. Nothing in this Section
7(k) shall affect or limit any right to serve process in any other manner
permitted by law.
(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.
15
(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]
16
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons
as of the date first indicated above.
The Company:
TOTAL LUXURY GROUP, INC.
By:____________________
Name:
Title:
The Purchaser:
ACCELERANT PARTNERS LLC
By:____________________
Name:
Title:
17
Schedule I
----------
Names and Addresses of the Purchasers Securities & Warrants Received
pursuant to the Purchase Agreement
Accelerant Partners LLC $19,000,000 principal amount of Note
Executive Pavilion
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇: _____________
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: [_____________________]
Facsimile: [_________________]
Email: [____________________]
i
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:
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 resales 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 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;
o broker-dealers may agree with the selling security holders to
sell a specified number of such shares at a stipulated price per
share;
o a combination of any of these methods of sale; and
o 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.
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.
ii
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.
iii
EXHIBIT B
---------
Form of Notice of Effectiveness
of Registration Statement
[NAME AND ADDRESS OF TRANSFER AGENT]
Attn: ____________________________
Re: Total Luxury Group, Inc.
Ladies and Gentlemen:
We are counsel to Total Luxury Group, Inc.., an Indiana corporation (the
"Company"), and have represented the Company in connection with that certain
Stock Purchase Agreement (the "Purchase Agreement"), dated as of March 7, 2008,
by and between the Company and Accelerant Partners LLC ( "Accelerant") pursuant
to which the Company issued to Accelerant Senior Secured 9% convertible
promissory notes (the "Note") and warrants (the "Warrant") to purchase shares of
the Company's common stock, par value $0.001 per share (the "Common Stock").
Pursuant to the Purchase Agreement, the Company has also entered into a
Registration Rights Agreement with Accelerant (the "Registration Rights
Agreement"), dated as of March 7, 2008, pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Note, the Common Stock and the shares of Common Stock
issuable upon exercise of the Warrant, under the Securities Act of 1933, as
amended (the "1933 Act"). In connection with the Company's obligations under the
Registration Rights Agreement, on ________________, 2008, the Company filed a
Registration Statement on Form S-1 (File No. 333-________) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") relating to
the resale of the Registrable Securities which names Accelerant as a selling
stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and accordingly, the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
Very truly yours,
[COMPANY COUNSEL]
By:__________________________
cc: ACCELERANT PARTNERS LLC
iv