GRAN TIERRA ENERGY INC. REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.24
GRAN
TIERRA ENERGY INC.
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is
made as of June 20, 2006 by and among GRAN TIERRA ENERGY INC., a Nevada
corporation, (the “Company”),
and
each investor listed on Schedule
1
hereto
(each such investor, individually, an “Initial
Investor”
and,
collectively, the “Initial
Investors”).
WHEREAS,
the Company has agreed to issue and sell to the Initial Investors, and the
Initial Investors have agreed to purchase from the Company, shares (the
“Shares”)
of the
Company’s common stock, $0.001 par value per share (including any securities
issued or issuable thereto or into which or for which such shares may be
exchanged for, or converted into, pursuant to any stock dividend, stock split,
stock combination, recapitalization, reclassification, reorganization or other
similar event, the “Common
Stock”)
and
warrants (“Warrants”)
to
purchase shares of Common Stock, at a per share price and upon the terms and
conditions set forth in the Securities Purchase Agreement, dated as of the
date
hereof, between the Company and the Investors (the “Securities
Purchase Agreement”);
and
WHEREAS,
the terms of the Securities Purchase Agreement provide that it shall be a
condition precedent to the closing of the transactions thereunder, for the
Company and the Investors to execute and deliver this Agreement.
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto hereby agree as follows:
1.
DEFINITIONS.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement. The following terms shall have
the
meanings provided therefor below or elsewhere in this Agreement as described
below:
“Affiliates”
means
any Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, a Person, as such
terms are used and construed under Rule 144.
“Board”
means
the board of directors of the Company.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to close.
“Closing
Date”
has
the
meaning set forth in the Securities Purchase Agreement.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and all of the rules and
regulations promulgated thereunder.
“Investor”
means
the Initial Investors and any Person holding Registrable Shares or any Person
to
whom the rights under this Agreement have been transferred.
1
“Person”
(whether or not capitalized) means an individual, partnership, limited liability
company, corporation, association, trust, joint venture, unincorporated
organization, and any government, governmental department or agency or political
subdivision thereof.
“Prospectus”
means
the prospectus included in any 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 Shares covered by such 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
Shares”
means,
at the relevant time of reference thereto, the Shares, the Warrants and the
Warrant Shares (including any shares of capital stock that may be issued in
respect thereof, or into which or for which such Shares, Warrants or Warrant
Shares may be exchanged for or converted into, pursuant to a stock split, stock
dividend, recombination, recapitalization, reorganization, reclassification
or
the like), provided,
however,
that
the term “Registrable Shares” shall not include any of the Shares or Warrants
that are actually sold pursuant to a registration statement that has been
declared effective under the Securities Act by the SEC.
“Registration
Statement”
means
the Mandatory Registration Statement, any Demand Registration on Form SB-2
(or
other equivalent or applicable form), and any additional registration statements
contemplated by this Agreement, 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 or Prospectus.
“Rule
144”
means
Rule 144 promulgated under the Securities Act and any successor or substitute
rule, law or provision.
“SEC”
means
the Securities and Exchange Commission.
“Securities
Act”
means
the Securities Act of 1933, as amended, and all of the rules and regulations
promulgated thereunder.
“Warrant
Shares”
means
the shares of Common Stock issuable upon exercise of or otherwise pursuant
to
the Warrants.
2
2. MANDATORY
REGISTRATION.
(a) As
promptly as possible after the date hereof, and in any event prior to the date
that is seventy-five (75) days following the Closing Date (the “Mandatory
Filing Date”),
the
Company shall prepare and file with the SEC a Registration Statement on Form
SB-2 (or on such other appropriate form for the required purpose) for the
purpose of registering under the Securities Act all of the Registrable Shares
for resale by, and for the account of, each Investor as an initial selling
stockholder thereunder (the “Mandatory
Registration Statement”).
The
Mandatory Registration Statement shall permit the Investors to offer and sell,
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act,
any or all of the Registrable Shares and shall contain (except if otherwise
required pursuant to written comments received from the SEC upon a review of
the
Mandatory Registration Statement) the “Plan of Distribution” attached hereto as
Annex
A.
The
Company agrees to use its best efforts to cause the Mandatory Registration
Statement to be declared effective as soon as possible but in no event later
than the date that is 120 days following the Closing Date (or 150 days following
the Closing Date in the event the Registration Statement is the subject of
a
review by the SEC) (the “Mandatory
Effective Date”)
(including filing with the SEC, within five (5) Business Days of the date that
the Company is notified (orally or in writing, whichever is earlier) by the
SEC
that the Mandatory Registration Statement will not be “reviewed” or will not be
subject to further review, a request for acceleration of effectiveness in
accordance with Rule 461 promulgated under the Securities Act (an “Acceleration
Request”),
which
request shall request an effective date that is within three (3) Business Days
of the date of such request) and will otherwise effect all such registration,
obtain all such qualifications and comply with all such laws, rules and
regulations as may be necessary to permit the sale, transfer and other
disposition of the Registrable Shares by the Investors thereof pursuant to
the
Mandatory Registration Statement. The Company shall notify each Investor in
writing promptly (and in any event within three (3) Business Days) after the
Company’s submission of an Acceleration Request to the SEC. The Company shall be
required to keep the Mandatory Registration Statement and any qualification,
exemption or compliance under state securities laws which the Company determines
to obtain or which the Company obtains at the request of the Investors
continuously effective (including through the filing of any required
post-effective amendments) with respect to the Investors, and to keep such
Registration Statement and related prospectus free of any material misstatements
or omissions, until the earlier to occur of (i) the date after which all of
the
Registrable Shares registered thereunder shall have been sold or (ii) the date
after which all of the Registrable Shares (excluding such Registrable Shares
as
are registered pursuant to any other effective Registration Statement) are
freely tradable without any volume limitations by the Investors pursuant to
Rule
144(k) promulgated under the Securities Act or any successor or substitute
rule,
law or provision. Thereafter, the Company shall be entitled to withdraw the
Mandatory Registration Statement and, upon such withdrawal, the Investors shall
have no further right to offer or sell any of the Registrable Shares pursuant
to
the Mandatory Registration Statement (or any prospectus relating
thereto).
3
(b) Notwithstanding
anything in this Section 2 to the contrary, if the Company shall furnish to
the
Investors a certificate signed by the Chief Executive Officer of the Company
stating that the Board has made the good faith determination (i) that the
continued use by the Investors of the Mandatory Registration Statement for
purposes of effecting offers or sales of Registrable Shares pursuant hereto
would require, under the Securities Act and the rules and regulations
promulgated thereunder, premature disclosure in the Mandatory Registration
Statement (or the Prospectus relating thereto) of material, nonpublic
information concerning the Company, its business or prospects or any proposed
material transaction involving the Company, (ii) that such premature disclosure
would be materially adverse to the Company, its business or prospects or any
such proposed material transaction or would not be in the best interests of
the
Company and (iii) that it is therefore essential to suspend the use by the
Investors, of the Mandatory Registration Statement (and the Prospectus relating
thereto), then the right of the Investors to use the Mandatory Registration
Statement (and the Prospectus relating thereto) for purposes of effecting offers
or sales of Registrable Shares pursuant thereto shall be suspended for a period
(the “Suspension
Period”)
not
greater than fifteen (15) Business Days during any consecutive twelve (12)
month
period. During the Suspension Period, the Investors shall not offer or sell
any
Registrable Shares pursuant to or in reliance upon the Mandatory Registration
Statement (or the Prospectus relating thereto). The Company agrees that, as
promptly as possible, but in no event later than one (1) Business Day, after
the
consummation, abandonment or public disclosure of the event or transaction
that
caused the Company to suspend the use of the Mandatory Registration Statement
(and the Prospectus relating thereto) pursuant to this Section 2(b), the Company
will as promptly as possible lift any suspension, provide the Investors with
revised Prospectuses, if required, and will notify the Investors of their
ability to effect offers or sales of Registrable Shares pursuant to or in
reliance upon the Mandatory Registration Statement.
(c) It
shall
be a condition precedent to the obligations of the Company to register
Registrable Shares for the account of an Investor pursuant to this Section
2 or
Section 3 that such Investor furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the method of disposition
of
such securities as shall be required by the SEC to effect the registration
of
such Investor’s Registrable Securities.
(d) In
the
event that the Mandatory Registration Statement or other required registration
statement is not declared effective by the SEC by the Mandatory Effective Date,
then the Company shall pay each Investor as liquidated damages for such failure
and not as a penalty the following amounts: one percent (1%) of the purchase
price (as set forth in the Securities Purchase Agreement) for the first month
after the Mandatory Effective Date; one and one-half percent (1.5%) commencing
on the first day of the second month through the last day of the third month
after the Mandatory Effective Date; two percent (2%) commencing on the first
day
of the fourth month through the last day of the fifth month after the Mandatory
Effective Date; and thereafter a one-half percent (0.5%) increase each quarter
(the “Liquidated
Damages Amount”),
each
month for such time period beyond the Mandatory Effective Date that such
registration statement is not effective or beyond any applicable Suspension
Period (a “Penalty
Period”)
(for
purposes of clarity, it is hereby understood and agreed that, solely for the
purpose of this Section 2(d), the deemed purchase price for each Share is $1.20
and the purchase price of each Warrant underlying each Unit shall be deemed
to
be equal to $0.30, provided that the dollar amounts set forth in this
parenthetical clause shall be appropriately adjusted in the event of any
adjustment, pursuant to the terms of the Warrants, in the exercise price of
the
Warrants or the number of shares issuable upon exercise of the Warrants);
provided, however, that the amount payable to any Investor hereunder for any
partial Penalty Period will not be pro-rated for the number of actual days
during such Penalty Period during which a registration default remains uncured.
Such payment of liquidated damages shall be made to each Investor within five
(5) calendar days after the Penalty Period either, at the Investor’s option, (1)
in cash or (2) in additional shares of Common Stock of the Company, such shares
being valued at the average of the VWAPs of the Common Stock as reported by
Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. to 4:02 p.m.
Eastern Time) using the VAP function over the 20 trading days immediately prior
to the Mandatory Effective Date; provided, however, that the payment of such
liquidated damages shall not relieve the Company from its obligations to
register the Registrable Shares pursuant to this Agreement. If the Company
fails
to pay said cash payment to a Investor entitled thereto by the applicable date
specified in the immediately preceding sentence, the Company will pay interest
thereon at a rate of 12% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to such Investor, accruing daily from
the date such liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The total amount of liquidated damages
payable to the Investors pursuant to this section 2(d), including any interest
thereon, shall in no event exceed twenty five percent (25%) of the purchase
price for the Units (as set forth in the Securities Purchase Agreement).
4
(e)
During
any Penalty Period, the Company shall not (i) file any other registration
statement, (ii) file any amendment to any other registration statement, or
(iii) request acceleration of the effective date of any other registration
statement registering with the SEC any securities of the Company until the
Company has cured the condition leading to such Penalty Period, unless such
filing or request has been approved by the holders of a majority of the
Registrable Securities; provided, however, that the foregoing shall not limit
the Company’s right to file or request acceleration of the effective date of any
other registration statements using Forms S-4 or S-8 or other applicable
successor Forms.
2A. DEMAND
REGISTRATION RIGHTS.
(a) If
for
any reason the SEC does not permit all of the Registrable Shares to be included
in a Mandatory Registration Statement filed pursuant to Section 2, or for any
other reason at any time any Registrable Shares are not able to be covered
or
resold pursuant to an effective Mandatory Registration Statement, and (i) Form
SB-2 (or other equivalent or applicable form) is then available for the
registration of such Registrable Shares and (ii) the Company shall receive
from
any Investors (including for this purpose their Affiliates) who hold (or who
together hold) at least twenty-five percent (25%) of the then outstanding
Registrable Shares a written request or requests (a “Demand
Notice”)
that
the Company effect a registration on Form SB-2 (or other equivalent or
applicable form)(a “Demand
Registration”),
or
any successor or substitute form, with respect to all or a part of the
Registrable Shares owned by such Investor(s), then the Company will promptly
give written notice of the proposed registration and the Investor’s or
Investors’ request therefor to all other Investors, and use best efforts to
effect such registration, as soon as practicable and in any event within thirty
(30) days, of all or such portion of such Investors’ Registrable Shares as are
specified in such request, together with all or such portion of the Registrable
Shares of any other Investor or Investors joining in such request as are
specified in a written request given by such other Investor or Investors within
fifteen (15) Business Days after receipt of such written notice from the
Company; provided,
however,
that
the Company may temporarily suspended the use of such registration statement
for
the same reasons and on the same terms as described in Section 2(b) above.
The
Company shall not be required to effect more than three (3) registrations
pursuant to this Section 2A(a) during any consecutive twelve (12) month period.
5
(b) It
shall
be a condition precedent to the obligations of the Company to register
Registrable Shares for the account of an Investor pursuant to this Section
2 or
Section 3 that such Investor furnish to the Company such information regarding
itself and the Registrable Securities held by it, and, if different from
Annex
A,
the
method of disposition of such securities as shall be required to effect the
registration of such Investor’s Registrable Securities.
3. “PIGGYBACK
REGISTRATION”.
(a) If
at any
time any Registrable Shares are not able to be resold pursuant to an effective
Registration Statement, and the Company proposes to register any of its Common
Stock under the Securities Act, whether as a result of an offering for its
own
account or the account of others (but excluding any registrations to be effected
on Forms S-4 or S-8 or other applicable successor Forms), the Company shall,
each such time, give to the Investors twenty (20) days’ prior written notice of
its intent to do so, and such notice shall describe the proposed registration
and shall offer such Investors the opportunity to register such number of
Registrable Shares as each such Investor may request. Upon the written request
of any Investor given to the Company within twenty (20) days after the receipt
of any such notice by the Company, the Company shall include in such
Registration Statement all or part of the Registrable Shares of such Investor,
to the extent requested to be registered.
(b) If
a
registration pursuant to Section 3 hereof involves an underwritten offering
and
the managing underwriter shall advise the Company in writing that, in its
opinion, the number of shares of Common Stock requested by the Investors to
be
included in such registration is likely to affect materially and adversely
the
success of the offering or the price that would be received for any shares
of
Common Stock offered in such offering, then, notwithstanding anything in this
Section 3 to the contrary, the Company shall only be required to include in
such
registration, to the extent of the number of shares of Common Stock which the
Company is so advised can be sold in such offering, (i)
first, the number of shares of Common Stock requested to be included in such
registration for the account of any stockholders of the Company (including
the
Investors), pro rata among such stockholders on the basis of the number of
shares of Common Stock that each of them has requested to be included in such
registration, and (ii) second, any shares of Common Stock proposed to be
included in such registration for the account of the Company.
(c) In
connection with any offering involving an underwriting of shares, the Company
shall not be required under this Section 3 or otherwise to include the
Registrable Shares of any Investor therein unless such Investor accepts and
agrees to the terms of the underwriting, which shall be reasonable and
customary, as agreed upon between the Company and the underwriters selected
by
the Company.
4. OBLIGATIONS
OF THE COMPANY.
In
connection with the Company’s registration obligations hereunder, the Company
shall, as expeditiously as practicable:
(a)
Use
its
best efforts diligently to prepare and file with the SEC a registration
statement on the appropriate form under the Securities Act with respect to
such
securities, which form shall comply as to form in all material respects with
the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and use its best efforts to cause
such registration statement to become and remain effective until completion
of
the proposed offering;
6
(b) (i)
Furnish to each Investor and such Investor’s counsel copies of all documents
filed with the SEC relating to the registration of the Registrable Shares prior
to their being filed with the SEC (and in any event fifteen (15) Business Days
prior to the filing) which documents shall be subject to the review of each
Investor and such Investor’s counsel, (ii) use commercially reasonable efforts
to cause its officers and directors, counsel and certified public accountants
to
respond to such inquiries as shall be necessary, in the reasonable opinion
of
such Investor, to conduct a reasonable investigation within the meaning of
the
Securities Act, and (iii) notify the Investors of any stop order issued or
threatened by the SEC and use best efforts to prevent the entry of such stop
order or to remove it if entered.
(c) (i)
Prepare and file with the SEC such amendments and supplements, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to comply with the Securities
Act and to keep the Registration Statement continuously effective as required
herein, and prepare and file with the SEC such additional Registration
Statements as necessary to register for resale under the Securities Act all
of
the Registrable Shares (including naming any permitted transferees of
Registrable Shares as selling stockholders in such Registration Statement);
(ii)
cause any related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant
to
Rule 424; (iii) respond as promptly as possible to any comments received from
the SEC with respect to each Registration Statement or any amendment thereto
and
as promptly as possible provide the Investors true and complete copies of all
correspondence from and to the SEC relating to the Registration Statement (other
than correspondence containing material nonpublic information); and (iv) comply
with the provisions of the Securities Act and the Exchange Act with respect
to
the disposition of all Registrable Shares covered by such Registration Statement
as so amended or in such Prospectus as so supplemented.
(d) Notify
the Investors and any underwriter as promptly as possible: (i) when the SEC
notifies the Company whether there will be a “review” of a Registration
Statement and whenever the SEC comments in writing on such Registration
Statement; and (ii) when a Registration Statement, or any post-effective
amendment or supplement thereto, has become effective, and after the
effectiveness thereof: (A) of any request by the SEC or any other federal or
state governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (B) of the issuance
by
the SEC or any state securities commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Shares or the initiation of any proceedings for that purpose; and
(C) 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 Shares for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose. Without limitation of any
remedies to which the Investors may be entitled under this Agreement, if any
of
the events described in Section 4(d)(ii)(A), 4(d)(ii)(B), and 4(d)(ii)(C) occur,
the Company shall use best efforts to respond to and correct the event.
7
(e) Notify
the Investors and any underwriter as promptly as possible of the happening
of
any event as a result of which the Prospectus included in or relating to a
Registration Statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading; and,
thereafter, the Company will as promptly as possible prepare (and, when
completed, give notice to each Investor) a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such Prospectus will not contain an untrue statement of
a
material fact or omit to state any fact necessary to make the statements therein
not misleading; provided that upon such notification by the Company, the
Investors will not offer or sell Registrable Shares pursuant to such Prospectus
until the Company has notified the Investors that it has prepared a supplement
or amendment to such Prospectus and delivered copies of such supplement or
amendment to the Investors (it being understood and agreed by the Company that
the foregoing proviso shall in no way diminish or otherwise impair the Company’s
obligation to as promptly as possible prepare a Prospectus amendment or
supplement as above provided in this Section 4(e) and deliver copies of same
as
provided in Section 4(i) hereof), and it being further understood that, in
the
case of the Mandatory Registration Statement, any such period during which
the
Investors are restricted from offering or selling Registrable Shares shall
constitute a Suspension Period.
(f) Upon
the
occurrence of any event described in Section 4(e) hereof, 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 light
of
the circumstances under which they are made, not misleading.
(g) Use
best
efforts to avoid the issuance of or, if issued, obtain the withdrawal of, (i)
any order suspending the effectiveness of any Registration Statement or (ii)
any
suspension of the qualification (or exemption from qualification) of any of
the
Registrable Shares for sale in any jurisdiction, as promptly as possible (it
being understood that, in the case of the Mandatory Registration Statement,
any
period during which the effectiveness of the Mandatory Registration Statement
or
the qualification of any Registrable Shares is suspended shall constitute a
Suspension Period).
(h) Furnish
to each of the Investors, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, and all exhibits to the
extent requested by such Investor or their counsels (including those previously
furnished or incorporated by reference) as promptly as possible after the filing
of such documents with the SEC.
8
(i) As
promptly as possible furnish to each selling Investor and the underwriter,
if
any, without charge, such number of copies of a Prospectus, including a
preliminary Prospectus, in conformity with the requirements of the Securities
Act, and such other documents (including, without limitation, Prospectus
amendments and supplements) as each such selling Investor may reasonably request
in order to facilitate the disposition of the Registrable Shares covered by
such
Prospectus and any amendment or supplement thereto. The Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Investors in connection with the offering and sale of the
Registrable Shares covered by such Prospectus and any amendment or supplement
thereto to the extent permitted by federal and state securities laws and
regulations.
(j) Use
best
efforts to register and qualify (or obtain an exemption from such registration
and qualification) the Registrable Shares under such other securities or blue
sky laws of the states of residence of each Investor and such other
jurisdictions as each Investor shall reasonably request, to keep such
registration or qualification (or exemption therefrom) effective during the
periods each Registration Statement is effective, and do any and all other
acts
or things which may be reasonably necessary or advisable to enable each Investor
to consummate the public sale or other disposition of Registrable Shares in
such
jurisdiction, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions where
it is not then qualified or subject to process.
(k) Cooperate
with the Investors to facilitate the timely preparation and delivery of
certificates representing the Registrable Shares to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to
the
extent permitted by the Securities Purchase Agreement and applicable law, of
all
restrictive legends, and to enable such Registrable Shares to be in such
denominations and registered in such names as such Investors may request.
(l) Cooperate
with any reasonable due diligence investigation undertaken by the Investors,
any
managing underwriter participating in any disposition pursuant to a Registration
Statement, Investors’ counsels and any attorney, accountant or other agent
retained by Investors or any managing underwriter, in connection with the sale
of the Registrable Shares, including, without limitation, making available
any
documents and information; provided, however, that the Company will not deliver
or make available to any Investor material, nonpublic information unless such
Investor specifically requests and consents in advance in writing to receive
such material, nonpublic information and, if requested by the Company, such
Investor agrees in writing to treat such information as
confidential.
(m) Furnish
to each prospective selling holder a signed counterpart, addressed to the
prospective selling holder, of (A) an opinion of counsel for the Company, dated
the effective date of the registration statement, and (B) a “comfort” letter
signed by the independent public accountants who have certified the Company’s
financial statements included in the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the accountants’ letter)
with respect to events subsequent to the date of the financial statements,
as
are customarily covered (at the time of such registration) in opinions of the
Company’s counsel and in accountants’ letters delivered to the underwriters in
underwritten public offerings of securities.
9
(n) Cause
the
securities covered by such registration statement to be listed on the securities
exchange or quoted on the quotation system on which the Common Stock of the
Company is then listed or quoted (or if the Common Stock is not yet listed
or
quoted, then on such exchange or quotation system as the selling holders of
Registrable Shares and the Company shall determine).
(o) Otherwise
use its best efforts to comply with all applicable rules and regulations of
the
SEC and make generally available to its security holders, in each case as soon
as practicable, but not later than 30 days after the close of the period covered
thereby, an earnings statement of the Company which will satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder (or any
comparable successor provisions).
(p) Otherwise
cooperate with the underwriter(s), the SEC and other regulatory agencies and
take all actions and execute and deliver or cause to be executed and delivered
all documents necessary to effect the registration of any securities under
this
Agreement.
(q) During
the period when the prospectus is required to be delivered under the Securities
Act, promptly file all documents required to be filed with the SEC pursuant
to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act.
(r) At
the
request of an Affiliate of an Investor, the Company shall amend any Registration
Statement to include such Affiliate as a selling stockholder in such
Registration Statement.
(s) Comply
with all applicable rules and regulations of the SEC in all material respects.
5. EXPENSES
OF REGISTRATION.
The
Company shall pay for all expenses incurred in connection with a registration
pursuant to this Agreement and compliance with Section 4 of this Agreement,
including without limitation (i) all registration, filing and qualification
fees
and expenses (including without limitation those related to filings with the
SEC, The Nasdaq Stock Market or any national securities exchange (including
The
American Stock Exchange) upon which the Company’s securities are at such time
listed and in connection with applicable state securities or blue sky laws),
(ii) all printing expenses, (iii) all messenger, telephone and delivery expenses
incurred by the Company, (iv) all fees and disbursements of counsel for the
Company, and (v) all 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, the expense of any annual audit
and
audits of any significant acquisitions required to be included in the applicable
registration statement.
6. DELAY
OF REGISTRATION.
Subject
to Section 12(f) hereof, the Investors and the Company (other than with respect
to Section 4(e) hereof) shall not take any action to restrain, enjoin or
otherwise delay any registration as the result of any controversy which might
arise with respect to the interpretation or implementation of this Agreement.
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7. INDEMNIFICATION.
In the
event that any Registrable Shares of the Investors are included in a
Registration Statement pursuant to this Agreement:
(a) To
the
fullest extent permitted by law, the Company will indemnify and hold harmless
each Investor and each officer, director, fiduciary, agent, investment advisor,
employee, member (or other equity holder), general partner and limited partner
(and affiliates thereof) of such Investor, each broker, underwriter or other
person acting on behalf of such Investor and each person, if any, who controls
such Investor within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, (the “Losses”)
to
which they may become subject under the Securities Act or otherwise, insofar
as
such Losses (or actions in respect thereof) arise out of or relate to any untrue
or alleged untrue statement of any material fact contained in the Registration
Statement, or arise out of or relate to the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or any violation by the Company
of
the Securities Act or state securities or blue sky laws applicable to the
Company and leading to action or inaction required of the Company in connection
with such registration or qualification under such Securities Act or state
securities or blue sky laws; and, subject to the provisions of Section 7(c)
hereof, the Company will reimburse on demand such Investor, such broker or
other
person acting on behalf of such Investor or such officer, director, fiduciary,
employee, member (or other equity holder), manager, general partner, limited
partner, affiliate or controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
the
indemnity agreement contained in this Section 7(a) shall not apply to amounts
paid in settlement of any such Losses if such settlement is effected without
the
consent of the Company (which consent shall not be unreasonably withheld),
nor
shall the Company be liable in any such case for any such loss, damage,
liability or action to the extent that it solely arises out of or is based
upon
an untrue statement of any material fact contained in the Registration Statement
or omission to state therein a material fact required to be stated therein
or
necessary to make the statements therein not misleading, in each case to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, in reliance upon and
in
conformity with written information furnished by such Investor with respect
to
such Investor expressly for use in connection with such Registration Statement.
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(b) To
the
fullest extent permitted by law, each Investor, severally (as to itself) and
not
jointly, will indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the Registration Statement, each person,
if
any, who controls the Company within the meaning of the Securities Act, against
any Losses to which the Company or any such director, officer or controlling
person may become subject to, under the Securities Act or otherwise, insofar
as
such Losses (or actions in respect thereto) solely arise out of or are based
upon any untrue statement of any material fact contained in the Registration
Statement, or solely arise out of or relate to the omission to state therein
a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent that such untrue statement
or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement in reliance upon and in conformity with written
information furnished by such Investor with respect to such Investor expressly
for use in connection with such Registration Statement; and, subject to the
provisions of Section 7(d) hereof, such Investor will reimburse on demand any
legal or other expenses reasonably incurred by the Company or any such director,
officer, or controlling person in connection with investigating or defending
any
such Losses, provided, however, that the maximum aggregate amount of liability
of such Investor under this Section 7 shall be limited to the proceeds (net
of
underwriting discounts and commissions, if any) actually received by such
Investor from the sale of Registrable Shares covered by such Registration
Statement; and provided, further, however, that the indemnity agreement
contained in this Section 7(b) or 7(e) shall not apply to amounts paid in
settlement of any such Losses if such settlement is effected without the consent
of such Investor against which the request for indemnity is being made (which
consent shall not be unreasonably withheld), and that no selling Investor shall
be required to indemnify any Person against any liability arising from any
untrue or misleading statement or omission contained in any preliminary
prospectus if such deficiency is corrected in the final prospectus or for any
liability which arises out of the failure of any Person to deliver a prospectus
as required by the Securities Act.
(c) As
promptly as possible after receipt by an indemnified party under this Section
7
of notice of the threat, assertion or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
any
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have the
right to participate in and, to the extent the indemnifying party desires,
jointly with any other indemnifying party similarly noticed, to assume at its
expense the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that, the failure to notify an indemnifying party promptly
of
the threat, assertion or commencement of any such action shall not relieve
such
indemnifying party of any liability to the indemnified party under this Section
7 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.
(d) If
any
indemnified party shall have reasonably concluded that there may be one or
more
legal defenses available to such indemnified party which are different from
or
additional to those available to the indemnifying party, or that such claim
or
litigation involves or could have an effect upon matters beyond the scope of
the
indemnity agreement provided in this Section 7, the indemnifying party shall
not
have the right to assume the defense of such action on behalf of such
indemnified party, and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for the fees and
expenses of counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Section 7. Subject to the foregoing, an indemnified party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof but the fees and expenses of such counsel shall not be at the expense
of
the Company.
12
(e) If
the
indemnification provided for in this Section 7 from the indemnifying party
is
applicable by its terms but unavailable to an indemnified party hereunder in
respect of any Losses, then the indemnifying party, in lieu of indemnifying
such
indemnified party, shall, subject to the maximum aggregate liability of any
Investor as set forth in Section 7(b), contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the actions which resulted in such losses, claims, damages, liabilities
or
expenses, as well as any other relevant equitable considerations. The relative
faults 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 to state a material fact, has been 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. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Sections 7(a), 7(b),
7(c) and 7(d), any legal or other fees, charges or expenses reasonably incurred
by such party in connection with any investigation or proceeding. 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. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7(e) were determined by pro rata allocation or by
any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
(f) The
indemnity and contribution agreements contained in this Section are in addition
to any liability that any indemnifying party may have to any indemnified party.
8. REPORTS
UNDER THE EXCHANGE ACT.
With a
view to making available to the Investors the benefits of Rule 144 and any
other
rule or regulation of the SEC that may at any time permit the Investors to
sell
the Registrable Shares to the public without registration, the Company agrees
to
use best efforts to: (i) make and keep public information available, as those
terms are understood and defined in Rule 144, (ii) file with the SEC in a timely
manner all reports and other documents required to be filed by an issuer of
securities registered under the Securities Act or the Exchange Act; (iii) as
long as any Investor owns any Shares, Warrants or Warrant Shares, to furnish
in
writing upon such Investor’s request a written statement by the Company that it
has complied with the reporting requirements of Rule 144 and of the Securities
Act and the Exchange Act, and to furnish to such Investor a copy of the most
recent annual and quarterly reports of the Company, and such other reports
and
documents so filed by the Company as may be reasonably requested in availing
such Investor of any rule or regulation of the SEC permitting the selling of
any
such Shares, Warrants or Warrant Shares without registration, and (iv) undertake
any additional actions reasonably necessary to maintain the availability of
a
Registration Statement, including any successor or substitute forms, or the
use
of Rule 144.
9. TRANSFER
OF REGISTRATION RIGHTS.
Each
Investor may assign or transfer any or all of its rights under this Agreement
to
any Person, provided such assignee or transferee agrees in writing to be bound
by the provisions hereof that apply to such assigning or transferring Investor.
Upon any such, and each successive, assignment or transfer to any permitted
assignee or transferee in accordance with the terms of this Section 9, such
permitted assignee or transferee shall be deemed to be an “Investor” for all
purposes of this Agreement.
10. ADDITIONAL
ISSUANCE.
The
Company’s issuance of additional capital stock and other securities of the
Company shall be limited pursuant to the additional issuance restrictions set
forth in Section 6.6 of the Securities Purchase Agreement.
13
11. ENTIRE
AGREEMENT.
This
Agreement constitutes and contains the entire agreement and understanding of
the
parties with respect to the subject matter hereof, and it also supersedes any
and all prior negotiations, correspondence, agreements or understandings with
respect to the subject matter hereof.
12. MISCELLANEOUS.
(a) This
Agreement, and any right, term or provision contained herein, may not be
amended, modified or terminated, and no right, term or provision may be waived,
except with the written consent of (i) the holders of a majority of the then
outstanding Registrable Shares and (ii) the Company; provided that any amendment
or modification that is materially and disproportionately adverse to any
particular Investor (as compared to all Investors as a group) shall require
the
consent of such Investor.
(b) This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York without regard to the principles of conflicts
of
law. This Agreement shall be binding upon the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns
and
transferees, provided that the terms and conditions of Section 9 hereof are
satisfied. Notwithstanding anything in this Agreement to the contrary, if at
any
time any Investor (including any successors or assigned) shall cease to own
any
Registrable Shares, all of such Investor’s rights under this Agreement shall
immediately terminate.
(c) Each
party hereby irrevocably and unconditionally (i) agrees that any suit, action
or
other legal proceeding arising out of this Agreement shall be brought in a
state
court located in New York, New York; (ii) consents to the jurisdiction of any
such court in any suit, action or proceeding; and (iii) waives any objection
which such party may have to the laying of venue of any such suit, action or
proceeding in any such court.
(d) Each
of
the Company and the Investor hereby waives any right to a trial by jury in
any
lawsuit, action, claim or proceeding to enforce or defend any right under this
Agreement or any amendment, instrument, document or agreement delivered or
to be
delivered in connection with this Agreement and agrees that any lawsuit, action,
claim or proceeding will be tried before a court and not before a
jury.
(e) Any
notices to be given pursuant to this Agreement shall be in writing and shall
be
given by certified or registered mail, return receipt request. Notices shall
be
deemed given when personally delivered or when mailed to the addresses of the
respective parties as set forth on Exhibit
A
or
Schedule
1
hereto,
as applicable, or to such changed address of which any party may notify the
others pursuant hereto, except that a notice of change of address shall be
deemed given when received. An electronic communication (“Electronic
Notice”)
shall
be deemed written notice for purposes of this Section 12(e) if sent with return
receipt requested to the electronic mail address specified by the receiving
party on Exhibit
A
or
Schedule
1
hereto,
as applicable. Electronic Notice shall be deemed received at the time the party
sending Electronic Notice receives verification of receipt by the receiving
party.
14
(f)
Upon
the
request of any Investor delivered to the Company in compliance with Section
12(e), the Company shall provide to counsel for such Investor (i) any
notices required to be provided to such Investor pursuant to this Agreement
and
(ii) copies of any documents required to be delivered to Investors pursuant
to this Agreement, including, without limitation, any notice required to be
given to such Investor under Sections 4(d) and 4(e) and any documents required
to be delivered to such Investor under Sections 4(h) and 4(i).
(g) The
parties acknowledge and agree that in the event of any breach of this Agreement,
in addition to other rights granted under this Agreement or at law, each of
the
parties hereto shall be entitled to specific performance of the obligations
of
the other parties hereto and to such appropriate injunctive relief as may be
granted by a court of competent jurisdiction. All remedies, either under this
Agreement or by law or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
(h) This
Agreement may be executed in a number of counterparts. All such counterparts
together shall constitute one Agreement, and shall be binding on all the parties
hereto notwithstanding that all such parties have not signed the same
counterpart. The parties hereto confirm that any facsimile copy of another
party’s executed counterpart of this Agreement (or its signature page thereof)
will be deemed to be an executed original thereof.
(i) Except
as
contemplated in Section 9 hereof, this Agreement is intended solely for the
benefit of the parties hereto and is not intended to confer any benefits upon,
or create any rights in favor of, any Person (including, without limitation,
any
stockholder or debt holder of the Company) other than the parties hereto.
(j) If
any
provision of this Agreement is invalid, illegal or unenforceable, such provision
shall be ineffective to the extent, but only to the extent of, such invalidity,
illegality or unenforceability, without invalidating the remainder of such
provision or the remaining provisions of this Agreement, unless such a
construction would be unreasonable.
(k) This
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their permitted successors and assigns.
[Signature
Pages Follow]
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IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.
16