EXHIBIT B AMERICAN ETHANOL, INC. AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
EXHIBIT
B
AMERICAN
ETHANOL, INC.
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as
of February 28, 2007 by and among AMERICAN ETHANOL, INC., a Nevada corporation
(the “Company”), the purchasers of Series A Preferred Stock of the Company (the
“Series A Investors”) pursuant to those certain Series A Preferred Stock
Subscription Agreements dated as of varying dates in February, March and
April,
2006 (the “Series A Agreements”) and the purchasers of Series B Preferred Stock
of the Company (the “First Series B Investors”) pursuant to that certain
Series
B
Preferred Stock Purchase Agreement
dated
September 5, 2006, (the “First Series B Agreements”), and the purchasers of
Series B Preferred Stock of the Company (the “Second Series B Investors” and
together with the First Series B Investors, the “Series B Investors”) pursuant
to that certain Series
B
Preferred Stock Purchase Agreement
of even
date herewith (the “Second Series B Agreements” and together with the First
Series B Agreements, the “Series B Agreements”) (the Series A Investors and the
Series B Investors being collectively referred to herein as the
“Investors”).
WHEREAS,
in connection with the First Series B Agreements, the Company, the Series
A
Investors and the First Series B Investors entered into that certain Amended
and
Restated Registration Rights Agreement dated September 5, 2006 (the “Prior
Rights Agreement”);
WHEREAS,
pursuant to the Second Series B Agreements, the Company shall sell and the
Second Series B Investors shall purchase up to 20,000,000 shares of Series
B
Preferred Stock of the Company (the “Series B Preferred” and, collectively with
the Series A Preferred, the “Preferred Stock”);
WHEREAS,
the obligation of each of the Second Series B Investors to purchase their
respective shares of Series B Preferred is conditioned upon, among other
things,
the execution and delivery of this Agreement;
WHEREAS,
a majority of the Series A Preferred and the First Series B Preferred have
consented to the amendment and restatement of the Prior Rights Agreement
in its
entirety and to accept the rights created pursuant hereto in lieu of the
rights
granted to them under the Prior Rights Agreement;
WHEREAS,
the Second Series B Investors desire to enter into this Agreement with the
Series A Investors, the First Series B Investors and the Company and upon
so
doing, this Agreement shall be binding upon all holders of the Preferred
Stock
and shall supersede the Prior Rights Agreement and any and all other agreements
regarding the subject matter hereof;
WHEREAS,
the Company has entered into an agreement with Marwich II,
Ltd.
(“Marwich”), a Colorado corporation, which shares of common stock are currently
registered with the Commission and quoted on the NASD OTC Bulletin Board
under
the trading symbol “MWII,” pursuant to which the Company will merge
with and into Marwich (the “Merger Agreement”);
provided,
however,
that
the offering of the Series B Preferred is not conditioned on the completion
of
such merger;
NOW,
THEREFORE, the parties hereto hereby covenant and agree as follows:
1. Certain
Definitions.
As used
in this Agreement, the following terms shall have the following respective
meanings:
“Business
Day”
means
any day other than Saturday, Sunday or any other day on which commercial
banks
in The City of New York are authorized or required by law to remain
closed.
“Commission”
shall
mean the Securities and Exchange Commission or any other federal agency at
the
time administering the Securities Act.
“Common
Stock”
shall
mean the Common Stock of the Company.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all
as the
same shall be in effect at the time.
“Holder”
or
“Holders”
shall
mean any Person or Persons to whom Registrable Securities were originally
issued
or permitted transferees under this Agreement who hold Registrable
Securities.
“Liquidity
Event”
shall
mean (i) any merger, consolidation or business combination of the Company
with
any other entity other than an affiliate of the Company and pursuant to which
the Company is not the surviving entity, (ii) any sale of all or substantially
all of the assets of the Company, or (iii) any bona fide offer by the Company
or
a third party, approved by the Company’s board of directors, to purchase, at a
price not less than fair market value, all or substantially all of the
securities of the Company.
“Merger”
shall
mean the merger between the Company and Marwich pursuant to the Merger
Agreement, or, if such merger is not consummated, a merger between the Company
and a Public Shell or a wholly-owned subsidiary of a Public Shell, which
qualifies as a “Reverse Merger” under the Company’s Amended and Restated
Articles of Incorporation as in effect on the Series B Agreements Closing
Date.
“Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and governmental or
any
department or agency thereof.
“Placement
Agent”
shall
mean Chadbourn Securities, Inc. and/or any other placement agent engaged
by the
Company in connection with the Series B Agreements.
“Placement
Agent Warrants”
shall
mean warrants to purchase Common Stock issued to the Placement Agent pursuant
to
the Engagement Letter between the Company and Chadbourn Securities,
Inc.
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“Prospectus”
shall
mean (i)
the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective Registration Statement in reliance upon
Rule 430A, 430B or 430C promulgated under the Securities Act), as amended
or supplemented by any prospectus supplement, with respect to the terms of
the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus
and
(ii) any “free writing prospectus” as defined in Rule 405 promulgated under the
Securities Act.
“Public
Sale”
shall
mean any sale of securities to the public pursuant to (i) an offering registered
under the Securities Act or (ii) the provisions of Rule 144 (or any similar
rule
or rules then in effect) under the Securities Act.
“Public
Shell”
shall
mean a company identified by the Company’s management as an appropriate party to
a Reverse Merger, which is a reporting company under Section 13 or 15 of
the
Securities Act or 1934, as amended, whose securities are quoted on the OTC
Bulletin Board, NASDAQ Capital Market or a national securities exchange in
the
United States.
“Register,”
“registered”
and
“registration”
shall
mean a registration effected by preparing and filing a registration statement
or
statements or similar documents in compliance with the Securities Act and
the
declaration or ordering of effectiveness of such registration statement or
document by the Commission.
“Registrable
Securities”
shall
mean (i) shares
of
Common Stock issued or issuable pursuant to the conversion of the Preferred
Stock, (ii) shares of Common Stock issued or issuable pursuant to the exercise
of the Placement Agent Warrants, and (ii) stock
issued with respect to or in any exchange for or in replacement of stock
referred to in (i) and/or (ii) hereof.
“Registration
Statement”
means
a
registration statement of the Company, a successor entity or the Public Shell,
filed under the 1933 Act covering the Registrable Securities.
“Requisite
Period”
shall
mean, (i) with respect to a firm commitment underwritten public offering,
the
period commencing on the effective date of the Registration Statement and
ending
on the date each underwriter has completed the distribution of all securities
purchased by it, and, (ii) with respect to any other registration, the period
commencing on the effective date of the Registration Statement and ending
on the
earlier of the date on which the sale of all Registrable Securities covered
thereby is completed or 90 days after such effective date.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, or any similar federal statue,
and
the rules and regulations of the Commission thereunder, all as the same shall
be
in effect at the applicable time.
“Series
B Agreements Closing Date”
shall
mean the closing date of the sale of shares of Series B Preferred in the
offering to the Second Series B Investors pursuant to the Second Series
B
Agreements.
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2. Registration
Following a Merger.
(a) Filing
of Registration Statement.
Promptly following the closing of the Merger (the “Merger Closing Date") but no
later than thirty (30) days after the Merger Closing Date (the "Filing
Deadline"), the Company shall prepare and file with the Commission one
Registration Statement on Form S-1 or Form SB-2 (or, if Form S-1 or Form
SB-2 is
not then available to the Company, on such form of registration statement
as is
then available to effect a registration for resale of the Registrable
Securities), covering the resale of the Registrable Securities. Such
Registration Statement also shall cover, to the extent allowable under the
1933
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 involving any adjustments
with
respect to the Registrable Securities. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 2(c)
to the
Investors’ counsel prior to its filing or other submission.
(b) Effectiveness.
(i) The
Company shall use commercially reasonable efforts to have the Registration
Statement declared effective as soon as practicable. The Company shall notify
the Investors by facsimile or e-mail as promptly as practicable, and in any
event, within one Business Day, after the Registration Statement is declared
effective and shall simultaneously provide the Investors with copies of the
Prospectus to be used in connection with the sale or other disposition of
the
securities covered thereby.
(ii) If
(A) a
Registration Statement covering the Registrable Securities is not declared
effective by the Commission within (i) one hundred fifty (150) days after
the
Filing Deadline, in the event that the Registration Statement is selected
for
review by the Commission, or (ii) ninety (90) days after the Filing Deadline,
in
the event that the Registration Statement is not selected for review by the
Commission, or (B) after the Registration Statement has been declared effective
by the Commission, sales cannot be made pursuant to such Registration Statement
for any reason (including without limitation by reason of a stop order, or
the
Company's failure to update the Registration Statement), but excluding the
inability of any Investor to sell the Registrable Securities covered thereby
due
to market conditions and except as excused pursuant to subparagraph (ii)
below,
then the Company will make pro rata payments to each Investor, as liquidated
damages and not as a penalty, in an amount equal to 0.5% of the aggregate
purchase price paid by such Investor for the Preferred Stock for each 30-day
period or pro rata for any portion thereof following (i) the date by which
or on
which such Registration Statement should have been filed or effective, as
the
case may be, or (ii) the date on which sales could not be made as set forth
in
(B) above, and until the date on which the Registration Statement is filed
or
becomes effective or regains its effectiveness, as the case may be (the
"Blackout Period"). Such payments shall be in full compensation to the
Investors, and shall constitute the Investors' exclusive remedy for such
events.
The amounts payable as liquidated damages pursuant to this paragraph shall
be
paid monthly within three (3) Business Days of the last day of each month
following the commencement of the Blackout Period until the termination of
the
Blackout Period. Such payments shall be made to each Investor in cash or
shares
of common stock, at the Company’s option.
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(iii) For
not
more than forty-five (45) consecutive days or for a total of not more than
ninety (90) days in any twelve (12) month period, the Company may delay the
disclosure of material non-public information concerning the Company, by
suspending the use of any Prospectus included in any registration contemplated
by this Section containing such information, the disclosure of which at the
time
is not, in the good faith opinion of the Company, in the best interests of
the
Company (an "Allowed Delay"); provided,
that the
Company shall promptly (a) notify the Investors in writing of the existence
of
(but in no event, without the prior written consent of an Investor, shall
the
Company disclose to such Investor any of the facts or circumstances regarding)
material non-public information giving rise to an Allowed Delay, (b) advise
the
Investors in writing to cease all sales under the Registration Statement
until
the end of the Allowed Delay and (c) use commercially reasonable efforts
to
terminate an Allowed Delay as promptly as practicable.
(c) Company
Obligations.
The
Company will use commercially reasonable efforts to effect the registration
of
the Registrable Securities pursuant to this Section 2 in accordance with
the
terms hereof, and pursuant thereto the Company will, as expeditiously as
possible:
(i) use
commercially reasonable efforts to cause such Registration Statement to become
effective and to remain continuously effective for a period that will terminate
upon the earlier of (i) the date on which all Registrable Securities covered
by
such Registration Statement as amended from time to time, have been sold
or (ii)
the date at which all the Registrable Securities covered by such Registration
Statement as amended from time to time, can be sold in any three-month period
without registration in compliance with Rule 144 of the Securities Act (the
"Effectiveness Period") and advise the Investors in writing when the
Effectiveness Period has expired;
(ii) prepare
and file with the Commission such amendments and post-effective amendments
to
the Registration Statement and the Prospectus as may be necessary to keep
the
Registration Statement effective for the Effectiveness Period and to comply
with
the provisions of the Securities Act and the Exchange Act with respect to
the
distribution of all of the Registrable Securities covered thereby;
(iii) provide
copies to and permit one counsel for the Investors to review each Registration
Statement and all amendments and supplements thereto in substantially the
form
intended to be filed no fewer than seven (7) days prior to their filing with
the
Commission and not file any document to which such counsel reasonably objects;
provided,
however,
that in
no event shall the Company be required to reimburse legal fees in excess
of
$20,000 pursuant to this Section 2;
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(iv) furnish
to the Investors and one counsel for the Investors’ (A) promptly after the same
is prepared and publicly distributed, filed with the Commission, or received
by
the Company (but not later than two (2) Business Days after the filing date,
receipt date or sending date, as the case may be) one (1) copy of any
Registration Statement and any amendment thereto, each preliminary prospectus,
each Prospectus and each amendment or supplement thereto, and each letter
written by or on behalf of the Company to the Commission or the staff of
the
Commission, and each item of correspondence from the Commission or the staff
of
the Commission, in each case relating to such Registration Statement (other
than
any portion thereof which contains information for which the Company has
sought
confidential treatment), and (B) such number of copies of a Prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as each Investor may reasonably request in order
to
facilitate the disposition of the Registrable Securities owned by such Investor
that are covered by the related Registration Statement;
(v) notify
the Investors of the issuance of any stop order or other suspension of
effectiveness of the Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction;
(vi)
use
commercially reasonable efforts to (A) prevent the issuance of any stop order
or
other suspension of effectiveness and, (B) if such order is issued, obtain
the
withdrawal of any such order at the earliest possible moment;
(vii) prior
to
any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the Investors and the
Investors’ Counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky
laws
of such jurisdictions reasonably requested by the Investors and do any and
all
other commercially reasonable acts or things necessary or advisable to enable
the distribution in such jurisdictions of the Registrable Securities covered
by
the Registration Statement; provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would
not
otherwise be required to qualify but for this Section 2(c), (B) subject itself
to general taxation in any jurisdiction where it would not otherwise be so
subject but for this Section 2(c), or (C) file a general consent to service
of
process in any such jurisdiction;
(viii) use
commercially reasonable efforts to cause all Registrable Securities covered
by
the Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
(ix) immediately
notify the Investors, at any time when a Prospectus relating to Registrable
Securities is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the Prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be
stated therein or necessary to make the statements therein not misleading
in
light of the circumstances then existing, and at the request of any Holder,
promptly prepare and furnish to such Holder a reasonable number of copies
of a
supplement to or an amendment of such Prospectus as may be necessary so that,
as
thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus shall not include 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 not misleading in light of the circumstances then existing;
and
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(x) otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission under the Securities Act and the Exchange Act,
take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder.
(xi)
with
respect to any particular Investor, it shall be a condition precedent to
the
obligations of the Company under this Section 2, that such Investor shall
furnish to the Company on the date hereof an executed Registration Statement
Questionnaire in the form attached hereto as Appendix I, and that such Investor
shall otherwise comply with the provisions of Section 8 hereof.
3. Demand
Registration.
(a) In
the
event that the Merger is not consummated or is terminated pursuant to its
terms
within 180 days after the Series B Agreements Closing Date (the “Merger
Deadline”), then upon the written request of Holders holding at least 20% of the
Registrable Securities then outstanding (the “Initiating Holders”), the Company
shall use commercially reasonable efforts to effect a registration under
the
Securities Act of all Registrable Securities in accordance with Section 7;
provided,
however,
that
the Company shall not be obligated to effect a registration pursuant to this
Section 3(a):
(i) prior
to
the Merger Deadline;
(ii)
in
any
particular jurisdiction in which the Company would be required to: (a) qualify
to do business, where it would not otherwise be required to qualify, (b)
subject
itself to general taxation, where it would not otherwise be so subject, or
(c)
execute a general consent to service of process unless it is already subject
to
service in such jurisdiction and except as required by the Securities
Act;
(iii) if
the
Company, within ten (10) days of the receipt of the request of such Holders,
gives notice of its bona fide intention to effect the filing of a registration
statement with the Commission within thirty (30) days of receipt of such
request
(other than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration which
is
not appropriate for the registration of Registrable Securities);
or
(iv) if
the
Company furnishes to such Holders a certificate signed by the Company’s Chief
Executive Officer stating that in the good faith judgment of the Company’s Board
of Directors, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed on or before the
date
filing would be required and it is therefore essential to defer the filing
of
such registration statement, in which case the Company shall have the right
to
defer such filing for a period of not more than ninety (90) days after the
furnishing of such a certificate of deferral; provided,
however,
that
this right may be exercised only once in any twelve (12) month period.
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(b) Within
10
days of receipt of any demand notice under Section 3(a) above, the Company
shall
give written notice (a “Company Notice”) to all Holders. Thereafter, the Company
shall use commercially reasonable efforts to register under the Securities
Act,
the number of Registrable Securities specified in such demand notice (and
in all
notices received by the Company from other Holders within twenty (20) days
after
the giving of such Company Notice). If
the
method of disposition shall be an underwritten public offering, all Holders
of
the Registrable Securities to be sold in such offering shall enter into an
underwriting agreement in customary form with the underwriter selected for
such
underwriting by the Company (which underwriter shall be reasonably acceptable
to
the Holders of majority of the Registrable Securities to be sold in such
offering). The Company shall be obligated to register Registrable Securities
pursuant to Section 3(a) on one occasion only; provided,
that
each such obligation shall be deemed satisfied only when a registration
statement covering all Registrable Securities specified in notices received
as
aforesaid, shall have become effective and, if such method of disposition
is a
firm commitment underwritten public offering, all such Registrable Securities
shall have been sold pursuant thereto.
(c) If
a
demand registration is an underwritten offering and the managing underwriters
shall advise the Company in writing that in their opinion the number of
Registrable Securities requested to be included in such offering exceeds
the
number of shares which can be sold in an orderly manner in such offering
within
a price range acceptable to the Initiating Holders without adversely affecting
the marketability of the offering, then the Company shall so advise all Holders,
and the number of Registrable Securities that may be included in the
registration and underwriting shall be allocated (i) first to the Initiating
Holders in proportion to the respective amounts of Registrable Securities
held
by such Holders, and (ii) second, to other shareholders of the Company who
have
requested registration, according to the number of such securities requested
by
them to be so included.
(d) The
right
of the Holders of Registrable Securities to have their securities registered
in
a demand registration shall terminate at the earlier of: (i) three (3) years
following the Series B Agreements Closing Date; or (ii) as to any Holder,
such
earlier time at which all Registrable Securities held by such Holder (together
with any affiliate of the Holder with whom such Holder must aggregate its
sales
under Rule 144) can be sold in any three-month period without registration
in
compliance with Rule 144 of the Securities Act.
4. Piggyback
Registration.
(a) If
the
Company at any time (other than pursuant to Sections 2, 3 or 5 hereof) proposes
to register any of its securities under the Securities Act for sale to the
public, whether for its own account or for the account of other security
holders
or both (except with respect to registration statements on Forms S-4 or S-8
and
any similar successor forms) (a “Piggyback
Registration”),
each
such time it will give prompt written notice to such effect to all Holders
at
least thirty (30) days prior to such filing. Upon the written request of
any
such Holder, received by the Company within twenty (20) days after the giving
of
any such notice by the Company, to register any of its Registrable Securities,
the Company will, subject to Section 4(b) below, cause all Registrable
Securities as to which registration shall have been so requested to be included
in the securities to be covered by the Registration Statement proposed to
be
filed by the Company, all to the extent requisite to permit the sale or other
disposition by the Holder of such Registrable Securities so registered.
Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 4 without thereby incurring
any liability to the Holders.
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(b) In
the
event that any Piggyback Registration shall be, in whole or in part, an
underwritten public offering of Common Stock and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities and/or other securities requested to be included in such offering
exceeds the number of shares which can be sold in an orderly manner in such
offering within a price range acceptable to the Company without adversely
affecting the marketability of the offering, then the Company will include
in
such registration (i) first, the securities the Company proposes to sell;
(ii)
second, the Registrable Securities pro rata from among the Holders according
to
the number of Registrable Securities held by such Holders; and (iii) third
to
other shareholders requesting registration pro rata. Notwithstanding the
foregoing, however, the number of Registrable Securities to be included in
such
registration and underwriting under this Section 4(b) shall not be reduced
to
less than thirty percent (30%) of the aggregate securities requested to be
included by the Holders in such registration without prior consent of at
least a
majority of the Holders who have requested their shares to be included in
such
registration and underwriting.
(c) The
right
of the Holders of Registrable Securities to have their securities registered
in
a Piggyback registration shall terminate at the earlier of (i) three (3)
years
following the Series B Agreements Closing Date, or (ii) as to any Holder,
such
earlier time at which all Registrable Securities held by such Holder (together
with any affiliate of the Holder with whom such Holder must aggregate its
sales
under Rule 144) can be sold in any three-month period without registration
in
compliance with Rule 144 of the Securities Act.
5. Registration
on Form S-3.
(a) In
addition to the rights under Section 3 and 4 hereof, if at any time (i) a
Holder
or Holders of at least 20% of
the
total Registrable Securities then outstanding request(s) that the Company
file a
registration statement on Form S-3 or any successor form thereto for a public
offering of all or any portion of the Registrable Securities held by such
requesting Holder or Holders, where the reasonably anticipated aggregate
price
to the public of this public offering would exceed $1,000,000 and (ii) the
Company is a registrant entitled to use Form S-3 or any successor form thereto
to register such Registrable Securities, the Company shall use commercially
reasonable efforts to register under the Securities Act on Form S-3 or any
successor form thereto, the number of Registrable Securities specified in
such
notice; provided,
however,
that
the Company shall not be required to effect a registration pursuant to this
Section 5:
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(i) at
any
time prior to six months following the effective date of a registration
statement for the offering of its securities effected under Sections 3 or
4;
(ii) in
any
particular jurisdiction in which the Company would be required to: (a) qualify
to do business, where it would not otherwise be required to qualify, (b)
subject
itself to general taxation, where it would not otherwise be so subject, or
(c)
execute a general consent to service of process unless it is already subject
to
service in such jurisdiction and except as required by the Securities
Act;
(iii) if
the
Company, within ten (10) days of the receipt of the request of such Holders,
gives notice of its bona fide intention to effect the filing of a registration
statement with the Commission within thirty (30) days of receipt of such
request
(other than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration which
is
not appropriate for the registration of Registrable Securities);
(iv) if
the
Company furnishes to such Holders a certificate signed by the Company’s Chief
Executive Officer stating that in the good faith judgment of the Company’s Board
of Directors, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed on or before the
date
filing would be required and it is therefore essential to defer the filing
of
such registration statement, in which case the Company shall have the right
to
defer such filing for a period of not more than ninety (90) days after the
furnishing of such a certificate of deferral; provided,
however,
that
this right may be exercised only once in any twelve (12) month period; or
(vi) after
the
Company has effected two (2) Registration Statements pursuant to this Section
5.
(b) The
right
of the Holders of Registrable Securities to have their securities registered
on
Form S-3 under this Section 5 shall terminate at the earlier of (i) three
(3)
years following the Series B Agreements Closing Date, or (ii) as to any Holder,
such earlier time at which all Registrable Securities held by such Holder
(together with any affiliate of the Holder with whom such Holder must aggregate
its sales under Rule 144) can be sold in any three-month period without
registration in compliance with Rule 144 of the Securities Act.
6. Holdback
Agreement. In
connection with registration of Registrable Securities pursuant to Sections
3, 4
or 5 in connection with an underwritten public offering, the Holders of
Registrable Securities agree, if so requested by the underwriter or
underwriters, not to effect any Public Sale or distribution (including any
sale
pursuant to Rule 144 under the Securities Act) of any Registrable Securities,
and not to effect any such Public Sale or distribution of any other equity
security of the Company or its successor or of any security convertible into
or
exchangeable or exercisable for any equity security of the Company or its
successor (in each case, other than as part of such underwritten public
offering) during the seven days prior to and the 120 days following the
effective date of the Registration Statement (other than a registration
statement on Form S-4 or S-8) with respect to such underwritten public offering
if the holders of Registrable Securities were afforded the opportunity to
include all of their Registrable Securities therein pursuant to the provisions
of this Agreement.
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7. Registration
Procedures.
If and
whenever the Company is required by the provisions of Sections 3, 4 or 5
hereof
to use commercially reasonable efforts to effect the registration of any
Registrable Securities under the Securities Act, the Company will, subject
to
the foregoing, as expeditiously as possible:
(a) prepare
and file with the Commission a Registration Statement with respect to such
securities within 60 days after delivery of a demand notice under Section
3(a)
or Section 5 hereof, and use commercially reasonable efforts to cause such
Registration Statement (A) to become effective not later than (i) one hundred
fifty (150) days after its filing, in the event that the Registration Statement
is selected for review by the Commission, or (ii) ninety (90) days after
its
filing, in the event that the Registration Statement is not selected for
review
by the Commission and (B) to remain effective for the Requisite Period.
If
the
Company does not meet the requirements of this subsection 7(a) with respect
to a
registration under Section 3 only, except in the event of a Grace Period,
then
the Company will make pro rata payments to each Investor, as liquidated damages
and not as a penalty, in an amount equal to 0.5% of the aggregate purchase
price
paid by such Investor for the Preferred Stock for each 30-day period or pro
rata
for any portion thereof following the date by which or on which such
Registration Statement should have been filed or effective, as the case may
be,
and until the Registration Statement is filed, becomes effective, or regains
its
effectiveness, as the case may be (the "Failure Period"). Such payments shall
be
in full compensation to the Investors, and shall constitute the Investors'
exclusive remedy for such events. The amounts payable as liquidated damages
pursuant to this paragraph shall be paid monthly within three (3) Business
Days
of the last day of each month following the commencement of the Failure Period
and until the termination of the Blackout Period.
For
not
more than forty-five (45) consecutive days or for a total of not more than
ninety (90) days in any twelve (12) month period, the Company may delay the
disclosure of material non-public information concerning the Company, by
suspending the use of any Prospectus included in any registration contemplated
by Sections 3, 4 or 5 containing such information, the disclosure of which
at
the time is not, in the good faith opinion of the Company, in the best interests
of the Company (a "Grace Period"); provided,
that the
Company shall promptly (a) notify the Holders in writing of the existence
of
(but in no event, without the prior written consent of an Investor, shall
the
Company disclose to such Holder any of the facts or circumstances regarding)
material non-public information giving rise to the Grace Period, (b) advise
the
Holder in writing to cease all sales under the Registration Statement until
the
end of the Grace Period and (c) use commercially reasonable efforts to terminate
a Grace Period as promptly as practicable.
(b) prepare
and file with the Commission such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as
may be
necessary to keep such Registration Statement effective for the Requisite
Period
and comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration Statement
in accordance with the intended method of disposition set forth in such
Registration Statement for such period;
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(c) furnish
to each seller of Registrable Securities and to each underwriter such number
of
copies of the Registration Statement and the Prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the intended disposition of the Registrable Securities
covered by such registration statement;
(d) use
commercially reasonable efforts (i) to
register or qualify the Registrable Securities covered by such Registration
Statement under the securities or “blue sky” laws of such jurisdictions as the
seller of Registrable Securities or, in the case of an underwritten public
offering, the managing underwriter reasonably shall request, (ii) to
prepare and file in those jurisdictions such amendments (including post
effective amendments) and supplements, and take such other actions, as may
be
necessary to maintain such registration and qualification in effect at all
times
for the period of distribution contemplated thereby and (iii) to
take such further action as may be necessary or advisable to enable the
disposition of the Registrable Securities in such jurisdictions,
provided,
that the
Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is
not
so qualified, to subject itself to general taxation where it would not otherwise
be so subject, or to consent to general service of process in any such
jurisdiction;
(e) use
commercially reasonable efforts to list the Registrable Securities covered
by
such registration statement with any securities exchange or over-the-counter
market on which the Common Stock of the Company or its successor is then
listed
or quoted;
(f) immediately
notify each seller of Registrable Securities and each underwriter under such
Registration Statement, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event
of which the Company has knowledge as a result of which the Prospectus contained
in such Registration Statement, as then in effect, includes any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of
the circumstances then existing and promptly amend or supplement such
Registration Statement to correct any such untrue statement or omission;
(g) notify
each seller of Registrable Securities of the issuance by the Commission of
any
stop order suspending the effectiveness of the Registration Statement or
the
initiation of any proceedings for that purpose and make every reasonable
effort
to prevent the issuance of any stop order and, if any stop order is issued,
obtain the lifting thereof at the earliest possible time;
(h) permit
a
single firm of counsel designated as selling shareholders' counsel by the
holders of a majority in interest of the Registrable Securities and all other
securities being registered (“Shareholders
Counsel”)
to
review the registration statement and all amendments and supplements thereto
for
a reasonable period of time prior to their filing (provided,
however,
that in
no event shall the Company be required to reimburse legal fees in excess
of
$20,000 per Registration Statement pursuant to this Section 7(h)) and the
Company shall not file any document in a form to which Shareholders Counsel
reasonably objects;
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12 -
(i) make
generally available to its security holders as soon as practicable, but not
later than 90 days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158 under the
Securities Act) covering a 12-month period beginning not later than the first
day of the Company's next fiscal quarter following the effective date of
the
Registration Statement;
(j) if
the
offering is an underwritten offering, the Company will enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are usual and customary in
the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature, including, without
limitation, customary holdback, indemnification and contribution
provisions;
(k) if
the
offering is an underwritten offering, at the request of any seller of
Registrable Securities, use its best efforts to furnish to such seller of
Registrable Securities on the date that Registrable Securities are delivered
to
the underwriters for sale pursuant to such registration: (i) a copy of an
opinion dated such date of counsel representing the Company for the purposes
of
such registration, addressed to the underwriters, stating that such Registration
Statement has become effective under the Securities Act and (A) that to the
knowledge of such counsel, no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose have been instituted
or are
pending or contemplated under the Securities Act, (B) that the Registration
Statement, the related Prospectus and each amendment or supplement thereof
comply as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as
to
financial statements or other financial information contained therein) and
(C)
to such other effects as are customarily the subject of opinions of issuer’s
counsel provided to underwriters in underwritten public offerings and are
reasonably requested by counsel for the underwriters and (ii) a copy of a
letter
dated such date from the independent public accountants retained by the Company,
addressed to the underwriters, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion
of
such accountants, the financial statements of the Company included in the
Registration Statement or the Prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as
to the
period ending no more than five Business Days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
(l) make
available for inspection by each seller of Registrable Securities, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors
and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
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13 -
(m) provide
a
transfer agent and registrar, which may be a single entity, for the Registrable
Securities not later than the effective date of the Registration Statement;
and
(n) take
all
actions reasonably necessary to facilitate the timely preparation and delivery
of certificates (not bearing any legend restricting the sale or transfer
of such
securities) representing the Registrable Securities to be sold pursuant to
the
Registration Statement and to enable such certificates to be in such
denominations and registered in such names as the Holders or any underwriters
may reasonably request.
8.
Obligations
of the Holders.
(a)
At
least
seven (7) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each seller of Registrable
Securities in writing of the information the Company requires from each such
seller. It shall be a condition precedent to the obligations of the Company
to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular seller of Registrable Securities that
such seller shall furnish to the Company such information regarding itself,
the
Registrable Securities held by it and the intended method of disposition
of the
Registrable Securities held by it as shall be reasonably required to effect
the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request.
(b) Each
Holder, by such Holder’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder,
unless
such Holder has notified the Company in writing of such Holder’s election to
exclude all of such Holder’s Registrable Securities from such Registration
Statement.
(c) Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Sections 2(c)(v) or 2(c)(ix) and Sections
7(g) or 7(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the applicable Registration Statement(s)
covering such Registrable Securities until such Holder receives copies of
the
supplemented or amended Prospectus contemplated by such sections or a notice
that no supplement or amendment is required.
(d) Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it in connection with sales
of
Registrable Securities pursuant to a Registration Statement.
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14 -
9. Expenses.
All
expenses incurred by the Company in complying with Sections 2, 3, 4 and 5,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including counsel fees) incurred in
connection with complying with state securities or “blue sky” laws, fees of the
National Association of Securities Dealers, Inc., fees of transfer agents
and
registrars, costs of insurance and fees and disbursements of one counsel
for the
seller of Registrable Securities and all other securities being registered,
but
excluding any Selling Expenses, are called “Registration
Expenses.”
All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called “Selling
Expenses.”
Subject
to the limitation on legal expenses set forth in Sections 2(c)(iii) or 7(h),
as
the case may be, the Company will pay all Registration Expenses in connection
with each Registration Statement filed hereunder. All Selling Expenses in
connection with each Registration Statement shall be borne by the participating
sellers in proportion to the number of Registrable Securities sold by each
or as
they may otherwise agree.
10. Indemnification
and Contribution.
(a)
In the
event of a registration of any of the Registrable Securities under the
Securities Act pursuant to the terms of this Agreement, the Company will
indemnify and hold harmless and pay and reimburse each seller of such
Registrable Securities thereunder, each underwriter of Registrable Securities
thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, from and against, and
pay
or reimburse them for, any losses, claims, expenses, damages or liabilities,
joint or several, to which such seller, underwriter or controlling person
may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement under which such
Registrable Securities were registered under the Securities Act pursuant
hereto,
any preliminary prospectus (unless superseded by a final Prospectus) or final
Prospectus contained therein, or any amendment or supplement thereof, or
(ii)
the omission or alleged omission to state in any such Registration Statement
a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any Prospectus, necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading, or (iii) any violation or alleged violation of the Securities
Act or any state securities or blue sky laws applicable to the Company and
relating to action or inaction required by the Company in connection with
the
offering of Registrable Securities and specifically will reimburse each such
seller, each underwriter and each such controlling person for any legal or
other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, damage or liability (or action in respect thereof);
provided,
that
the Company will not be liable in any such case if and to the extent that
any
such loss, claim, damage or liability (or action in respect thereof) arises
out
of or is based upon the Company's reliance on an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by any such seller, any such underwriter or any such
controlling person in writing specifically for use in such Registration
Statement or Prospectus; and provided,
further,
that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability (or action in respect thereof) arises out
of or
is based upon an untrue statement or alleged untrue statement or omission
or
alleged omission in such Registration Statement or Prospectus, which untrue
statement or alleged untrue statement or omission or alleged omission is
completely corrected in an amendment or supplement to the Registration Statement
or Prospectus and such seller or such controlling person thereafter fails
to
deliver or cause to be delivered such Registration Statement or Prospectus
as so
amended or supplemented prior to or concurrently with the Registrable
Securities, or the written confirmation of the sale of the Registrable
Securities, as the case may be, to the person asserting such loss, claim,
damage
or liability (or action in respect thereof) or expense after the Company
has
furnished such seller or such controlling person with the same.
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(b) In
the
event of a registration of any of the Registrable Securities under the
Securities Act pursuant hereto, each seller of such Registrable Securities
thereunder, severally and not jointly, will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning
of the
Securities Act, each officer of the Company who signs the Registration
Statement, each director of the Company and each underwriter and each person
who
controls any underwriter within the meaning of the Securities Act from and
against all losses, claims, expenses, damages or liabilities, joint or several,
to which the Company or such officer, director, or controlling person may
become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based
on any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement under which such Registrable Securities
were registered under the Securities Act pursuant hereto, any preliminary
prospectus or Prospectus, or any amendment or supplement thereof, or arise
out
of or are based upon 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, and will reimburse the Company and each such officer,
director, underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage or liability (or action in respect thereof);
provided,
that
such seller will be liable hereunder in any such case if and only to the
extent
that any such loss, claim, damage or liability arises out of or is based
upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information pertaining to such
seller furnished in writing to the Company by such seller specifically for
use
in such Registration Statement or Prospectus; and provided,
further,
that
the liability of each seller hereunder shall be limited to the proportion
of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the Registrable Securities sold by such
seller
under such Registration Statement bears to the total public offering price
of
all securities sold thereunder, but not in any event to exceed the proceeds
received by such seller from the sale of Registrable Securities covered by
such
Registration Statement. Notwithstanding the foregoing, the indemnity provided
in
this Section 10(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if such settlement is effected
without
the consent of such indemnified party, which shall not be unreasonably
withheld.
(c) Promptly
after receipt by an indemnified party hereunder of notice of the commencement
of
any action or claim, such indemnified party shall, if a claim in respect
thereof
is to be made against the indemnifying party hereunder, notify the indemnifying
party in writing thereof, but the omission so to notify the indemnifying
party
shall not relieve it from any liability which it may have to such indemnified
party other than under this Section 10 and shall only relieve it from any
liability which it may have to such indemnified party under this Section
10 if
and to the extent the indemnifying party is materially prejudiced by such
omission. In case any such action shall be brought against any indemnified
party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent
it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake
the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 10 for any legal expenses subsequently incurred
by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
that if
the defendants in any such action include both the indemnified party and
the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different
from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to
select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of
such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
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16 -
(d) In
order
to provide
for just
and equitable contribution to joint liability under the Securities Act in
any
case in which either (i) any Holder of Registrable Securities exercising
rights
under this Agreement, or any controlling person of any such holder, makes
a
claim for indemnification pursuant to this Section 10 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 10 provides for indemnification
in
such case, or (ii) contribution under the Securities Act may be required
on the
part of any such seller or any such controlling person in circumstances for
which indemnification is provided under this Section 10, then, and in each
such
case, the Company and such Holder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion as is appropriate to reflect their relative
fault in connection with the actions, statements or omissions that resulted
in
such losses, claims, damages or liabilities as well as any other relevant
equitable considerations. Such relative fault 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,
the Company or the Holder, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such action, statement
or
omission. Notwithstanding anything to the contrary contained above: (A) no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the dollar amount of the net proceeds received by such Holder upon the
sale
of the Registrable Securities giving rise to such contribution obligation;
and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
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17 -
11. Changes
in Capital Stock and Successors.
If, and
as often as, there is any change in the capital stock of the Company by way
of a
stock split, stock dividend, combination, reclassification, or through a
merger,
consolidation, reorganization or recapitalization, by any other means, then
appropriate adjustment shall be made in the provisions hereof so that the
rights
and privileges granted hereby shall continue with respect to the capital
stock
as so changed or exchanged; and, in the event of a Merger or another merger
or
consolidation where the Company is not the surviving entity, the successor
to
the Company shall assume the obligations of the Company hereunder.
12. Rule
144 Reporting.
With a
view to making available the benefits of certain rules and regulations of
the
Commission which may at any time permit the sale of the Registrable Securities
to the public without registration, at all times after 90 days after any
registration statement covering a public offering of securities of the Company
under the Securities Act shall have become effective, the Company agrees
to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144(c) under the Securities Act;
(b) file
with
the Commission in a timely manner all reports and other documents required
of
the Company under the Securities Act and the Exchange Act; and
(c) furnish
to each Holder of Registrable Securities forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of
such Rule 144 and of the Securities Act and the Exchange Act, a copy of the
most
recent annual or quarterly report of the Company, and such other reports
and
documents so filed by the Company as such holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing such
holder
to sell any Registrable Securities without registration.
13. Event
of Election.
In the
event that the Company fails to fulfill its registration responsibilities
pursuant to Section 2, 3, 4 or 5 of this Agreement, the Holders shall have
all
rights and remedies available to them at law or equity.
14. Representations
and Warranties of the Company.
The
Company represents and warrants to the Investors as follows:
(a) The
execution, delivery and performance of this Agreement by the Company have
been
duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
charter or by-laws of the Company or any provision of any indenture, agreement
or other instrument to which it or any or its properties or assets is bound,
conflict with, result in a breach of or constitute (with due notice or lapse
of
time or both) a default under any such indenture, agreement or other instrument
or result in the creation or imposition of any lien, charge or encumbrance
of
any nature whatsoever upon any of the properties or assets of the Company
or its
subsidiaries.
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18 -
(b) This
Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms.
15. Assignment
of Registration Rights.
The
rights to cause or have the Company register Registrable Securities pursuant
to
this Agreement may be assigned by the Investors to transferees or assignees
of
such securities; provided,
that:
(a) there is transferred to such transferee not less than ten thousand (10,000)
shares of Registrable Securities, appropriately adjusted for any stock splits,
stock dividends, reverse splits and similar events; (b) the Company is, within
reasonable time after such transfer, furnished with written notice of the
name
and address of such transferee or assignee and the securities with respect
to
which such registration rights are being assigned, and such transferee shall
agree to be subject to all the restrictions set forth in this Agreement;
and (c)
an opinion of counsel is provided by the Investor, satisfactory to the Company,
to the
effect that such disposition will not require registration of such shares
or
Registrable Securities under the Securities Act.
The
term “Investors” or “Holders” as used in this Agreement shall include such
permitted transferees and assignees.
16. Miscellaneous.
(a) All
covenants and agreements contained in this Agreement by or on behalf of any
of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto (including without limitation
permitted transferees of any Registrable Securities), whether so expressed
or
not.
(b) All
notices, requests, consents and other communi-cations hereunder shall be
in
writing and shall be delivered in person, mailed by certified or registered
mail, return receipt requested, or sent by telecopier or telex, addressed
(i) if
to the Company, at American
Ethanol, Inc. ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.; (ii)
if to
Investors, at the address of such party as set forth beneath such party's
signature to the Series B Agreements’ signature page (in the case of the Series
B Investors) or as set forth in the records of the Company (in the case of
the
Series A Investors); (iii)
if to
the Placement Agent, at
Chadbourn Securities, Inc.,
[
],
facsimile: [ ], Attention: ▇▇▇▇▇ ▇▇▇▇▇;
and
(iv)
if to
any subsequent Holder, to it at such address as may have been furnished to
the
Company in writing by such Holder; or (v) in any case, at such other address
or
addresses as shall have been furnished in writing to the Company (in the
case of
a Holder) or to the Holders (in the case of the Company) in accordance with
the
provisions of this paragraph.
(c) Upon
the
execution of this Agreement by the Company and holders of a majority of the
Registrable Securities subject to the Prior Rights Agreement, the Prior Rights
Agreement shall be terminated and superseded entirely by this
Agreement.
(d) This
Agreement shall be governed by and construed in accordance with the laws
of the
State of California applicable to contracts entered into and to be performed
wholly within said State.
(e) Any
judicial proceeding brought against any of the parties to this Agreement
on any
dispute arising out of this Agreement or any matter related hereto shall
be
brought in the courts of the State of California and County of Santa ▇▇▇▇▇
or in
the United States District Court for the Northern District of California
and, by
execution and delivery of this Agreement, each of the parties hereto accepts
for
itself and himself the process in any such action or proceeding by the mailing
of copies of such process to it or him, at its or his address as set forth
in
paragraph 16(b) and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Each party hereto irrevocably
waives
to the fullest extent permitted by law any objection that it or he may now
or
hereafter have to the laying of the venue of any judicial proceeding brought
in
such courts
and any
claim that any such judicial proceeding has been brought in an inconvenient
forum. The foregoing consent to jurisdiction shall not constitute general
consent to service of process in the State of California for any purpose
except
as provided about and shall not be deemed to confer rights on any person
other
than the respective parties to this Agreement.
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(f) Except
as
expressly provided herein, neither this Agreement nor any term hereof may
be
amended, waived, discharged or terminated other than by a written instrument
referencing this Agreement and signed by the Company and the Holders holding
not
less than a majority of the Registrable Securities; provided,
however,
that
the assumption of this Agreement by the Company’s successor following the Merger
will not require the consent of any Holder pursuant to this Agreement. Any
amendment, waiver, discharge or termination effected in accordance with this
paragraph shall be binding upon each Holder and each future Holder of all
such
securities of Holder. Each Holder acknowledges that by the operation of this
paragraph, the Holders of not less than a majority of the Registrable Securities
(together with the Company) will have the right and power to diminish or
eliminate all rights of such Holder under this Agreement.
(g) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate
as a
waiver thereof. No waiver shall be effective unless and until it is in writing
and signed by the party granting the waiver.
(h) This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
(i) The
Company shall not grant to any third party other than the Placement Agent
any
registration rights more favorable than or inconsistent with any of those
contained herein, so long as any of the registration rights under this Agreement
remains in effect.
(j) If
any
provision of this Agreement shall be held to be illegal, invalid or
unenforceable, such illegality, invalidity or unenforceability shall attach
only
to such provision and shall not in any manner affect or render illegal, invalid
or unenforceable any other provision of this Agreement, and this Agreement
shall
be carried out as if any such illegal, invalid or unenforceable provision
were
not contained herein.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
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AMERICAN
ETHANOL, INC.
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By:
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ |
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▇▇▇▇
▇. ▇▇▇▇▇▇, Chairman
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SERIES
A INVESTORS:
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SERIES
B INVESTORS:
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SIGNATURE
PAGE TO
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
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