EXHIBIT 10
EXHIBIT D
to Subscription Agreement
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FORM OF REGISTRATION RIGHTS AGREEMENT
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AGREEMENT dated as of July 29, 2004, between MERCATOR MOMENTUM FUND,
L.P., MERCATOR MOMENTUM FUND III, L.P, MONARCH POINTE FUND, LTD. (collect-
ively, the "Funds") and MERCATOR ADVISORY GROUP, LLC ("MAG") (the Funds and
MAG are referred to individually as a "Holder" and collectively as the
"Holders"), and Energy & Engine Technology Corporation, a Nevada corporation
(the "Company").
WHEREAS, the Funds have purchased, for an aggregate of $1,700,000,
Convertible Debentures (the "Debentures") from the Company, and have the
right to cause their Debentures to be converted into shares of Common Stock,
$_______ par value (the "Common Stock"), of the Company, pursuant to the
conversion formula set forth in its Debenture;
WHEREAS, each Fund and MAG have acquired Warrants (together, the
"Warrants") from the Company, pursuant to which the Holders have the right to
purchase in the aggregate up to ______________ shares of the Common Stock
through the exercise of the Warrants;
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the shares of Common Stock issuable
upon the conversion of the Debentures and the exercise of the Warrants.
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Registrable Securities. As used herein the terms "Registrable
Security" means each of the shares of Common Stock (i) issued upon the
conversion of the Debentures (the "Conversion Shares") or (ii) upon exercise
of the Warrants (the "Warrant Shares"), provided, however, that with respect
to any particular Registrable Security, such security shall cease to be a
Registrable Security when, as of the date of determination that (a) it has
been effectively registered under the Securities Act of 1933, as amended (the
"Securities Act"), and disposed of pursuant thereto, or (b) registration under
the Securities Act is no longer required for the immediate public distribution
of such security. The term "Registrable Securities" means any and/or all of
the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be made in the definition of "Registrable
Security" as is appropriate in order to prevent any dilution or enlargement
of the rights granted pursuant to this Section 1.
2. Registration.
(a) The Company shall file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") within thirty (30) days after the date of this Agreement in order to
register the resale of the Registrable Securities under the Securities Act.
Once effective, the Company shall maintain the effectiveness of the
Registration Statement until the earlier of (i) the date that all of the
Registrable Securities have been sold, or (ii) the date that the Company
receives an opinion of counsel to the Company that all of the Registrable
Securities may be freely traded without registration under the Securities Act,
under Rule 144 promulgated under the Securities Act or otherwise.
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(b) The Company will initially include in the Registration Statement
as Registrable Securities _____________ (___________) shares of Common Stock,
being the maximum number of shares of Common Stock issuable by the Company
upon conversion of the Debentures and exercise of the Warrants.
3. Covenants of the Company with Respect to Registration.
The Company covenants and agrees as follows:
(a) The Company shall use best efforts to cause the Registration
Statement to become effective with the SEC as promptly as possible and in no
event more than 120 days after the date of this Agreement. If any stop order
shall be issued by the SEC in connection therewith, the Company shall use
best efforts to obtain promptly the removal of such order. Following the
effective date of the Registration Statement, the Company shall, upon the
request of any Holder, forthwith supply such reasonable number of copies of
the Registration Statement, preliminary prospectus and prospectus meeting the
requirements of the Securities Act, and any other documents necessary or
incidental to the public offering of the Registrable Securities, as shall be
reasonably requested by the Holder to permit the Holder to make a public
distribution of the Holder's Registrable Securities. The obligations of the
Company hereunder with respect to the Holder's Registrable Securities are
subject to the Holder's furnishing to the Company such appropriate information
concerning the Holder, the Holder's Registrable Securities and the terms of
the Holder's offering of such Registrable Securities as the Company may
reasonably request in writing.
(b) The Company shall pay all costs, fees and expenses in connection
with the Registration Statement filed pursuant to Section 2 hereof including,
without limitation, the Company's legal and accounting fees, printing
expenses, and blue sky fees and expenses; provided, however, that each Holder
shall be solely responsible for the fees of any counsel retained by the Holder
in connection with such registration and any transfer taxes or underwriting
discounts, commissions or fees applicable to the Registrable Securities sold
by the Holder pursuant thereto.
(c) The Company will take all actions which may be required to
qualify or register the Registrable Securities included in the Registration
Statement for the offer and sale under the securities or blue sky laws of such
states as are reasonably requested by each Holder of such securities, provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
4. Additional Terms.
(a) The Company shall indemnify and hold harmless the Holders and
each underwriter, within the meaning of the Securities Act, who may purchase
from or sell for any Holder, any Registrable Securities, from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
of a material fact contained in the Registration Statement, any other
registration statement filed by the Company under the Securities Act with
respect to the registration of the Registrable Securities, any post-effective
amendment to such registration statements, or any prospectus included therein
or caused by any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by
any such untrue statement or omission based upon information furnished or
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required to be furnished in writing to the Company by the Holders or
underwriter expressly for use therein, which indemnification shall include
each person, if any, who controls any Holder or underwriter within the meaning
of the Securities Act and each officer, director, employee and agent of each
Holder and underwriter; provided, however, that the indemnification in this
Section 4(a) with respect to any prospectus shall not inure to the benefit of
any Holder or underwriter (or to the benefit of any person controlling any
Holder or underwriter) on account of any such loss, claim, damage or liability
arising from the sale of Registrable Securities by the Holder or underwriter,
if a copy of a subsequent prospectus correcting the untrue statement or
omission in such earlier prospectus was provided to such Holder or underwriter
by the Company prior to the subject sale and the subsequent prospectus was not
delivered or sent by the Holder or underwriter to the purchaser prior to such
sale and provided further, that the Company shall not be obligated to so
indemnify any Holder or any such underwriter or other person referred to above
unless the Holder or underwriter or other person, as the case may be, shall at
the same time indemnify the Company, its directors, each officer signing the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Securities Act, from and against any and all losses,
claims, damages and liabilities caused by any untrue statement of a material
fact contained in the Registration Statement, any registration statement or
any prospectus required to be filed or furnished by reason of this Agreement
or caused by any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission based upon information furnished in writing to
the Company by the Holder or underwriter expressly for use therein.
(b) If for any reason the indemnification provided for in the
preceding section is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations.
(c) Neither the filing of a Registration Statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by
the Holder shall impose upon any Holder any obligation to sell the Holder's
Registrable Securities.
(d) Each Holder, upon receipt of notice from the Company that an
event has occurred which requires a Post-Effective Amendment to the
Registration Statement or a supplement to the prospectus included therein,
shall promptly discontinue the sale of Registrable Securities until the Holder
receives a copy of a supplemented or amended prospectus from the Company,
which the Company shall provide as soon as practicable after such notice.
(e) If the Company fails to keep the Registration Statement referred
to above continuously effective during the requisite period, then the Company
shall, promptly upon the request of any Holder, use best efforts to update the
Registration Statement or file a new registration statement covering the
Registrable Securities remaining unsold, subject to the terms and provisions
hereof.
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(f) Each Holder agrees to provide the Company with any information
or undertakings reasonably requested by the Company in order for the Company
to include any appropriate information concerning the Holder in the
Registration Statement or in order to promote compliance by the Company or
the Holder with the Securities Act.
(g) The Company agrees that it shall cause each of its directors,
officers and shareholders owning ten percent (10%) or more of the Company's
outstanding Common Stock to refrain from selling any shares of the Company's
Common Stock, except under Rule 144, until the Registration Statement has
been declared effective.
(h) Each Holder, on behalf of itself and its affiliates, hereby
covenants and agrees not to, directly or indirectly, offer to "short sell",
contract to "short sell" or otherwise "short sell" any securities of the
Company, including, without limitation, shares of Common Stock that will be
received as a result of the conversion of the Debentures or the exercise of
the Warrants.
5. Governing Law. The Registrable Securities will be, if and when
issued, delivered in California. This Agreement shall be deemed to have
been made and delivered in the State of California and shall be governed as
to validity, interpretation, construction, effect and in all other respects
by the internal substantive laws of the State of California, without giving
effect to the choice of law rules thereof.
6. Amendment. This Agreement may only be amended by a written
instrument executed by the Company and the Holders.
7. Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties, oral and
written, with respect to the subject matter hereof.
8. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered
by hand or mailed by registered or certified mail, postage prepaid, return
receipt requested, as follows:
If to the Holders, Mercator Advisory Group, LLC
Mercator Momentum Fund, L.P.
Mercator Momentum Fund III, L.P.
Monarch Pointe Fund, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Hampton LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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If to the Company, Energy & Engine Technology Corporation
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
With a copy to Energy & Engine Technology Corporation
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▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Jolie ▇▇▇▇, General Counsel
10. Binding Effect; Benefits. Any Holder may assign its rights here-
under. This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, legal representatives, successors
and assigns. Nothing herein contained, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
heirs, legal representatives and successors, any rights or remedies under or
by reason of this Agreement.
11. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
12. Severability. Any provision of this Agreement which is held by a
court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
13. Jurisdiction. Each of the parties irrevocably agrees that any and
all suits or proceedings based on or arising under this Agreement may be
brought only in and shall be resolved in the federal or state courts located
in the City of Los Angeles, California and consents to the jurisdiction of
such courts for such purpose. Each of the parties irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding
in any such court. Each of the parties further agrees that service of process
upon such party mailed by first class mail to the address set forth in Section
9 shall be deemed in every respect effective service of process upon such
party in any such suit or proceeding. Nothing herein shall affect the right
of either party to serve process in any other manner permitted by law. Each
of the parties agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
14. Attorneys' Fees and Disbursements. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party or parties shall be entitled to receive from the other party
or parties reasonable attorneys' fees and disbursements in addition to any
other relief to which the prevailing party or parties may be entitled.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
ENERGY & ENGINE TECHNOLOGY CORPORATION
By:
Name: _________________________________
Its: President
HOLDERS:
MERCATOR MOMENTUM FUND, L.P.
BY: MERCATOR ADVISORY GROUP, LLC,
GENERAL PARTNER
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Managing Member
MERCATOR MOMENTUM FUND III, L.P.
BY MERCATOR ADVISORY GROUP, LLC
GENERAL PARTNER
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Managing Member
MONARCH POINTE FUND, LTD.
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: President
MERCATOR ADVISORY GROUP, LLC
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Managing Member
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