Exhibit 4.5
REGISTRATION RIGHTS
AGREEMENT
This Registration Rights Agreement (the “
Agreement ”) is made and entered into as of this ___
day of ____, 2008 by and among Z Trim Holdings Inc., an Illinois
corporation (the “ Company ”), ______________
(“ Placement Agent ”), and certain accredited
investors purchasing Units consisting of a $100,000 24-month senior
secured promissory note (each, a “ Note ” and
collectively, the “ Notes ”) convertible at the
rate of $0.26 per share into 384,615 shares of common stock, par
value $.00005 per share, of the Company (the “ Common
Stock ”) bearing interest at the rate of 8% per annum,
which interest is payable quarterly in Common Stock at the rate of
$0.26 per share, and two five-year warrants, one to purchase
230,769 shares of Common Stock with an exercise price of $0.01 per
share (the “ $0.01 Warrants ”), and the other to
purchase 153,846 shares of Common Stock with an exercise price of
$0.26 per share (the “ $0.26 Warrants
” and, together with the $0.01 Warrants, collectively, the
“ Warrants ”) offered in private placement (the
“ Offering ”) by the Company. Such
investors are each referred to herein as an “Investor”
and, collectively, as the “ Investors
”.
WHEREAS, in connection with certain Subscription
Agreements among the Investors and the Company (the “
Subscription Agreement ”) which have been executed in
connection with the consummation of the transactions contemplated
in that certain Confidential Private Placement Memorandum dated
___________, 2008 (the “ Memorandum ”), the
Company has agreed, upon the terms and subject to the conditions of
the Subscription Agreements and the Memorandum to issue and sell to
the Investors an aggregate of up to 50 Units;
WHEREAS, to induce the Investors to execute and
deliver the Subscription Agreement, the Company has agreed to
provide certain registration rights with respect to the shares of
Common Stock (i) issuable upon conversion of the Notes, or in
payment of interest thereon, and (ii) issuable upon exercise of the
Warrants; and
WHEREAS, the Company has agreed to provide
certain registration rights with respect to the shares (the “
Placement Agent Warrant Shares ”) of Common Stock
issuable upon exercise of the warrants issued to the Placement
Agent and its permitted transferees (the “ Placement Agent
Warrants”) both on the terms and conditions provided
herein.
NOW, THEREFORE, for good and valuable
consideration, the parties hereby agree as follows:
1.
Certain Definitions .
As used in this Agreement, the following terms
shall have the following meanings:
“ Affiliate ” means, with
respect to any person, any other person which directly or
indirectly controls, is controlled by, or is under common control
with, such person.
“ Business Day ” means a day,
other than a Saturday or Sunday, on which banks in Illinois are
open for the general transaction of business.
“ Common Stock ” as defined
in the Preamble.
“ Investors ” means the
Investors purchasing Registrable Securities pursuant to the
Subscription Agreements, the Placement Agent and any Affiliate or
permitted transferee of any Investor or the Placement Agent who is
a subsequent holder of any Warrants or Registrable
Securities.
“ Memorandum ” as defined in
the Preamble.
“ Offering ” as defined in
the Preamble.
“ Placement Agent Warrants ”
as defined in the Preamble.
“ Placement Agent Warrant Shares
” as defined in the Preamble.
“ Prospectus ” means the
prospectus included in any Registration Statement, 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 such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
“ Register ,” “
registered ” and “ registration ”
refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as
defined below), and the declaration or ordering of effectiveness of
such Registration Statement or document.
“ Registrable Securities ”
shall mean (i) the Shares, (ii) the Warrant Shares, (iii) the
Placement Agent Warrant Shares and (iv) any other securities issued
or issuable with respect to or in exchange for Registrable
Securities; provided , that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration
Statement or Rule 144 under the 1933 Act, or (B) such security
becoming eligible for sale by the Investors pursuant to Rule 144(k)
under the 1933 Act.
“ Registration Statement ”
shall mean any registration statement of the Company filed under
the 1933 Act that covers the resale of any of the Registrable
Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material
incorporated by reference in such Registration
Statement.
“ Required Investors ” means
the Investors holding a majority of the Registrable
Securities.
“ SEC ” means the U.S.
Securities and Exchange Commission.
“ Shares ” means the shares
of Common Stock issuable upon conversion of, or in payment of
interest on, the Notes sold in the Offering.
“ Subscription Agreement ” as
defined in the Preamble.
“ 1933 Act ” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“ 1934 Act ” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“ Warrants ” as defined in
the Preamble.
“ Warrant Shares ” means the
shares of Common Stock issuable upon the exercise of the
Warrants.
2.
Registration .
(a)
Registration Statements .
(i) Promptly
following the final closing of the purchase and sale of the
securities contemplated by the Memorandum (the “ Closing
Date ”) but no later than thirty (30) days after the
Closing Date (the “ Filing Deadline ”), the
Company shall prepare and file with the SEC one Registration
Statement on Form S-3 (or, if Form S-3 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 in
an amount at least equal to the Shares, the Warrant Shares and the
Placement Agent Warrant Shares. Such Registration
Statement shall include the plan of distribution attached hereto as
Exhibit A . 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 with
respect to the Registrable Securities. The Company shall
use its reasonable best efforts to obtain from each person who now
has piggyback registration rights a waiver of those rights with
respect to the Registration Statement. The Registration
Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be
provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission. If a
Registration Statement covering the Registrable Securities is not
filed with the SEC on or prior to the Filing Deadline, the Company
will make pro rata payments to each Investor, as liquidated damages
and not as a penalty, in an amount equal to 1.5% of the aggregate
amount invested by such Investor for each 30-day period or pro rata
for any portion thereof following the Filing Deadline for which no
Registration Statement is filed with respect to the Registrable
Securities. Such payments shall be in partial
compensation to the Investors, and shall not constitute the
Investors’ exclusive remedy for such events. Such
payments shall be made to each Investor in cash or additional
shares of Common Stock, as determined by each Investor, and shall
be paid monthly within three (3) Business Days after the last day
of each month following the Filing Deadline.
(ii)
Additional Registrable Securities . Upon the
written demand of any Investor and upon any change in the Exercise
Price (as defined in the Warrants and the Placement Agent Warrants,
respectively) such that additional shares of Common Stock become
issuable upon the exercise of the Warrants and/or Placement Agent
Warrants, the Company shall prepare and file with the SEC one or
more Registration Statements on Form S-3 or amend the Registration
Statement filed pursuant to clause (i) above, if such Registration
Statement has not previously been declared effective (or, if Form
S-3 is not then available to the Company, on such form of
registration statement as is then available to effect a
registration for resale of such additional shares of Common Stock
(the “ Additional Shares ”)), covering the
resale of the Additional Shares, but only to the extent the
Additional Shares are not at the time covered by an effective
Registration Statement. 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 with
respect to the Additional Shares. The Company shall use
its reasonable best efforts to obtain from each person who now has
piggyback registration rights a waiver of those rights with respect
to such Registration Statement. The Registration
Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be
provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission. If a
Registration Statement covering the Additional Shares is required
to be filed under this Section 2(a)(ii) and is not filed with the
SEC within ten (10) Business Days after the request of any Investor
or the occurrence of any of the events specified in this Section
2(a)(ii) (the “ Additional Shares Deadline ”),
the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1.5%
of the aggregate amount invested by such Investor for each 30-day
period or pro rata for any portion thereof following the date by
which such Registration Statement should have been filed for which
no Registration Statement is filed with respect to the Additional
Shares. Such payments shall be in partial compensation
to the Investors, and shall not constitute the Investors’
exclusive remedy for such events. Such payments shall be
made to each Investor in cash or additional shares of Common Stock,
as determined by each Investor, and shall be paid monthly within
three (3) Business Days after the last day of each month following
the Additional Shares Deadline.
(iii)
S-3 Qualification . If the Company is not
eligible to use a registration statement on Form S-3 as provided in
Sections 2(a)(i) and 2(a)(ii) above, then, promptly following the
date (the “ Qualification Date ”) upon which the
Company becomes eligible to use a registration statement on Form
S-3 to register the Registrable Securities or Additional Shares, as
applicable, for resale, but in no event more than ten (10) Business
Days after the Qualification Date (the “ Qualification
Deadline ”), the Company shall file a registration
statement on Form S-3 covering the Registrable Securities or
Additional Shares, as applicable (or a post-effective amendment on
Form S-3 to the registration statement on Form S-1) (a “
Shelf Registration Statement ”) and shall use
commercially reasonable efforts to cause such Shelf Registration
Statement to be declared effective as promptly as practicable
thereafter. If a Shelf Registration Statement covering
the Registrable Securities is not filed with the SEC on or prior to
the Qualification Deadline, the Company will make pro rata payments
to each Investor, as liquidated damages and not as a penalty, in an
amount equal to 1.5% of the aggregate amount invested by such
Investor for each 30-day period or pro rata for any portion thereof
following the date by which such Shelf Registration Statement
should have been filed for which no such Shelf Registration
Statement is filed with respect to the Registrable Securities or
Additional Shares, as applicable. Such payments shall be
in partial compensation to the Investors, and shall not constitute
the Investors’ exclusive remedy for such
events. Such payments shall be made to each Investor in
cash or additional shares of Common Stock, as determined by each
Investor, and shall be paid monthly within three (3) Business Days
after the last day of each month following the Qualification
Deadline.
(b)
Expenses . The Company will pay all expenses
associated with each registration, including filing and printing
fees, the Company’s counsel and accounting fees and expenses,
costs associated with clearing the Registrable Securities for sale
under applicable state securities laws, listing fees, and fees and
expenses of one counsel to the Investors (not to exceed
$7,500). Other than the above, the Investors shall bear
their respective expenses in connection with the registration,
including, without limitation, discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable
Securities being sold.
(c)
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 twenty-four (24) hours, after any Registration Statement is
declared effective and shall simultaneously provide the Investors
with copies of any related Prospectus to be used in connection with
the sale or other disposition of the securities covered
thereby. If after a Registration Statement has been
declared effective by the SEC, 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 1.5% of the aggregate amount
invested by such Investor for each 30-day period or pro rata for
any portion thereof following the date by which such Registration
Statement should have been effective (the “ Blackout
Period ”). Such payments shall be in partial
compensation to the Investors, and shall not 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 after 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 in additional
shares of Common Stock as determined by each Investor.
(ii) For
not more than twenty (20) consecutive days or for a total of not
more than forty-five (45) 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 and the Placement Agent in writing of the existence of
(but in no event, without the prior written consent of an Investor
and the Placement Agent, 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 and the Placement Agent 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.
3.
Company Obligations . The Company will use
commercially reasonable efforts to effect the registration of the
Registrable Securities in accordance with the terms hereof, and
pursuant thereto the Company will, as expeditiously as
possible:
(a) 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, and (ii)
the date on which all Registrable Securities covered by such
Registration Statement may be sold pursuant to Rule 144(k) (the
“ Effectiveness Period ”) and advise the
Investors in writing when the Effectiveness Period has
expired;
(b) prepare
and file with the SEC 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 1933
Act and the 1934 Act with respect to the distribution of all of the
Registrable Securities covered thereby;
(c) provide
copies to and permit counsel designated by the Investors to review
each Registration Statement and all amendments and supplements
thereto no fewer than seven (7) days prior to their filing with the
SEC and not file any document to which such counsel reasonably
objects;
(d) furnish
to the Investors and their legal counsel (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, 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 and Prospectus and
each amendment or supplement thereto, and each letter written by or
on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than
any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) 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;
(e) use
commercially reasonable efforts to (i) prevent the issuance of any
stop order or other suspension of effectiveness and, (ii) if such
order is issued, use commercially reasonable best efforts to obtain
the withdrawal of any such order at the earliest possible
moment;
(f) prior
to any public offering of Registrable Securities, use commercially
reasonable efforts to register or qualify or cooperate with the
Investors and their 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
requested by the Investors and do any and all other
